With regard to your astute question, our short answer is "Resorts World," even though Genting Group has done virtually nothing with the site in four months. The reason is very simple: money. Genting is making a lot of it at Genting Highlands in Malaysia, Resorts World Sentosa in Singapore, and at Resorts World New York at Aqueduct Racetrack, near JFK International Airport. With so much cash flow and relatively little else on its development platter (though it may be taking over troubled Baha Mar megaresort in the Bahamas), Genting has little reason not to proceed on the Las Vegas Strip. Genting also has no exposure in Macao, so it is not going to be slowed down by the latter’s recession.
A few cautions are in order. The $2 billion cost of Phase One will not be easy to recoup in the highly competitive Strip market. Perhaps in cognizance of this, Genting has delayed a projected water park and a panda habitat into an indefinitely scheduled Phase Two. (Mandalay Bay tried and failed to get pandas from the Chinese government in 2002, so we’re skeptical about that particular aspect of the development.) If Genting goes for a full, four-tower build-out of the old Stardust and Westward Ho sites, it could cost $7 billion, a bill exceeded on the Strip only by CityCenter, which has provided but a modest return for co-owner MGM Resorts International. Finally, Resorts World’s nearest feeder property will be Slots-A-Fun, so the prospects for walk-in traffic will not be great.
James Packer’s Crown Resorts’ Alon consists of a logo and some renderings at this point, far sketchier (pardon the pun) than Resorts World. However, Vegas Inc. reports that work will begin in "late 2015." If anything, Alon is already top-heavy with management, including former Wynn Resorts executive Andrew Pascal and ex-SLS Las Vegas president Rob Oseland, to say nothing of nightclub brainiac Jesse Waits, plucked from Wynn last July. The project is budgeted at $4 billion, which – again – will be a stretch to recover. However, Packer is in a good "neighborhood," as Alon will be surrounded by Trump International, Wynn Las Vegas, Encore, and Fashion Show Mall.
Progress on Alon could be curbed by the Macao economy, which recently contributed to a 41 percent drop in Crown Resorts’ profits. Packer resigned as chairman of the company and became executive director, a change more cosmetic than substantive. Having aborted a casino project in Sri Lanka, Crown theoretically has more attention to give to Las Vegas. However, it has irons in several fires in the Pacific Rim, including the opening (with partner Melco Entertainment) of Studio City Macau.
Also, Packer has a disastrous track record in the American casino market, having lost his entire investment in Cannery Casino Resorts, as well in Station Casinos and in then-Harrah’s Entertainment, and having failed to build a casino tower on the former site of Wet ‘n Wild on the Strip. We notice that he is surrounding himself with Vegas veterans this time around.
As gaming diminishes as a share of total Las Vegas revenue (and as SLS Las Vegas is proving that you can’t succeed with a casino-hotel predicated on nightclubs), this may not be the time to be building more high-end resorts, it’s true. Also, if Caesars Entertainment’s emergence from bankruptcy requires the shedding of Strip assets, there could be good properties to be had, priced to move. (Caesars’ bankruptcy, however, should not be taken as an indicator of a bad Strip economy but rather of the past hubris of piling $30 billion in debt atop the company and expecting it to stay upright.)
As for SLS’ troubles, they are an essay unto themselves. Suffice it to say that opening a casino in such an isolated location was a terrible mistake, one compounded by partially pinning hopes for SLS’ success on walk-in traffic from Resorts World, which will open in 2018 at the earliest. Whether SLS will still be around at that point (it is currently generating a negative return on investment) remains very much to be seen.
