MGM Mirage Wants to Franchise Globally

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MGM Mirage, reeling from a disappointing year and projects put on hold, has decided the way to make money is by its name — by franchising internationally, that is.

MGM Mirage already has 10 franchise deals with hotels carrying the Bellagio and MGM Grand name. The reason? It may be the only way the casino operator (partially controlled by billionaire Kirk Kerkorian) can expand with $12 billion in debt.

The management and franchise deals allow 2 to 3 percent of gross sales (and up to 10 percent if the property makes profit projections) at the international locales, with several non-gambling properties.

Two MGM Grand casino resorts are planned fro Ho Tram, Vietnam, and Sharm el-Sheikh, Egypt. Non-gambling properties include Bellagios in Cairo, Mumbai and four in China. A Bellagio, MGM Grand and Skyloft hotels will also be franchised in Dubai.

The franchising is a first for MGM Grand, but not a moment too soon. That crippling $12 billion in debt should make Kerkorian and other investors eager to find new revenue streams — and as profits go this one is pretty low-risk. I’m just surprised it took this long for the franchising to begin.

Bay Area resident and award-winning business journalist Barbara E. Hernandez has covered tourism, real estate and personal finance. Her clients include the New York Times, Los Angeles Times, San Francisco Chronicle and Washington Post.

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