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They burned the Monte Carlo ... and may get away with it
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They burned the Monte Carlo ... and may get away with it
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Posted At : September 10, 2009 12:03 PM | Posted By : D McKee
Related Categories: LVCVA,TV,Lake Tahoe,MGM Mirage,Bally Technologies,North Las Vegas,Marketing,Alex Yemenidjian,Atlantic City,The Strip,CityCenter,Sheldon Adelson,Laughlin,Detroit,Economy,Reno,Station Casinos
Dipping into the dispatch box, S&G finds the following tidbits, courtesy of the nice people at J.P. Morgan:
Alex Yemenidjian is serious about revamping the Tropicana Las Vegas. He's just inked a contract with Bally Technologies for a player-tracking system and other BYI goodies ...
... fading interest in MGM Grand Detroit has caused MGM Mirage to take it off the market. Also, with the company looking at price concessions to its CityCenter condo buyers (i.e., forfeiting money it was counting on to finance CityCenter), it may need to borrow against its Detroit palace, one of the few MGM properties still unencumbered ...
... Atlantic City, like Macao, is and will probably always be essentially a daytripper market. So there's symmetry in the fact that China State Construction Engineering Corp. has been signed to finish the stalled Revel project on the Boardwalk, to the tune of $1.7 billion. A July 11 opening is predicted. This is the best news to emerge from Atlantic City in quite a long while.
Speaking of good news, gaming revenues for Nevada's July are in and, basically, they don't suck. Yes, the Silver State was down 8% and the Strip was 11%. But June's year/year comparisons were far suckier (-15% on the Strip), so there's some consolation to be had. In fact, compared to a series of truly craptacular year/year comparisons -- all in double digits, except for last May -- it's darn near cause for celebration.
Table game drop was down overall but the casinos played lucky, particularly at baccarat. (Watch the first-season Mission Impossible episode "Odds on Evil," if you need a quick primer on this game. You'll get scintillating performances by Martin Landau and Barbara Bain in the bargain.)
Slot play is way down (-17.5% win on -15% handle) and North Las Vegas, bouyed by Aliante Station, was the only part of Clark County to have a positive month. Laughlin got hammered pretty badly (-19%) and neither Reno (-21%) nor South Lake Tahoe (-33%) seems likely to ever fully recover from tribal competition across the border, Tahoe especially. If there was a moment for some "unbundling" by overexposed companies, this is it.
Didn't get the memo. Would somebody break into the R&R Partners biosphere and let oxygen into the office of Billy Vassiliadis? "Billy V" was the author of this boneheaded pensée, which he shared with the Los Angeles Times:
"You've got to drop your rates, but you don't want to create a sense that this is a discount experience or that the experience itself has been diminished."
What the ... ? Las Vegas' recent success was built on the perception (and actuality) of a "discount experience," and lower prices are unlikely to "diminish" a tourist destination that is now synonymous with exclusivity and unaffordability. Vassiliadis, like Sheldon Adelson and the Las Vegas Convention & Visitors Authority, seems convinced that the current doldrums are -- to use my favorite Internet-board gaffe -- "a blimp [sic] on the radar."
They need to wrap their heads around the reality that 2004-like levels of business were damned good at the time (superb, in fact) and that Vegas needs to get back to the value-based messages that fueled the preceding 15 years of growth. Or, as David G. Schwartz writes in a particularly trenchant DieIsCast.com entry: "Of course, unpredictable events can make a hash of any predictions, so it’s possible that five years from now the casino industry will be employing 100,000 more people than it does today. That would be after the federal government offers Americans a $10,000 annual tax credit against travel to Las Vegas, and Las Vegas alone."
Seems like some folks in the marketing bidness should be taking Dr. Schwartz's classes.
Having borrowed money to buy the Las Vegas Hilton five years ago at a dirt-cheap $200 million, Colony Capital -- those financial wizards -- borrowed $250 million more to retire the first loan. (Does Colony intend to pay off the second loan by taking out a third?)
At some point, Colony may have to start like, you know, paying down these loans ... but not yet. It's extended the maturity on Loan #2 into 2011. The story (second item) is somewhat confusingly worded, but it sounds like Colony is down to its last extension. And the LVH is now losing money. Perhaps Colony should ring up Penn National Gaming and see if CEO Peter Carlino wants to talk "flip." It's still a classy property with a wealth of history and unbeatable proximity to the Las Vegas Convention Center. There are much worse deals to be had out there (*cough* Fontainebleau *cough*).
Also: LVH headliner Barry Manilow is reportedly mulling a leap over to Paris-Las Vegas, another augury of trouble for Colony. Manilow's departure would leave the LVH with some tight trousers to fill.
