Two Way Hard Three | Las Vegas Casino & Design Blog

What would be the financial criteria required for a casino to be shuttered? Just going into bankruptcy is likely not enough to close a property. I would think a negative net revenue (with little chance of ever making a profit). This would require all sources of revenue to be less than the ongoing operating costs (excluding servicing of the debt which could be wiped out in BK) . At what point would nobody be interested in buying such a property? How does this change if the property was part of a large company rather than a stand alone property? e.g. Imperial Palace vs Riviera. I could see it being easier for a larger property to fail because of the maintenance costs.

I haven't heard much discussion about the following: new casino/bar decor at NY-NY, the spa and Simon/pool area at Palms Place, what to expect at PH Towers (restaurant/bars/hotel/condo), and prospects for the new on-strip Hard Rock restaurant.

Has anyone had a chance to sample the pool at Encore? Does it seem like it is going to be as crowded/cramped as many people have anticipated?

Wynn Resorts recently sold more shares of the company, gathers more hundreds of millions of dollars. Steve Wynn insists that he's not going to buy anything back from MGM Mirage, including Bellagio. Do you think Steve will keep his word, or will he buy something from MGM in the near future at these firerocket prices?

Posted by mike_ch

parchedearth, I can't tell you much about Palms Place (having only seen the lobby) but I know Mike_E has stayed there and had some opinions. You may want to look through his old trip reports.

I've been out of Vegas for six weeks until a couple days ago, and I'm putting material together right now for a upcoming StripWalk. I've got some of the things you've talked about covered and you've given me ideas for some more.

Does Hunter no longer enter the Imperial Palace because he is constantly mistaken for the Owen Wilson "Dealertainer"?

Don_S - I'll be hitting the Encore pool for several days, starting tomorrow. I'll let you know how full it is.

It's looking like a majority of strip area properties could be operating under some type of bankruptcy by the end of 2009. Does the VEGAS GANG think it is possible some would have to close? And if so, who?

Not really a question but an interesting review on Bloomberg.com today on the Fontainebleau Miami. The observations on service levels and that they have the in-room iMacs but charge for Internet access are interesting. So, I wonder how much of that will transfer to the Vegas property when it opens.

http://www.bloomberg.com/apps/news?pid=20601093&sid=amKhSk0lGCH0&refer=home

Within the last 6 months at least, I've read that they still intended to have macs per room at Fontainebleu, whether that happens or not is definitely up in the air though in my opinion, especially considering they are already concerned about revenue generation upon opening.

I'm probably the only one here who gives a crap about the LV Monorail, but....

Are there still plans to extend the Las Vegas Monorail to McCarran? I know the placement BEHIND all the casinos was ill advised, but I dig the monorail. Sadly, it seems more and more neglected each time I visit which I assume is due to their cash woes. I also heard something about there being a contingency fund set aside to demolish the system if it could not support itself!? Is this true? Why not let the RTC take it over? Seems incredibly wasteful to do something like that.

Posted by mike_ch

It's hard to argue for taxpayers to take over the LV Monorail when it doesn't go anywhere of importance to valley residents, meaning they are not interested in paying for it. A McCarran extension would be nice if it stopped at the South Strip Transfer Terminal on the way there, integrating it into the rest of the transit network. Alternatively, and more relevant, would be the Downtown Transit Terminal.

Monorail is very expensive to build, which is why Disney hasn't laid down any beamway since EPCOT Center opened around 1983. In nearly twenty years Disney has added two more theme parks, a shopping district, and numerous hotels to it's Orlando property, but this is all accessed with buses.

Vegas' transportation needs extend far beyond the Monorail and as you know certain casinos don't even approve of the thing.

Posted by mike_ch

BTW, Art, if you're ever interested in the details of the Monorail up to 2005 (when it was published), I have to recommend this story: http://www.lasvegascitylife.com/articles/2005/09/15/cover_story/cover.txt

The most relevant part regarding your post:
"Technically, if the monorail defaults, bondholders own it. If they elect not to run it, the assets of the non-profit company could be given to a government agency, like the state Department of Business and Industry, which issued the monorail bonds, or the county. (The 1997 law that created private monorail franchise agreements contains a provision that stipulates if the system is taken by eminent domain, the county must run it for a certain period of time before shutting it down.) And there is always the option of getting rid of it entirely: Under the franchise agreement, $6 million has been set aside for demolition of the system's pillars and stations."

Thanks, that was a great story. Seems like there really is no easy answer for the fate of that system. The whole non-profit entity subbing out the for profit operating company is just flat out crooked and wrong.

It's a shame, because I think that a non-bus transit system could have been built that did serve some public interest as well, even if it just traveled North and South on Las Vegas Boulevard and to McCarran. How many people from Southern Nevada are employed on the Strip that could use it? But when you narrow that down to the hotels that are REALLY accessible from the existing stations, that argument evaporates pretty quickly. Something as simple as easier transfers from the East / West bus routes could contribute as well, but as it is now, you can't even access the monorail from the street. All of the elevators and stairways that exist are "out of service", so you have to go up and through a casino to ride. That even further emphasizes that it is just a resort shuttle in its current incarnation.

