Two Way Hard Three | Las Vegas Casino & Design Blog

Or, Hamsterdam under the Mandarin Oriental

With the recent spasm of homicides on the Las Vegas Strip (3 in less than two weeks), public safety on the Boulevard has become a big issue. I wrote a little about it here last week, and several local news outlets have given the issue more scrutiny. Yesterday I did an interview with KLAS's I-Team for a week-long series on the subject that will air next week.

I'll continue after the jump:

Treasure Island owner Phil Ruffin doesn't seem to think CityCenter was such a hot idea. Ok, that might be a bit of monday-morning-quarterbacking but he's also going out on a limb to say Cosmo is doomed, in his talk with Nevada journalist Jon Ralston.

He also revealed that his $1B offer for The Mirage was turned down by MGM's board just over a year ago.

http://www.mynews3.com/category.php?id=5392&n=5035

Ruffin's typically one of the more restrained casino owners when it comes to making public comments. Interesting to see him coming out full on, including bashing President Obama.

It's been quite a week in Vegas-land. Hard to imagine that less than a week ago, we were reading a WSJ story that validated pretty much everything I wrote back in September about CityCenter.

From there, we were off and into conference calls, some of which included a few interesting tidbits. MGM told us that both Bellagio and MGM Grand will be getting room refurbs next year, while Steve Wynn explained that their Cotai development work was wrapping up and they'd start moving dirt around any day. The best part of that call was The Steve's ludicrous assertion that they're not secretive about their hotel designs - he practically laughed the questioner off the call. We'll see detailed models and drawings of Wynn Cotai just as soon as some inept outside designer posts them online, not because the company was feeling generous.

Speaking of leaks, they continue at Aria, where we've learned that they're working on a massive new signage package to lure Cosmo visitors and that they're even considering building The Strip's largest marquee. I've got loads of new CC stuff to share with you as soon as I'm done digesting it all.

That brings us to today, with the only piece of news this week that really surprised me - Wynn Las Vegas superstar Andrew Pascal has decided to leave the company, to be replaced with the reliable Marilyn Winn Spiegel (someone we considered as a VPP guest before we settled on the excellent Tom McCartney). What is Andrew going to do next? He's a young man, I can't believe that he's ready to retire.

Pascal has worked for Wynn for a long time but before this current stint, he was in Silicon Valley as Chairman of WagerWorks, a company that provided online casino games, playable for points. Is he headed back to tech? Chuckmonster is betting on Icahn but I just can't imagine that sort of transition.

Ichan's not really in hospitality, he's in hospitality finance - moving money around from distressed property to distressed property, a far cry from actually serving guests. Nope, I think for Pascal I'd put my money on a few months time off and then into some new entrepreneurial venture of some kind - more likely Silicon Valley than Spring Valley though. Maybe Aunt Elaine has eyes on angel investing - we know she can afford it.

What's more interesting is Wynn hiring a veteran Harrah's exec for such a tough job. The last HET (or should I say CZR?) alum to have the gig, Don Marrandino, didn't even make it to opening day. Spiegel is well regarded but the properties she's overseen for Loveman have very different guest satisfaction aspirations. Hopefully we're not in for a rocky transition just as Las Vegas starts to ramp up again.

Interesting stuff... In other news, I've been thinking recently about re-calibrating this blog and it's content. The landscape has changed dramatically since I started doing this and in a world where my time is limited, I want to make sure I'm spending it to do something that matters, not just be the second, third or fourth site to post on the same topic. More on this as decisions are made.

One last thing - if you haven't already, maybe go ahead and nominate this blog and my app Vegas Mate for The Trippies - you have three days left before they close. Maybe, just maybe, I'll be so pleased with being nominated that I'll spill a bunch of new juicy secret details about everyone's favorite massively overpriced, failing joint venture project.

Cheers.

The Fontainebleau is about to open.

A re-invigorated Plaza project has broken ground and Boyd is halfway through putting up a gorgeous red-gold glass curtain wall on Echelon Place. Jim Murren is a semi-successful investment banker in Connecticut, the Marnell's own the recently joined Rio/Palms complex and Nevada's recently elected junior senator is attending the groundbreaking of a monorail extension that will bridge McCarran Airport, The Strip and Fremont Street.