Another setback for Ed Ad. Its attempt to lease the southeast portion of its ex-New Frontier acreage to a "Dinner in the Sky" outfit (complete with a 160-foot crane) got the back of the hand from the Clark County Commission. Both Boyd Gaming and Wynn Resorts balked at the prospect of diners dangling high above Echelon and Wynn Las Vegas. However, there's some pretty freaky shit on the Strip already and this seems tame by comparison. God knows, it couldn't be worse than the lametastic "Sirens of T&A" or whatever Phil Ruffin's nautical titty show is called.
Posted At : July 20, 2009 02:07 PM | Posted By : D McKee
Related Categories: Harrah's,Tourism,The Strip,Station Casinos,LVCVA,Fontainebleau,Encore,Labor,Colony Capital,Economy,MGM Mirage,Wall Street,Morgans Hotel Group,M Resort,Boyd Gaming,Plaza,Cosmopolitan,Steve Wynn
Just last week, UNLV's historical sage, Dr. Eugene Moehring, was taking a dim view of the fate of Las Vegas' working class. Now comes the Wall Street Journal to back him up with some sobering reportage.
Even at union salaries, Culinary Union-represented employees are hardly living on Easy Street. According to the WSJ's Tamara Audi, a hotel maid can expect to make slightly under $30K/year. She also finds a fry cook who was pulling in $36K annually, before he was laid off. (He's now making much less at union-free M Resort.) This goes to show not only the importance of union representation but also how close many of these people are to the economic precipice.
Many of the causes of our current plight (like real estate speculation) are outside my remit. However, a great deal of the blame falls upon casino CEOs who -- encouraged by banks that pushed too-easy credit like "happy dust" and by cheerleading Wall Street analysts -- succumbed severally and variously to a collective psychosis.
The Plaza: Rooms available, starting the 12th of Never.
The hyper-optimistic mentality that produced a rapid-fire succession of (in no particular order) CityCenter, Cosmopolitan, Fontainebleau, Echelon, Palazzo, Encore, the Hard Rock Hotel acquisition/expansion, and even will o' the wisps like Crown Las Vegas and Viva, rested upon a bizarre assumption. Namely, that the Las Vegas Strip could not only absord literally thousands upon thousands of new rooms (preponderantly at the high end) but could do in a compressed time frame.
A few companies even thought this could be done even after they'd glutted themselves with LBO debt. (True, Harrah's Entertainment now says it never intended to go the metaresort route but the available evidence testifies otherwise.) As I've written before, a bubble was mistaken for a baseline, thereby magnifying the consequences when the economic fundamentals began to crumple.
Distance evidently lends clarity, at least to Harvey Perkins of East Coast-based Spectrum Gaming Group. He calls for a complete rethinking of the luxury-based Vegas business model, repositioning the Strip's posh palaces slightly downmarket. It'll mean eating a lot of pride but what alternatives are there?
It's a glass half-full perspective, which is preferable to the overdose of gloom quaffed by MGM Mirage CEO Jim Murren. He darkly prophesies, "There won't be another property built in Las Vegas for a decade."
Just wait 'til the next economic upturn and see if Murren is still saying kaddish. There will be new casinos in Las Vegas before 2019, I'm fully confident -- but they'll be ones positioned around affordability and (hopefully) generating double-digit ROI. Because, frankly, Las Vegas isn't the investment it used to be.
The St(ump) Regis, as it was to have been.
Then there's the schizoid-sounding Sheldon Adelson, who harrumphs, "I don't see any opportunities for any development in Las Vegas." Emphasis added; the Las Vegas Sands CEO seems to swing from bullish to bearish by the day.) It'd be nice for Sands if Adelson had been vouchsafed this insight before he started work on the St(ump) Regis in the midst of a condo-market meltdown. Now it's big bloody nose right betwixt the eyes of the Venetian and Palazzo.
The polar opposite of Adelson is Culinary Union boss D. Taylor who sounds like a flack for the Las Vegas Convention & Visitors Authority, so giddy is his optimism. Hey, D., have you talked to your workforce lately -- you know, the ones who just had to defer a $710/year pay bump?
At least some amusement is to be had from the Strip map prepared for the WSJ by Bill Lerner's new outfit, Union Gaming Research:
I don't think I'd take investment advice from a firm that doesn't know the correct spellings of "Echelon" or "Caesars." City Center seems to fallen off the map entirely. It'd also take issue with the classification of many sites (like the in-foreclosure FX Real Estate plot) as "ceased or delayed" as there was never any work to cease or delay at, say Elad Properties' "Plaza" site or Crown Las Vegas (aka "Archon"). Ditto MGM/Kerzner, Africa Israel, etc. However, the Cosmo, which really is in limbo, doesn't make onto the map.
At any rate, as land prices on the Strip continue to return to earth, there's going to be plenty of prospective acreage for the company that's ready, willing and able to build a mid-market casino on the Strip.
