Interesting questions VEGA$MAN. Here are my thoughts:
As far as offering a better product, I think MGM is great at branding. With Vdara, it plans to offer a chic, sophisticated hotel with a concentration on personalized service. As a new brand, and being part of the hype that is CityCenter, MGM is likely to raise the stakes to offer something that will appeal to discerning travelers. I liken it to MGM's take on the W brand.
First, it has an amazing location between the CityCenter resort and the Bellagio with pedestrian walkways to each location. Second, it'll be different from other offerings on the Strip, non-gaming, service-based, and modern. Third, it will be more accessible to consumers than other hotels at CityCenter, including the pricier Mandarin and Harmon hotels.
Now, all that is great, but it's hard to say that it will increase in value in the short term. Like The Signature, many investors thought they could perform a quick flip on the properties or break even on monthly rentals. However, MGM controls the market value of condo hotels at the moment. If Vdara started at $650,000, the perceived market value of The Signature would raise. But because Vdara starts at $500,000, the perceived value for The Signature remains about the same. They know that no one can built it as fast or price like they can, so they've taken advantage of that to ensure brisk sales. As for breaking even on monthly rentals, every investor I've talked to thought the exact opposite - they knew that it would be negative and thought it was a plus that rentals could pay for a percentage of the monthly mortgage.
However, owners at The Signature have succeeded in renting out units on their own to keep more of a percentage. There are A LOT of fees associated with the rental program, and taking rentals into your own hands can ensure a much larger revenue each month, it just takes some work.
Also, consider the value of having a project like CityCenter steps away from The Signature. That will be a huge selling point in the future for those who can incur the red for a few years.
I think a Signature owner could rationalize a Vdara purchase, but only if you're looking long-term. Vegas is changing rapidly and the hotels that will succeed (and command a higher daily room rate) are the ones that have the best service, period. As long as MGM keeps that a priority, room rates stay up, travelers check-in, and owners stay happy.
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Originally Posted by VEGA$MAN
Okay - time for me to chime in on CityCenter here.
While all these numbers sound great for CityCenter, I really wonder how well resale units will do once you have every owner competing against one another [sometime in approx. early 2010], something which always occurs when you have a large speculator/flipper market, and something which has had disastrous consequences thus far with their sister property and condotel "guinea pig", the MGM Signature. Not a good precedent.
To add insult to injury, most of the Signature's owners have consistently been in the red since closing on their units since the middle of last year, something no one had expected to last, hence, the fire sales in the secondary (resale) market.
I am speaking from first-hand experience with respect to the Signature, as I own a unit in Tower I, and what I paid is considered a bargain compared to what they will offer at CityCenter on a square foot comparison!
Question #1: Comparing apples to apples, will MGM really be able to offer up a better product and better service in a condotel like Vdara as compared to the Sig - which would potentially translate to increased demand and value upon resale - to justify paying such a premium just because of all this hype over CityCenter in general??? 
Question #2: Being a bit of an insider, having done business with MGM, and having a partnership under their rental management agreement since mid-2006, how could any customer of the Sig ever rationalize a purchase at CC, when MGM lacks in their rental management service at the Sig, not to mention the egregious hidden fees and assessments they juice us to death with so there's no chance of a positive return unless double the room rates?
It is always great to hear that CC "is a real estate micro-market with its own supply, demand and prices", but that may mean absolutely nothing in 2010 when everyone will want to cash out because their notes aren't being covered (as is the case with the Signature). So, what's to say that the condotel Vdara will rise in value and then subsequently fall like Signature has (hopefully momentarily) done???
From what I hear, CityCenter sales staff is playing it safe and is not releasing any figures as to the rental split on Vdara. Rumor has it, although, that a 70/30 split will be offered, in favor of the owner, but that means nothing if it isn't in writing from the get go. Why else would one want to buy a condotel if you're not in it for the cash flow? The studios are too small to live in and the one bedrooms don't pencil out. The only other folks would be multi-billionaires who could care less about cash flow and just want a place to crash or to put their mistress in - but that's a minority. 90% of all the buyers in the Sig are hard-working investors like myself who want a positive ROI. We bought it for one reason and one reason only and don't have time or the money to waste impressing people that don't make us $$$.
Bruce, et al, I know you have much insight into these issues, so let's here it from you experts out there!
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