Can we fast forward to 2017? I'm sure that's what some Las Vegas casino operators would wish for. It's hard to blame them.

Things look a bit sour for Las Vegas - August numbers notwithstanding, let's be honest - some of the city's best boom-time customers don't have any more money to spend on bottle service and $500 dinners at SW. Sure, the biggest players haven't lost enough to kill their gambling habit but that mid-tier backbone - successful young people, boomers and a smaller segment of folks truly blowing the rent on a weekend in Vegas - they're still pretty fucked up from this recession.

Well, at least it's not as bad as it is in Atlantic City where the top operator doesn't even want to own the other half of their property. In my mind, AC is toast.

As someone that has spent the last ten years as mostly excited about Las Vegas and now sells a product that is inexorably linked to the city, I have to say that things look very tough for the next few years.

A CB Richard Ellis study publicized today really laid out the bad news. The market won't be able to handle the massive increase in supply for some time. Thanks a lot CityCenter. At least we don't have any more rooms coming online anytime soon... Oh, crap... Thanks a lot Cosmo.

The Cosmopolitan will be the last property for awhile, and that's almost certainly a good thing. In a way, they may end up with an advantage - they can be the 'newest property on The Strip' for five years or more. That title worked great for The Aladdin. Oh well, whatever, nevermind.

Some of the issues mentioned in the report are structural - air traffic is more difficult than ever in the era of shoe-bombers and naked body scanners. Asian baccarat is slated to increase but that alone is not a market savior. The formerly solid underbelly of Las Vegas tourism - that combination of California drive-ins along with southern and midwestern vacationers... well, they're hurting... and that's not going to change anytime soon (damn that Obama-Reid-Pelosi-Boehner-Palin-McCain cabal!)

It's easy for Wynn to charge $200+/night for a weekend night when the town is half full but when Luxor, Excalibur, Monte Carlo and Treasure Island are all offering rooms in the sub-$50 range (sans the ridiculous resort fees), those rates are harder to justify... and how anyone could feel good about a $150/night room at Aria or Vdara mystifies me. Just say no.

But it's not the Wynns of the world I'm worried about. Aside from maybe Las Vegas Sands, they're probably best positioned to ride this turbulence out. As a lover of the history of Las Vegas, it makes me a little sad to see how little of their revenue now comes from the 'Gambling Capital of the World'. In quarterly earnings today, LVS reported that barely 15% of their revenue comes from their two Strip casinos. With Singapore on the rise, LVS is again a gaming company to watch, even if their numbers don't yet match Chairman Adelson's bluster.

Why am I writing this? I dunno. For whatever reason, a few stories today sucked me in and I felt compelled.

See you Saturday.

This time on the show:

Podcast-a-palooza - Oct. 30th, 2010. Our guest will be Tropicana Las Vegas President Tom McCartney - all the details are available on the Web site.

* PENN Swallows M
* August Gaming Figures
* MGM May Sell Borgata ; Not Making Much Money
* Room Rate Survey Data

* Vegas Gang 'Sure Bets'

Check out the show: http://www.vegasgangpodcast.com

Feel free to leave your comments below. If it's a question that you want asked on the show, please make that clear in your post. You can also send those to editor@ratevegas.com.

We're doing a Vegas Gang episode on Thursday so I guess I should just say thank you and leave it at that. This is great material.

Instead, I'm going to once again report on difficulty for MGM Resorts International - profits are still a Mirage - they just can't Wynn (get it?!? I'm so clever).

When a company does an early release of their financials and it includes several bullet points and a few paragraphs of figures, always read it in reverse. The most interesting stuff is always hidden behind a smokescreen of PR-speak.

The part of the company not infected with the virus that is CityCenter continues to deflate - down 13% for wholly owned operations (it was -16% last quarter). CityCenter may be a debacle but MGM needs the other places to keep the lights on.

