Vol. 4, No. 4, April 2008
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Going Up or Not?
But in the past year, several potential projects have bit the dust, including the W Hotel, the Edge Resort, George Clooney’s Las Ramblas, Maxim and several others. Others have been delayed, such as Southern Highlands. Announcements we have been told to expect have not come to pass, including a Marriott casino; a project on the site of the Polo Towers; a joint venture between MGM Mirage and Kerzner International across from the Sahara; a CityCenter-like development by Harrah’s Entertainment on the site of Harrah’s, Flamingo, Imperial Palace and Bill’s Gamblin’ Hall and Saloon; and, up north, a Station Casinos project in Reno.
There are serious reasons for the failure to develop these projects. Mostly it’s financial. A combination of tight credit markets and weakening business fundamentals have reduced the money available to investors to build these projects.
So what’s the real story? It’s different for every development. Casino Connection staff has developed reports on the following proposals, either announced, planned or actually under construction.
Moulin Rouge
Developers: Moulin Rouge Development Corp. and Republic Urban Properties, LLC.
Cost: $700 million to $1 billion
Plans: 700-room hotel, 30,000-square-foot casino, 50,000 square feet of meeting space, concert venue and a small jazz center.
Scheduled Opening: 2010
The Moulin Rouge casino has sat vacant for far too long. After a number of false starts, the Moulin Rouge Development Corp. is now moving full-speed ahead on this project. It was recently announced, and the developers have several zoning issues to address with the city before site work can begin, but MRDC and its development partner Republic Urban Properties are confident that work will begin in 2009. While everyone wants to see this historic property rise like a phoenix, it seems something of a long shot at this point to put money behind it. Let’s face it: The location isn’t the greatest and $1 billion is a lot of money to round up from an investment market that has taking a wait-and-see approach with Las Vegas.
Crown Las Vegas
Developers: Crown, LLC
Cost: $5 billion
Plans: 5,000 hotel rooms, 250,000 square feet of gaming, undisclosed retail, conference and amenity space.
Scheduled Opening: The first phase could open as early as 2011 with the project complete in 2013.
James Packer’s Crown, LLC, is making a splash in the Las Vegas gaming scene with investments in Harrah’s Entertainment and Station Casinos and its recent acquisitions of the Cannery Casino Resorts. The company is also investing in Fontainebleau, a neighboring project to the proposed Crown Las Vegas. Crown is a sky-high dream, with original plans calling for a 1,888-foot hotel tower, a height that would make it the tallest tower in the western hemisphere. The Federal Aviation Administration, however, chopped more than 200 feet off the proposed height to protect planes using the north/south runways at McCarran. At 1,064 feet, it would only be the tallest hotel tower in the U.S. All of that may be moot, however, because the company is preparing to launch a “strategic review” of its plans “in light of what is happening in capital markets,” according to Rowen Craigie, Crown chief
executive.
FONTAINEBLEAU
Developers: Fontainebleau Resorts
Cost: $2.8 billion
Plans: 63-story hotel tower with 4,000 rooms, 95,000-square-foot casino, 60,000-square-foot spa, 3,300-seat performing arts center, 1,000 condo units, 180,000 square feet of retail space and 400,000 square feet of conference space.
Scheduled Opening: Late 2009 or early 2010
Construction is moving along on this project—they’re closing in on the 30th floor—but you wouldn’t really know it from the amount of media coverage it is getting. Fontainebleau Las Vegas really is a legitimate and significant project that is part of the redevelopment of the north end of Las Vegas Boulevard. Money shouldn’t be much of an issue, with Australian billionaire James Packer owning almost 20 percent of the project through his gaming corporation, Crown. As the opening date comes closer, expect to hear a lot more about this project.
MGM CityCenter
Developers: MGM Mirage
Cost: $8 billion
Plans: 4,000 hotel rooms and condos in a casino hotel, 2,300 of branded hotel towers, 1,650 luxury condo units, 500,000 square feet of retail space, 165,000 square feet of casino space, 225,000 square feet of meeting space and a 70,000-square-foot spa.
