It’s no shock that all eyes have been on the multibillion-dollar CityCenter project in Las Vegas as of late. As HotelNewsNow.com’s Patrick Mayock reported last week, the new 67-acre centerpiece of the Las Vegas Strip has been worth the five-year wait. It is spectacular in all ways, even though it isn’t even fully completed. But judging from the reaction after last week’s grand opening, the project is going to be a success.
But it’s only a part—albeit a big part—of how Las Vegas is going to add 10,000 guestrooms to a supply of 140,000 that’s already steeply discounted. When I was there a couple of weeks ago, the talk among the common folk—the cabbies, blackjack dealers and restaurant waiters and waitresses—was about CityCenter siphoning existing demand from hotels.
That’s not necessarily true, according to Art Jiminez, senior director of leisure sales for the Las Vegas Convention and Visitors Authority. Speaking as part of a panel at the Hotel Electronic Distribution Network Association’s meeting at The Wynn, Jiminez said there’s a history of new projects creating more demand in Las Vegas—and city leaders expect the same thing to happen with CityCenter.
“In 1989 when the Mirage opened, we saw double-digit increases in visitation next year. The same thing happened with Bellagio,” Jiminez said.
|Rooms in the Golden Nugget's new Rush Tower (like this one pictured) are befitting of most Strip properties.
He said that Las Vegas has been hit harder by the recession than any other market in the world, but expects the opening of CityCenter to be a big part of the city’s fortunes.
“I don’t think we’ll see 2007 (average daily) rates (at hotels) in Las Vegas for a very, very long time, but we’ll see better rates than we see today,” he said. “We’re still going to get 36 million visitors this year and have 82 percent occupancy.”
Jiminez said Las Vegas as a destination soon is going to launch an online rate and availability tool to help visitors more easily book hotel rooms. That tool, along with some promotions, could help start turning the tide in Sin City.
That all might be true, but a turnaround is not going to happen overnight. The major reason for the delay in the return of the boom times is supply. Adding 10,000 rooms to an already bloated inventory is a huge obstacle. And while the CityCenter’s hoopla is inspiring, there are many other factors that will play into a recovery for the Las Vegas hotel industry.
Trouble in paradise
The biggest eyesore for Vegas is the half-finished Fountainbleau resort on the north end of the Strip. It’s deserted and is a symbol of what’s happened to the economy during the past two years. It is sitting there about 60 percent complete and its owners don’t know what to do with it. The 3,812-room, 68-floor hotel/condo/casino project is being built on 24.5 acres where the El Rancho and Algiers casinos once stood.
According to reports, carpet, wallpaper and other finishings are in guestrooms that were outfitted up to the 30th floor before lenders pulled the plug on financing, forcing the project to seek bankruptcy protection in June.
Financier Carl Icahn, in the meantime, is moving ahead with plans to buy the project during an auction next month. Icahn has offered $156.2 million in cash and financing as the auction's stalking horse bidder. Developed at an original cost of US$2.9 billion, it’s estimated that it will cost US$1.5 billion to finish the project.
And we can't forget about Boyd Gaming's Echelon project. The US$4.8-billion project sits partially completed on 87 acres where The Stardust, Westward Ho and Budget Suites used to sit. That projected has been halted, and completion might be three to five years away. Once it is completed, the property will have nearly 5,000 guestrooms.
There are other troubles in paradise. During the past 10 days, Binion’s Hotel & Gambling Hall, a downtown hotel-casino icon, closed its hotel rooms, and the Sahara Hotel and Casino announced it would temporarily shutter two of its three hotel towers. That’s not good news any way you look at.
Signs of growth
Lost in the hubbub over CityCenter is the US$750 million expansion at the Hard Rock Hotel & Casino. The off-Strip property next week is opening 359 rooms in its HRH Tower after opening about 500 new rooms in its 17-story Paradise Tower earlier this year.
In addition, the new Rush Tower at the Golden Nugget in downtown Las Vegas has been overlooked as well. With rooms befitting of most Strip properties, the new tower offers a whole different experience for guests who prefer the intimacy and historic feel of downtown Vegas.
|The new Rush Tower offers a whole different experience for guests who prefer the intimacy and historic feel of downtown Vegas.
I stayed at the property during the Vantage Hospitality conference earlier this month and must say it was impressive. While it lacked superfluous finishings such as crown molding, the new tower is a great new addition to the downtown inventory.
What I liked: no traipsing through a 10-mile-wide casino to get from the front desk to the room elevators (they’re just around the corner); modern, tasteful décor; plenty of dining options (including a Chart House restaurant that also is owned by property owner Landry’s); and an aquarium theme that is worth a visit to the property even by guests not staying there.
The US$150-million, 25-story tower includes more than 500 guestrooms that are 20 percent larger than rooms in the hotel’s other two towers. It includes four Penthouse suites and 70 junior corner suites—some with fantastic views of the Strip that could be the best bargains in the city.
All in all, there’s a mixture of good news and bad news coming out of Las Vegas. It remains to be seen if it is digging its own grave by adding so much inventory during such economic chaos. My best guess is that by 2012, the good times will erase the questions created in 2009, and even more rooms will be in the planning stages.