As for Borgata, they did get an offer but it's below the amount they've been carrying on their books for the asset so they'll be taking a write-down this quarter to align their books with... well, reality. Will BOYD also have to do a write-down? I'd say probably.

When the Borgata thing is eventually settled, they'll not only get the cash from the sale but also their share of operations put into trust since the Pansy Ho debacle. That'll be one fat quarter when it hits but that's like when the drug dealer comes to your house and opens up his briefcase. He's not moving in, don't get too excited.

Say what you want about Borgata - and Atlantic City is certainly in trouble - but it is the top property there and has been helping to fill Jimbo's bank account every month. MGM may not have had much choice when it came to selling but that cash-flow is going to leave a hole of at least some size once the post-sale hangover wears off.

Interestingly enough, the day after we get news of improved Strip numbers (up 21%) for August, MGM reports taking an almost 10% hit in casino revenue for the quarter. How is that supposed to jive? This story cites baccarat as a bright spot but MGM's bac volume was down 6%. Does that mean that September cratered? Or were all these gains elsewhere? MGM still controls a huge percentage of the high-end bac play so this seems a bit odd.

As I previously wrote in my series on CityCenter, MGM is now going back to the markets for capital - they have loans of over a billion dollars due next year that they need to pay off. It will be interesting to see how much this influx of supply will impact prices on the open market. Much to the Swami's chagrin, stock was down 6% in after hours trading.

There is some good news, something else that I hinted at in my previous series - Aria is starting to swing over to the profitable side of the fence. It's had good volumes but this time around it got the hold percentages it needed to post a number in the black. ADR and REVPAR for Aria are both improving.

So I guess everything's fine...

This morning, I awoke to an MGM press release announcing their new iPhone app, featuring augmented reality. Of course, anything iPhone and Vegas related immediately gets me interested so I dug in.

For those unfamiliar, augmented reality (AR) is a technique by which a user sees a live video stream with computer graphics overlaid, based on their location. So for instance, you hold up your phone and on the screen you see what the camera lens sees but with information painted on top, typically points of interest, etc...

This app, Vegas Reality, is in the App Store now and I took it for a little spin. This will probably sound like sour grapes to some but honestly, I wasn't all that impressed. The app has several downsides in my mind. First, it only includes MGM Mirage stuff. Understandable I guess but that means that over half The Strip has no annotations at all.

Once you drill down on a resort, there's a little bit of high-level information, less than you'd find on a typical resort Web site. The augmented reality bit only shows you the names of the resorts around you, basically the same info you'd get from reading the marquee.

The app does integrate Twitter, a feature that's also in the forthcoming 2.6 version of Vegas Mate for the iPhone.

All that said, the app is free (search for 'mgm mirage' in the App Store) so there's no risk if you want to try it for yourself. If you're not in Vegas, it simulates your location as being at the corner of Tropicana and LVB. The app requires an iPhone 3GS or greater and does not work on the iPod touch at all.

One important question - AR requires the use of the video camera but that technology was recently banned at Luxor and Excalibur. Is this app not welcome there either?

I actually built about half of an AR feature for Vegas Mate 2.5 but I dropped it for an important reason - augmented reality isn't very useful in most real-world situations! Walking around with a phone in front of you isn't very desirable and due to the limitations of GPS technology, it doesn't work well inside, a place where something like this could be awesome if done right. Maybe someday, if we can get this kind of thing embedded into sunglasses...

I can imagine the pitch meeting for this app - AR looks fantastic in a demo but most users try it once and then put it back down. The AR revolution never took off. Trust me, we won't see people walking down The Strip, phones held aloft looking for these annotations anytime soon.

I expect more and more apps for all platforms from the resort companies. So far though, they're treating them more like they would Web sites. If they want to really knock people's socks off, they need to understand this is a new medium and adjust strategy accordingly.

This shows that sort of thinking but with a technology itself (AR) that's a bit half-baked.

There's an interesting story in the Sun about some of the new 'green' room designs showing up at the Hospitality Design Expo.

http://www.lasvegassun.com/news/2010/may/22/forget-how-firm-bed-check-out-shower/

Of course, a big part of CityCenter's marketing is their LEED status - an important achievement, no doubt. I'm all for reducing energy consumption and I'm glad builders are taking this into account in their designs but when I make my buying decisions, it's little to no part of it.