Scheduled Opening: Late 2009
Where to even begin with this one? It’s going to have its own dedicated fire station and power plant! That’s certainly a first for a casino project. It’s going to need at least 1,000 dealers to staff all the tables, and who knows what kind of support team a project of this size will require. CityCenter will feature a Mandarin Oriental Hotel, Vdara condotel tower, Veer luxury condos, a Harmon condotel tower… Harmon Avenue will actually meander through the buildings. What more can you say? This is literally a city within a city. CityCenter was the first metaresort announced, and there has never been any fear that it would be completed.
Echelon Place
Developers: Boyd Gaming
Cost: $4.8 billion
Plans: 5,000 hotel rooms in five towers, 140,000 square feet of casino space, 300,000 square feet of retail space, a 750,000-square-foot convention center, 4,000-seat and 1,500-seat theaters.
Scheduled Opening: Fall 2010
Boyd Gaming’s Echelon Place will be a historic project for the company, and it will be appropriately located at the site once occupied by the historic Stardust. Echelon marks the company’s first foray into a full-fledged destination resort, and its taking a “go hard or go home” philosophy. Boyd is partnering with General Growth Properties (Fashion Show Mall, Palazzo Shoppes, Canal Shoppes at the Venetian) to manage the retail operations. It is partnering to bring branded hotels including the 350-room Shangri La Las Vegas, the 860-room Mondrian Las Vegas and the 550-room Delano Las Vegas. Boyd will handle operations at the 2,500-room Echelon Hotel. Construction is progressing with the first floors of the main tower, the Shangri La and the parking garage beginning to take shape. While many were sad to see the Stardust go, this new project is destined to be a new kind of star on the Strip.
Encore
Developers: Wynn Resorts
Cost: $2 billion
Plans: 2,034 suites, 71,000-square-foot casino, and 60,000 square feet of convention space.
Scheduled Opening: December 2008
While Steve Wynn won’t win any awards for the clever title of his follow up to the successful Wynn Las Vegas, Encore remains a powerhouse behind the upscale development of the former value-oriented mid and north Strip area. The property looks like a mirrored reflection of Wynn Las Vegas, but with more than 2,000 rooms—all of them suites—it’s certainly a grandiose vision. Las Vegas Sands Corp. head Sheldon Adelson had the first laugh when he beat his rival Steve Wynn to the punch with Palazzo, an all-suite hotel at the corner of Sands Avenue and Las Vegas Boulevard, but we won’t know until later this year who will end up enjoying the last laugh.
Aliante Station
Developers: Station Casinos
Cost: $675 million
Plans: 202 hotel rooms, 14,000 square feet of meeting space, 700-seat show room and 16-screen movie theater.
Scheduled Opening: Late 2008
Station Casinos has a knack for getting up and running just about the time a Las Vegas suburb takes off. The company has shown impeccable timing with Green Valley Ranch in Henderson, and Red Rock Casino in Summerlin. So with North Las Vegas growing by leaps and bounds, its not surprising to see that Station is making final preparations for a late 2008 opening of Aliante Station. The new property will be similar to Red Rock, but will have fewer rooms. It will also share a similarity with Red Rock and Green Valley Ranch in that is a 50-50 joint venture between Station Casinos and the Greenspun Corporation. The casino will be the first near the growing area of North Las Vegas along the 215 beltway between I-15 and U.S. 95, but as is the Station tradition, it brings more than gaming to the area. Aliante will increase the dining and nightlife options in the area, with six new restaurants and a movie theater and a bowling alley when the second phase is completed.
Eastside Cannery
Developers: Cannery Casino Resorts
Cost: $250 million
Plans: 16-story hotel tower with 307 rooms, 65,000-square-foot casino, 20,000 square feet of meeting space and a rooftop lounge overlooking the Las Vegas Valley.
Scheduled Opening: Summer 2008
Construction is moving along nicely at the Eastside Cannery on the Boulder Highway. After a groundbreaking in May 2007, it was just seven months until a toping off ceremony was held in December 2007. The Nevada Palace marked its last day of operation in late February and it will be a parking lot pretty soon. The Eastside Cannery is supposed to bring the same mix of gaming, dining and entertainment options that Cannery Casino Resorts brought to North Las Vegas in 2003. The Boulder Highway has been clamoring for something new for some time, and the casino will mark the first new hotel tower in 13 years. Locals love to check out new casinos, so that should bode well for the Eastside Cannery. While it would be nice to get through the rest of this without mentioning James Packer again, his gaming company is working to finalize the purchase of Cannery Casino Resorts.
