• Dubai World joins with MGM

Dubai World, the sovereign wealth fund that owns Nakheel Hotels, is being tipped to further link-up with US gambling giant MGM to buy the Drake in New York.

The hotel development site, currently owned by Harry Macklowe, would be expected to become a flagship for MGM as it attempts to build a hotel business separate from its casino empire.

Activist investor Kirk Kerkorian, who owns 53.4% of MGM Mirage, has been pushing for the company to split its hotels and gaming operations in a move that would be the reverse of the spin-off from Hilton Hotels Corp in 1998 creating Park Place Entertainment.

Back in 1998, it was gaming that was the hidden star but this time around it is MGM's hotels that are viewed as being held back.

Certainly, MGM's numbers for the first quarter looked poor with a 30% decline in profit, following the trend of the other US gaming operators. The amount of pain in the industry was demonstrated when Tropicana Entertainment filed for bankruptcy in early May.

Dubai World is not the only SWF showing interest in US leisure companies. Dubai Holding, the owner of Jumeirah and DIC, the Travelodge backer, is, through Tatweer, looking at buying a stake in amusement park operator Six Flags. Tatweer is also looking at possible stakes in other theme park companies and film studios, as it seeks partnerships for its domestic developments.

These include Dubailand, a leisure park three-times the size of Manhattan, and Bawadi, a strip of hotels and leisure venues in the fashion of Las Vegas which aims to be the "longest" hospitality, shopping and leisure destination in the world. It will total more than 29,000 rooms including the 6,500 room Asia-Asia Hotel, the biggest in the world.

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