How about you?

Thanks to @detroit1051 for sending the link.

Wow, this seems like it is a full on shooting war now.

Perini paid to have the following 11 page letter posted in the Review Journal, asking Governor Gibbons to open an investigation into the MGM Mirage / CityCenter payment dispute.

Trust me, you want to read this...

http://media.lvrj.com/documents/Letter_to_Governor_about_MGM_Payment.pdf

Perini is playing hardball on this one, no doubt. They recently told investors in their conference call that they intend to fight for every penny they believe they are owed.

UPDATE: MGM has responded. What's interesting is that they are now paying the subs directly, clearly wanting to diffuse that part of a potential public relations nightmare. Smart on MGM's part.

Without the contracts and supporting docs, there's really no way to make a call on this either way. My prediction that City Center would end up as a giant lawsuit seems to have been proven correct.

Mike is back with Strip Walk and this time, he's heading into Palazzo, Luxor, CityCenter, Treasure Island, Caesars Palace and more.

Food reviews for Solaro (Palazzo) and Grotto (Golden Nugget).

Complete photo gallery is here:
http://photo.ratevegas.com/Other/Strip-Walk-April-2010/11815947_kraey

Today, MGM Mirage pre-announced their first quarter earnings, two weeks early. These are subject to change but let's be honest, they probably won't.

Why would a company pre-announce? Typically they have some information that is out of alignment with what the market knows and wants to give it some time to absorb. Often it's bad news...

Let's look at MGM's announcement - keep in mind that MGM Mirage only owns half of the CityCenter joint venture (the good half?)

MGM has always been very helpful in breaking out their results by property. Unfortunately, it appears that they are reporting their 50% of CityCenter's results as a single blob - no way to know Aria vs. Mandarin vs. Vdara vs. Crystals. Hopefully we'll get more detailed info in the real quarterly filing.

Compared to the year ago quarter, this time they don't have the benefit of the TI sale nor the insurance income from the Monte Carlo fire. Also, they had to write down the residential inventory at CityCenter, all of which hurt them compared to 2009Q1.

What is interesting - the CCJV netted $24 million from poor saps that abandoned their deposits on residential units. Probably can't count on that cash for 2011Q1.

CityCenter is reporting an operating loss of $255MM in the first quarter, though $171MM of that is a charge related to the write down of the residential inventory. Aria's loss is pegged at $66MM, though most of that is depreciation expense.

Did you spend time at Aria and wonder why you didn't hear your neighbor in the room next door? Chances are, you didn't have one:

"Occupancy percentage at Aria was 63% with an average daily rate of $194."

Ouch. That figure, 63%, is pretty darn low. That said though, the $194 isn't too bad - you wonder if they had lowered rates more if they could have boosted the occupancy.

As a comparison, in the first full quarter Wynn Las Vegas was open, it had an ADR of $264 and 93% occupancy... Granted, 2005 was a very different time for Las Vegas so even mention that here is probably grossly unfair.

Their non-CityCenter results aren't great either - Adjusted Property EBITDA for the wholly owned stuff is down almost 20%. Table games hold was down (it was at the high end of the range in 2009), though volume was up compared to 2009. REVPAR took another hit, to under $100 at $94.

Because of the charges and the prior year having the TI sale, they swung from $355MM operating profit to an $11MM loss. MGM Mirage has worked hard to pay down its debt and that's starting to show in the results as interest expense decreases.

So - tough quarter for MGM but they have some cash and borrowing available so they'll probably ride it out just fine. Hopefully in Q2 we'll see Aria firing on a few more cylinders - hard not to think that if this bleeding continues that they'll shed some additional service folks and degrade the experience for the guests.

Complete Release:
http://phx.corporate-ir.net/phoenix.zhtml?c=101502&p=irol-newsArticle&ID=1413122&highlight=

In other news, the company announced a private placement:
http://phx.corporate-ir.net/phoenix.zhtml?c=101502&p=irol-newsArticle&ID=1413121&highlight=

Vegas Gang is back!