What do you do if your expensively wrought, expensively litigated marketing slogan has jumped the shark and become the most tiresome cliché in America.?If you're the Las Vegas Convention & Visitors Authority, you figure out a way to monetize the fact that your catchprase is played out ... thereby ringing up a few extra changes upon it. Congratulations to R&R Partners for this splendid example of advertisement jujitsu.
Even as MGM Mirage CEO Jim Murren and Treasure Island owner Phil Ruffin are preparing to stomp out any incipient recovery in Las Vegas by jacking up room rates, words of restraint are coming from the unlikeliest of sources: Mayor Oscar Goodman. Quoth Hizzoner: "There are a lot of people [here] now; I understand they may not be spending as much as they have in the past."
(And if Ruffin really doesn't want $50/night customers, as he's said, I can inform him that Harrah's Las Vegas would be very happy to take them off his hands this very evening. As for Columbia Sussex's Westin Casuarina, those guys are living in a f***ing dream world, demanding $109 for a room on a night when I can get one at Caesars Palace for but a dollar more. Hmmmm ... Westin Casuarina, Caesars Palace ... Casuarina, Caesars ... such a tough choice.)
Goodman was counseling moderation in the context of praising what he called "very conservative" projections by the Las Vegas Convention & Visitors Authority. The recent double-whammy of low occupancies and ADRs obviously sucks, but if occupancy truly is beginning to ramp back up, there'd be no better way to nip that in the bud than by repricing as though a full-blown recovery were underway.
As for the LVCVA, it sure didn't waste any time ditching the "bargain destination" message in favor of the same old "Party like it's 2006" crap. Do you get the feeling that selling a message of affordability really chaps the LVCVA's ass? (That band of brothers and sisters from Cranfils Gap, Tex., seems to have done a quick disappearing act. Anybody seen them lately?)
The indiscreet charm of the douchebagerie appears more to the LVCVA's liking. According the authority's guru-on-retainer, Billy Vassiliadias, customers seek "some comfort that this is the Vegas they've always known and loved." You mean that high-end-centric, $500-for-a-bottle-of-Absolut-and-some-cranberry-juice Vegas? Yeah, that's the ticket.
Goodman gets it. Too bad Vassiliadias apparently doesn't.
"We don't see them getting worse. The problem is we don't see them getting better." -- Boyd Gaming CEO Keith Smith on 2009-10 tourism statistics for Las Vegas.
Just yesterday, I was comparing a dazzling Macao promotional spot -- one which made the most of what diversity that enclave has to offer -- to the staler-than-stale recent efforts churned out on Las Vegas' behalf by R&R Partners. Little did I know that a topical one-shot ad spot from the Las Vegas Convention & Visitors Authority was running in Monday's USA Today.
Seizing upon Vice President Joseph Biden's recent "gaffe" about steering clear of swine flu, the LVCVA ran a full-page ad featuring Biden's mug and the tagline, "Mr. Vice President, if you had said it here, no one would have known."
Har-de-har. Actually, having worked with quite a few professional singers in a previous incarnation as an arts journalist, I can tell you they'd vouch for Biden's advice re being wary of confined conveyances -- especially airplane flights -- right down the line. As is so often the case in Washington, simple candor becomes a "gaffe." The Naval Observatory (official resident of the Veep) just might be the only place in or around D.C. where Diogenes could safely stop these days.
The Biden ad, of course, rings yet another change on "What happens here, stays here." Well, as the Carrie Prejean kerfuffle conclusively proves, what happens in Vegas has a half-life of forever nowadays. Besides, that "what happens in Vegas" cliché jumped the shark when convicted felon O.J. Simpson tried to employ it to excuse a botched heist at Palace Station. Surely it's time to put that line out to stud or send it to the glue factory, perhaps.
Splendid! Call me jaded but I've never seen a Las Vegas Convention & Visitors Authority spot that was nearly as appealing ... and probably won't as long as the LVCVA remains wedded to the tired ideas of R&R Partners.
These days, one is constantly reading gripes that it's no fun to play in Las Vegas anymore. They sure don't have that problem in Russia, as this compilation of eye-in-the-sky footage proves. (Thanks to GamingFloor.com Editor Ian Sutton for the link.) True, the dealers can't deal and nobody can keep their hands to themselves -- but these comrades sure know how to party! Forget R&R Partners: This is the kind of promotional spot Rossi Ralenkotter needs.
Be sure to watch until the very end or you'll miss the best laugh in the entire reel.
Update: I don't think all the casinos are in Moscow, that's just a figure of speech. (I wanted to headline it, "What happens in Murmansk ..." but decided this blog was obscure enough already.) The locations are all identified at the end, I believe, but my Cyrillic is right up there with my Swahili.