I think the ideal solution logistically might have been a subway system with exits on the Strip, but I assume that was not feasible due to the flooding issues that the city is prone to.

All that said, the system is still much more efficient than any other currently available means of Strip transportation. The Deuce is just about useless when there is any volume of people in town, and a cab will take longer and cost 4x as much.

For now, at least its an easy way for me to stay at nicer casinos and gamble at low limit dumpy ones. :)

Posted by mike_ch

Art: It's not that many people in the valley don't work at the Strip, it's that they live miles and miles and miles away, in the HOA-dominated sprawl that you see out your windows for the final few minutes before touching down at McCarran. The lower income workers (room cleaning, casino janitor, etc) tend to live in North Las Vegas, and the crime-heavy area around Nellis. These are all a long way from the strip.

I live on the border with Summerlin, which pretty much started the sprawling boomtown development, and riding the mass transit system here takes me 2 hours. Many bus stops don't have any actual shelters and are just a bench, which makes going to town brutal in the ~110 degree heat. It's taken a toll on me and now any summer StripWalks this year will be done in the evening hours, though I'm not sure how well construction will appear in that time period. At least CityCenter is thoroughly lit up. Now that the RTC added the bus system to Google Maps, I can at least plan the route that has the least amount of transfer time. It still takes me two hours, but I use routes that keep me on a moving bus instead of standing around on a corner.

The real solution, and it's supposedly what the RTC is working on and calling ACE, is small transit hubs in each region of the valley connected to a BRT line that takes the freeway and stops at a limited number of places on the way into town. They already have one BRT line, called MAX, connecting the area near Nellis with the transit terminal Downtown, arguably for the commutes of the low-income hotel workers I was talking about above, but it runs at eight minute intervals on most hours, which is far better than most routes that don't serve the Strip.

Unfortunately, Vegas is built on unsustainable sprawl and the majority opinion is still "what are you, nuts? Get a car!" but the greenies and progressives and my group, the armchair urban planners, will keep banging our head against the wall until either things change or we give up and move away.

Posted by mike_ch

Oh, by the way, regarding rail:

I'd like to see a rail system here, but I have a feeling it would be difficult. I honestly would prefer a system is an extension of the train to LA. Imagine a train that stops somewhere far up north in the area called Centennial Hills, then travels at regional rail speeds to downtown, then moseys over to McCarran Airport, then finally hits bullet train speeds out of the valley to Southern California.

Unfortunately, even with the stimulus bill giving hope for a SoCal train this idea seems unfeasible because of a lot of development and the Union Pacific rail in the way.

Also, subways are a no-go because the desert ground is too hard. Above-ground rail like the San Diego SPRINTER, Seattle Sounder, etc is more doable but again you have the freight rail in the way and you're generally going to be talking about a lot of eminent domain and tax dollars being spent and other things which aren't popular in Southern Nevada, which still shows a libertarian distrust of government streak now and then despite being the left-wing corner of the state.

Anyway, I'm sorry for hijacking the Vegas Gang post with this stuff, but it's kind of what gets me excited. Like how Hunter or Mike E can go on talking about hotel floorplan secrets (I should know, having gone on a walking tour of Wynn with both) cityscapes and urbanism is kind of a relatively newfound hobby of mine since going to Toronto and San Francisco made me jealous compared to what little urbanism we have here in Vegas. It seems like the potential is there, though, since the various governments seem to have no problem tearing up perfectly good roads and parks and other things, doing new things with them.

Mike - I'm glad you're taking up the transportation question because in all honesty, with all the questions I have received both here and via email, I'm not sure we will be able to get to it on the show.

BTW - if there was a high-speed train to CA and I could get on it easily, I'd take it all the time.

Mike CH/Hunter,

As a transit user I can tell you first hand that the monorail is a total flop although I liked it. As for the RTC bus system, it is far from perfect however it is a vast improvement from just a few years ago. Ridership levels have been rising across the area despite lower gas prices which is atipical. Many of the problems with the Duce are not the RTC's own making. The issue is the inability to manage strip traffic levels at peak times.

On the topic of sprawl, over the next few years you will see a seed change. Areas around Summerlin, central Henderson & around the strip will continue to populate while the rest of the metro will end up depopulating. I noticed this a while ago & the morggage crisis has only excelerated this trend. Put another way you will start to see more clustering of neighborhoods. The days of continued sprawl are over.

Thaughts?

Posted by mike_ch

Sean: I have no idea what Vegas will look like in a few years, I can only decide what I think is "right" for it and yell and moan for it. :) Not that I can make much of a difference anyway. Stopping the runaway growth was the first step, and economic conditions seem to have done that.

I think the best plan would be to try and invest in a real working downtown that doesn't feel like a hovel town as soon as you walk a few blocks from Fremont and expand that out toward the Arts District.

There's a lot of city that needs renovating, but between the various government bodies trying to point fingers at each other you get no answers. Like, for example, who is responsible for all the grunge near the Stratosphere? The area immediately around the place is City of Las Vegas, but once you reach the southern side of the Sahara ave intersection where the Sahara and Circus property begins, it's Clark County.