Win an iPad! Details here: http://www.ratevegas.com/blog/2010/03/submit_your_veg.html

* Station Casinos Re-Org
* CityCenter's First Hundred Days
* CityCenter vs. Perini
* Atlantic City Mini-Casinos
* Closure of CalNeva

Feel free to leave your comments below. If it's a question that you want asked on the show, please make that clear in your post. You can also send those to editor@ratevegas.com.

The development of CityCenter was notable for all sorts of reasons - a massive, expensive new development on The Strip is always a big story.

By now, everyone knows about the problems, most notably what happened with the stunted Harmon Hotel tower. Well, it seems that since the project is now up and running, it's time for the lawsuits to start flying.

http://www.lasvegassun.com/news/2010/mar/29/strip-slugfest-pits-owner-builder/

As the Sun says - it could get ugly.

Mike's adventures continue: Encore Las Vegas, Bellagio, Aria, The Crystals and a stop at Valentino Grill @ The Venetian.

Click through to read the complete text. Photo gallery is here:
http://photo.ratevegas.com/Other/Strip-Walk-March-2010/11542241_VD4fu

Las Vegas Sands - Net Income: -$113.9 million (loss) Revenue: $1.28 billion LV Sun

MGM Mirage - Net Income: -$434 million (loss) Revenue: $1.45 billion LV Sun

Harrah's Entertainment - Net Income: $295.6 million Revenue: $2.09 billion LV Sun

Wynn Resorts - Net Income: -$5.2 million (loss) Revenue: $809.3 million More Info

Boyd Gaming - Net Income: -$1.0 million (loss) Revenue: $384.9 million More Info

This thread will be updated as other companies report.

This time on the show:

* MGM's Aria - 2 Months In
* MGM Mirage Exits Atlantic City / Wynn Enters Philadelphia Market
* Greenspun / Station Casinos Relationship Disintegrates
* Lake Las Vegas Shuts Down
* President Obama's Remarks and Visit
* Harrah's Interested in The Palms?

Check out the show: http://www.vegasgangpodcast.com/2010/02/vegas-gang-44-february-25th-2010/

Feel free to leave comments below. Trivia questions can be sent to editor@ratevegas.com - we might use yours on the show.

This weekend, hoping to break a long set-in case of the burnout blues, I decided at the last minute to head to Las Vegas. Some friends would be in town, it sounded like fun. Hell, I might even get to see the president (I didn't).

Continue after the jump for the rantings and raving of a madman.

Mike is back with another Strip Walk. This time we venture through TI, Bellagio, PH Towers, Palazzo, Aria, NYNY and more, including a mini-review of the Dal Toro restaurant at Palazzo.

Enjoy.

Our own mike_ch is back with a 'mega' Strip Walk, including his first time at CityCenter.

As regular readers know, Mike is never short of opinions - you'll get his full take on the new MGM Mirage development as well as a boatload of photos.

This is a good one - you don't want to miss it. Enjoy.

Complete gallery: http://photo.ratevegas.com/Other/Stripwalk-January-2010/10930508_gxkui

This time on the show:

* CityCenter Opens
* 2009 Recap/2010 Look Forward
* Gary Jacobs and MGM Mirage

Have a Happy New Year. We love you.

http://www.vegasgangpodcast.com/2009/12/vegas-gang-42-december-31st-2009/

This is a short post about something I haven't been able to get out of my head. I had lunch at Julian Serrano inside ARIA this past Friday. Serrano is doing tapas at this joint, unlike the far more formal Picasso at Bellagio.

Wow. I can't wait to go back.

Not only is it open for lunch but given the restaurant's tapas format, it's super easy to try a bunch of different flavors without committing to one dish. In some way's it's the anti-buffet - small portions of the best food you'll ever have.

The shots of what I tried:

http://img129.yfrog.com/i/ilez.jpg/
http://img111.yfrog.com/i/kr4o.jpg/

any my personal fave: http://img158.yfrog.com/i/dns.jpg/