Cosmopolitan
Developers: Global Hyatt Corp. and Marathon Asset Management
Cost: $3 billion
Plans: 75,000-square-foot casino, 3,000 condotel and hotel rooms, 150,00 square feet of convention space and 300,000 square feet of retail, restaurant and entertainment space.
Scheduled Opening: Late 2009
This was a close one, and for a few minutes there, it looked like the Strip may have its version of a Third World, half-completed construction project wedged between CityCenter and Bellagio. Fortunately for former Cosmopolitan developer Ian Bruce Eichner, who defaulted on a $700 million construction loan, Global Hyatt Corp. and Marathon Asset Management agreed to provide the equity needed to keep the project heading toward its scheduled late 2009 completion date. Hyatt and Marathon were lenders to the project—and Hyatt has known since 2005 that it was going to run the 3,000 condo and hotel units at the new property—so it wasn’t a big surprise that they stepped up to the plate. It is not clear how the move by Duetsche Bank to foreclose on the property will impact the future of the property. The troubles at this property show how finicky the credit and financing markets are and that these projects are going to become increasingly difficult to bring to market.
Plaza Las Vegas
Developers: Elad Properties
Cost: $5 billion to $8 billion
Plans: 175,900 square feet of casino space, 4,100 hotel rooms and 2,600 condo units in seven towers, 135,000 square feet of restaurant space, 350,000 square feet of retail area and 540,000 square feet of convention and meeting space.
Scheduled Opening: 2011
Elad Properties paid a record-setting $33 million an acre to wrest away the New Frontier from Phil Ruffin, which it plans to replace with a gigantic replica of its New York City landmark Plaza Hotel. It is in the middle of a legal battle with Tamares Group, owner of the Plaza Hotel and Casino in Downtown Las Vegas, over the Plaza name, but Elad is confident it will succeed in court and start work on the project in 2008. After the hiring of former MGM Mirage exec Danny Wade to run the project, the project received its final approvals last month. But with the troubled credit market it wouldn’t be surprising if Elad decides to postpone work on the property. It is difficult to say at this point which way things will go. The company is well-heeled and the New Frontier has been razed, so it isn’t outside the realm of possibility that Elad will deliver to the Strip what renderings suggest will be a beautiful property.
Las Vegas Sports Arenas
Developers: REI Neon/ Harrah’s Entertainment
Cost: $1 billion/ $500 million
Plans: REI Neon was awarded a city contract to build a sports arena, casino and hotel complex near the Arts District; Harrah’s announced plans for a 20,000-seat stadium on Koval behind Paris Las Vegas and Bally’s.
Scheduled Opening:
No dates announced
M Resort
Developers: M Resorts
Cost: $1.8 billion
Plans: 11-story hotel tower with 400 rooms, 100,000 square feet of casino space, 40,000 square feet of conference space, a 100,000-square-foot pool area and a 70,000-square-foot events center.
Scheduled Opening: Late Spring 2009
Progress on M Resort is clearly visible from the I-15 south of Las Vegas, and Anthony Marnell III is confident that the project will open on time and on budget. Any doubters need simply to look at the fact that MGM Mirage signed on to help finance $160 million of the project. Marnell says his new casino will cater to locals in the rapidly growing Henderson and Southern Highlands suburb, as well as tourists. Of particular interest are motorists driving in from Los Angeles, for whom M Resort will be the first property marking the edge of Las Vegas. And, the casino will also be strategically positioned to take advantage of plans to build a second airport south of Las Vegas in the Tonopah valley. The southern edge of the Las Vegas Valley is definitely underserved when it comes to casinos, so it would be difficult to imagine a situation in which M Resort won’t prove a success as the population continues to swell.
