Back in 2007, when the first rumors began to circulate, we confess to being bemused by the whole concept of "de-theming" an Egyptian-motifed hotel that's actually housed inside a pyramid, but who's to argue with then new President and COO Felix Rappaport when he stated, shortly after MGM Mirage's takeover of the resort that, "We're not a British museum with ancient artifacts, we're a casino-resort." He went on to elaborate that, while it was "a brilliantly conceived building from the outside" and that "the pyramid always created a sense of wow and wonder", the plain truth about Luxor was that "the inside never delivered on that promise" once you got inside.
The initial "de-theming" was not planned but started not long after the property opened, thanks to some unfortunate deaths on the Nile -- or at least alleged sightings of the deceased.
When Luxor debuted in 1992, small barges navigated a river that encircled the casino floor and were intended to ferry guests to the "inclinators" (sloping elevators designed to accommodate the unique pyramidal shape). When the same guests complained about the wait, however, the ride was promoted purely for entertainment purposes as the Nile River Adventure. It remained in place for just three years.
While the official line was that its demise was merely part of a major interior remodel, according to the unofficial but popular account, the Nile River was removed because guests kept seeing ghosts of the three workers killed during Luxor's construction whenever the river passed through dark tunnels.
Fast forward to 2008 and the official announcement that, since its purchase by what was then MGM Mirage, Luxor was undergoing a "$300-million de-themeing, with a renovation of 80% of the interior. Some of those fundamental changes included the replacement of Ra nightclub by LAX; the replacement of Isis and the Sacred Sea by CatHouse, the replacement of the hieroglyphic motifs throughout the casino with a "water theme" (emphasized with the arrival of Liquidity bar in the center of the casino), the ouster of Nefertiti’s by the more modern Aurora Lounge, the donation of the contents of the Tomb & Museum of King Tutankhamen exhibit, as you mentioned, which made way for the Titanic exhibit, and various other upgrades and remodels property-wide, including the addition of more hip and trendy restaurants and nightclubs.
It's even been rumored that the Sphinx may be on the way out, but that's only a rumor...
While the concept of the de-theming of the Luxor garnered a fair amount of bemused publicity, it was not the first property in the group to move in that direction. MGM Grand's original Emerald City/Wizard of Oz theme was quickly abandoned, while Treasure Island later rebranded as "TI" and pushed sexy over family-friendly. Even Excalibur, which in its current castle shell is about as hard to "de-theme" as a pyramid, ditched Merlin back in 2007, as we recorded in an April QoD answer, when someone inquired what had happened to the wizard:
"A call to the Excalibur led to some sleuthing on their part, as no one had informed marketing that the wizard was gone and nobody apart from you had noticed! Inquiries were placed with the maintenance department; they revealed that they'd taken him down in mid-March, although no explanation was forthcoming, nor were details of his fate. All that they could reveal was that his removal is permanent. Marketing speculated that it's probably a reflection of the property's deliberate move away from being a family-oriented destination to a more adult one, with shows like Thunder from Down Under and the new Octane ultralounge. (Only a decade or so behind the rest of the city, then.)"
Apparently, there had been a sense that Luxor had devolved into nothing more than a dormitory to accommodate guest overflow from Mandalay Bay and other neighboring resorts, a state of affairs the new management wished to reverse. It was concluded that de-theming would attract a younger, hipper crowd, although focus groups voted against changing the Luxor's name, due not least to the inescapable remaining fact that the hotel is still housed inside a massive pyramid.