Pardon our French, but: Not bloody likely. Tropicana Entertainment, a subsidiary of hotelier Columbia Sussex, went into Chapter 11 on May 5, swamped by the debt load Columbia Sussex undertook to acquire Aztar Corp., the Trop’s previous owner.
Aztar itself had scarcely announced its own makeover of the Trop, in early 2006, when it did an immediate 180 and put the company on the market. Into the dustbin went $26 million worth of redevelopment planning.
With 34 acres of developable Strip land, the Trop was a coveted asset and a spirited, protracted bidding war soon broke out. Columbia Sussex, a late entrant, emerged the eventual winner, paying $2.75 billion.
In December 2006, Columbia Sussex disclosed its own redevelopment plan, which would have retained the Island and Paradise towers, along with the "Folies Bergere" theater. To these would be added four more towers, for a grand total of 10,224 guest rooms (including 948 condos) on but 34 acres. "By contrast," observed the Las Vegas Business Press, "Venetian Resort Hotel Casino will expand from 4,027 guest rooms to 7,052 on approximately 60 acres," once it finished The Palazzo. The casino, with its barrel-vaulted, stained-glass ceiling, was among the items slated for demolition. The extreme density of the project drew skepticism, followed by derision, with In Business Las Vegas Editor Jeff Simpson calling it "ridiculous."
As planned, this Trop 2.0 would have piggybacked massive, 460-foot hotel towers onto the much smaller Island and Paradise ones. Columbia Sussex CEO William J. Yung III told Casino Enterprise Management that the rest of the acreage would be filled out with 1.5 million square feet of stores, meeting space and "various commercial stuff." He expected the redesign to triple the property’s income.
Three months later, the Business Press learned, through a source close to the Trop, that the Island tower would be demolished as part of Columbia Sussex’s renovation. (Scuttlebutt had it that pile-driving for the four new towers would have caused the Island one to collapse of its own accord.)
This report was borne out when an architectural model for Columbia Sussex’s Trop revamp surfaced on the Internet. Sure enough, no Island Tower was to be seen, merely a mish-mash of generic high-rise towers and a modest nod to the "tropical" theme, in the form of a new water feature out front. A gargantuan podium level now blanketed nearly the entire 34 acres. The mega-structure, if completed, would be larger than the Pentagon in Washington, D.C. As you can see, the Trop's legendary and beloved pool area would be bulldozed and built over, presumably to replaced with more casino square footage and "various commercial stuff."
With a degree of optimism the rest of us can but envy, Columbia Sussex initially budgeted $1 billion-plus for this 10,000-room behemoth. Later, that cost was modestly upped to between $3 billion and $3.5 billion – at a time when the 3,0000-room Cosmopolitan had shot past the $3 billion mark, headed toward $4 billion.
Even after filing bankruptcy, Columbia Sussex cheerfully maintained that its big, big building was still on the boards. However, Yung may have to surrender some of his 100% ownership in order to reduce debt. Or he may be compelled to put the Trop back on the market. Or he could sell the company altogether.
"In the meantime, market conditions have gotten so bad, the value of Yung’s company may not be enough to cover his $2.7 billion in debts," reported the Cincinnati Enquirer. At the Vegas real estate market’s peak, the Trop’s underlying land alone could have fetched $1 billion-plus – and still might, making an outright sale an expedient way of partially mollifying Yung’s creditors.
Given the Trop’s current insolvency, the runaway cost of construction in Las Vegas, the erosion of the lower- and middle-market customer segments during the current recession, and the time it would take for a sale to go through, our best guess that a remake of the Tropicana is at least a year down the road, probably much further.
Make no mistake: At some point, it will have to be done. (The property is in a very distressed condition.) The only way it take place sooner is if the debt holders assume control and decide the best way to recover their money is to spring for the cost of rehabbing the joint, making it more attractive to both customers and potential buyers. But that’s a big "if" right now.