NORTHERN NEVADA
Northern Nevada isn’t experiencing the same building boom that’s happening in Las Vegas, but there are a number of new and exciting projects coming to the area that are worth looking at.
Jethro Bodine’s Beverly Hillbillies Mansion and Casino
Developer: Max Baer Jr.
Cost: $120 million
Plans: 40,000-square-foot casino, two 240-room hotel towers, undisclosed conference, meeting and retail space.
Scheduled Opening: 2009
“Jethro”—Max Baer Jr., that is—has been trying to get this project off the ground for years—he even considered bringing it to Las Vegas at one point—and it looks like it is finally a go. It’s really hard to say how strong of a draw the Beverly Hillbillies theme will be, but northern Nevada and Douglas County really need some exciting new projects, and this one certainly fits the bill. While some aspects of the project like the flaming oil derrick have been rejected, county officials seem willing to do as much as they can to help the project along.
Sierra Gold
Developer: Golden Gaming Inc.
Cost: $100 million
Plans: 112-foot hotel tower with 220 rooms, 13,000 square feet of conference space and 65,000-square-foot casino.
Scheduled Opening: 2009
Everything that Blake Sartini has touched has turned to gold, including the slot route he developed into Golden Gaming Inc. While there are some zoning issues regarding the height of the hotel tower, everything else should be a go. Carson City boosters are really excited about the conference space, and we’ve seen time and again that projects do much better with the full backing and support of city officials and tourism promoters.
GoldTown Hotel and Casino
Developer: American Vantage Companies
Cost: $250 million
Plans: 300 hotel rooms, 105,000 square feet of casino space, a bingo parlor, a 250-seat concert stage and a business and events center.
Scheduled Opening: 2009
GoldTown Hotel and Casino is another new development in Douglas County that officials hope will revitalize the area’s economy. Developers plan to start moving dirt soon, and wrap up construction in 15 to 18 months. Some think that having two large projects in close proximity might be an additional boost and help draw in more tourists from California.
Room to Expand
Not only are there a huge number of new projects cleared for landing in Las Vegas, but there are also several noteworthy expansion projects underway, too. Clearly, no matter what is happening with the credit market and the Wall Street warriors, the people on the ground in Las Vegas certainly think it’s appropriate to continue building.
Harrah’s Entertainment tops the list at Caesars Palace with the most expensive expansion project. The $1 billion expansion will bring a new 665-room hotel tower called Octavius, three pool villas, add 250,000 square feet of convention space and renovate 512 older rooms. The project should debut in early 2009.
Morgans Hotel Group and finance partner DLJ Merchant Banking Partners are also working an a massive expansion at Hard Rock that could come in with a final price tag between $750 million and $1 billion. The heft price brings a new 550-room hotel tower, a separate 400-suite VIP tower, 30,000 square feet of new retail space, 35,000 square feet of new casino space, an expanded pool area and a new theater. It has been suggested that there may be trouble on Paradise Road, but the work is already underway, and the 2009 completion date remains in sight.
The Silverton Casino Lodge has decided to scale back its expansion plans, putting the $500 million new hotel project on the shelf until the credit market improves. Still, the property is in the middle of a $185 million project that will add 35,000 square feet of casino space and a new parking garage. The hotel expansion finishing touches on what looks like an impressive project, so hopefully things pick up over there.
It might not even be worth mentioning at this point, but there hasn’t been a lot of news from Downtown Las Vegas. That’s because there aren’t a lot of planned projects. All the major work like the Four Queens and Golden Nugget are either complete or almost complete. The Golden Nugget is still looking to build a new hotel tower, but when that project will actually start remains a mystery.
The one project that had everyone excited was the Lady Luck renovation. Three days after the Henry Brent Company bought the Downtown casino for $10.3 million in 2005 it announced plans for a major renovation. The Lady Luck closed its doors in February 2006 for remodeling that was scheduled to take about 12 months.
Fourteen months later, the Henry Brent Company sold the property to CIM Group for $20.4 million. CIM Group is expected to announce its renovation plans “soon.” At this point we’ve been waiting two years and won’t believe anything on this project until Mayor Oscar Goodman is sipping a martini and cutting a ribbon at the grand re-opening.
