MGM Resorts purchases stake in operator of NoMad hotel brand

MGM Resorts International has purchased a 50 percent stake in the Sydell Group, a hotel company that operates the NoMad brand, among others.

The two companies are already familiar with each other; NoMad opened a 293-room boutique hotel on the top four floors of Park MGM in October.

“MGM Resorts is a global leader in the hospitality and entertainment industry, and this is part of the next evolution of our growth opportunities,” spokesman Brian Ahern said via email.

The move could help MGM capture a specific kind of traveler — those that belong to a younger, affluent demographic, according to Jefferies analyst David Katz. About 24 percent of Las Vegas visitors last year were 60 or older, according to the Las Vegas Convention and Visitors Authority.

“We know that globally, inside or outside of gaming, the focus of hospitality companies is on delivering experiences that are more finely segmented,” he said. “What’s important for MGM in many respects is brand equity,” or the commercial value drawn from consumers’ perception of a brand.

The investment is part of MGM’s long-term strategy to become a company with fewer capital assets, Ahern said.

The purchase was likely a minimal investment for MGM, Katz said.

“My impression is that it is not a big number that would alter our model,” he said. But it could be “helpful and supportive over time.”

The move is rare in that Sydell is the first U.S. hotel operator MGM has invested in that is not connected to gaming, according to Ahern. While many resort-casinos are growing their non-gamingassets, Katz said non-gaming investments could be used to enable growth in gaming. Nongaming amenities now account for between 45 percent and 75 percent of revenue generated by most resorts nationwide.

“I don’t know that being in a pure-play hospitality business without gaming is a game changer for MGM,” he said. “It helps proliferate the brand, it helps them enter new markets and gives them name brand acceptance, but I don’t know that it’s going to be a core driver of profit for them.”

Contact Bailey Schulz at bschulz@reviewjournal.com or 702-383-0233. Follow @bailey_schulz on Twitter.