City of LV could have done some major urban renewal work around "crack alley" and the naked city around and north of the Strat, but didn't. Now even if they wanted to they can't afford to.

I'm curious to know what role Tom Brietling and Tim Poster have played at Wynn Resorts recently. I think they were to be involved in the redevelopment of the golf course, but now that the economy is in the tank, what are they doing now day to day at Wynn? Are they ever seen on the casino floor at Wynn these days (ie: glorified casino host roles without the job responsibilities?) While it may have been just for the show, in their old reality series when they owned the Golden Nugget it seemed they were always on the floor being the life of the party with their guests, not sure if Wynn would be ok with that, but Tim and Tom seemed to enjoy that part of their ownership, being face to face with their guests.

Posted by Hunter

I see both Tim and Tom on the floor often, usually looking like they are busy heading somewhere.

I know Tom has been helping with marketing stuff, including Internet related bits.

I think Tim has been helping with some player development efforts but all that is second hand info. At Encore's opening he looked like a kid in a candy store - you can tell the guy just loves casinos.

I would ask the following:

- Now that Phil Ruffin has bougt Treasure Island, what changes should he implement and what do you think he will do.

- The Citycenter development was meant to be partially financed by over priced condos, how many have they sold and of the people that have placed deposits how many are like to go ahead with the purchase. Will they lower their prices?

- Are MGM likely to go ahed with future renovions of places like Luxor given their current financial position.

- Also parchedearth's question about the changes to NYNY and also to Luxor.

Cheers, Andrew

I would ask similar to Andrew, but in relation to Fontainebleau;
Obviously ythey have about 1,000 condos that they look like they are not going to sell currently, whcih they thought they would, and i am sure the proceeds of those sales is what made their proforma work.
How can a property like Fontainebleau make enough revenue to possibly pay back it's debts, with no condo sales, or players club in existence.?

Posted by mike_ch

Regarding Fbleau, I think (and correct me on this if I'm wrong) they're owned by Turnberry, who owns that collection of condo towers near the building. They were going to have condos in Fbleau, but I think at this point they're not looking to sell any because they know it's such a tough market.

They're probably having enough work keeping the Turnberry towers healthy that opting out of condos for Fbleau isn't a huge deathblow. So anyway, unless I'm terribly wrong about all of this, they sort of DO still have condos, they just all happened to be built before the hotel (and some of them have some poor views of the parking garage, which prompted lawsuits years ago.)

Since Fontainebleau has been silent on condo sales, I'm sure they'll remain unfinished and not for sale until the economy improves. I agree with Scott. How can FB make it on the North Strip all by itself. The name is big here in Florida, but how many Vegas visitors are anxiously waiting for it to open in Vegas?
Turnberry, which grew and prospered in South Florida in the 1990's and early 2000's, is not faring very well. Turnberry Place was successful because its four towers were built and sold during the boom years. Turnberry Towers, across Paradise, is a different story as reported in this week;s LV Business Press:
http://www.lvbusinesspress.com/articles/2009/04/06/news/iq_27842404.txt

Fontainebleau Resorts was set up as a separate entity by Turnberry in 2005. Glenn Schaeffer, formerly of Mandalay Resort Group, sure is invisible. He was responsible for the Miami Beach Fomtainebleau renovation and expansion and FB Las Vegas. I never see him quoted in the news. When he went there, FB talked about expanding the FB brand around the world. That won't happen now.

Posted by mike_ch

Schaeffer has been in and out, I think he's laying low because the questions he faces now ("how are you going to protect yourself when you're opening at the same time as a monster resort whose success is considered critical to the state's future?") than then ("do people really want to live on the Strip?")

I think timing is FB's biggest problem more than location, because a lot of hotels staked out what looked like really crummy locations and did well. FB is right by two monorail stations and anyone staying there is pretty much going to be playing there when in the area, unless they feel like wandering over the to the Hilton. But opening around the same time as Aria has to put a lump in your throat.

Most of us know Schaeffer as the guy who brought us Mandalay Bay and the Baccarat table era at Luxor, and if wasn't for that history I'd probably not be very interested in what they're doing.

Fontainebleau is in for a rough ride when it opens, terrible location, recession and Citycenter opening up at a similar time. From memory it also has way too many rooms, restaurants, bars and shops. They wont get the room rates they had budgeted on either.

On a different note, was looking at my next trip in Jan 2010 and had to laugh that Aria was priced at $259 n Expedia, are they serious? Or will Priceline end up selling these rooms nearer the time for $99?

Andy,

Regarding CityCenter condo sales the most recent information I've been able to find was an RJ story from Jan. 2008 (not a typo!) claiming they were about half sold. Here was the breakdown according to the story: Mandarin 93% of 227 units; Veer 60% of 670; Vdara 42% of 1543. There were also some sales at Harmon (now canceled). It's a pretty safe bet those numbers haven't increased much, if any, in the last 15 months.

In the 4th quarter conference call Bobby Baldwin said something noncommittal about condo closings, like he thought some buyers might have cash. He didn't say anything about new sales though.