We pick up where we left off on Friday with the concluding half of the story of SLS and what the future may hold for the struggling north Strip property.
While President Scott Kreeger was busy optimistically touting the changes taking place at SLS, the fortunes of founder and minority investor Sam Nazarian were taking a dive. He'd put both his Bel Air and Summerlin mansions on the market, liquidated the Katsuya and Cleo restaurant chains to STK, and had sold SLS Beverly Hills and SLS South Beach for a combined $320 million. "Could his 10 percent stake in SLS Las Vegas be next," we asked at the time. It was. Nazarian sold his shares to Stockbridge and surrendered his hard-won and grudgingly bestowed Nevada gaming license. Virtually the only remaining trace of Nazarian's presence is the abstract statue out front, "Sam by Starck," which tourists have dubbed "The Happy Blob."
When the second-quarter numbers for 2015 emerged, they were worse than before, with SLS posting a $49 million loss. During the summer months, with the Rock in Rio event taking place on its doorstep, one would expect the property to be performing at its best, but on the contrary Stockbridge was obliged to make three more subsidy payments, totaling $13 million. Stockbridge spoke vaguely of cost cuts, adding, "there can be no assurance that such actions will be effective" and blaming "factors beyond our control" and "extensive regulation and licensing" for the continuing hemorrhage and red ink. The Fred Segal retail brand, which had seven outlets in SLS alone, skeddadled virtually overnight right about the time these numbers emerged. The third quarter of 2015 was more of the same: SLS lost $39 million and Stockbridge had to pony up another $31 million of subsidies.
Stockbridge said it was committed for the "long haul" to SLS and has been suffering stoically well into this year, though the trickle of information from the corporate faucet has been shut off. One of the few droplets that emerged was the news, delivered in November, that Hilton Worldwide had dropped SLS from its Curio collection of hotels, cutting it off from the HHonors loyalty program. (In what was seen by some as a rash move, Nazarian had traded his Sammy Boy Entertainment and Sahara customer databases to MGM Resorts International in return for a home for his Hyde nightclub brand at Bellagio.) Partial rescue then arrived in the form of Starwood Resorts, which took over the VIP-oriented northeast tower and slapped the hip and prestigious W Hotel escutcheon on it in what could be considered something of an unlikely coup, considering the brand had for years been toying with a Las Vegas presence that had never materialized. The other two towers were absorbed into Starwood's Tribute Portfolio.
With the hotel component now in someone else's hands, Stockbridge soldiers on, proclaiming, "We continue to invest in marketing and advertising to increase awareness of the SLS brand and attract new customers." Given the deep hole that Stockbridge dug itself with its $540 million commitment to SLS, it will take more than consciousness-raising to turn this casino around, but with celebrated Chef Jose Andres still leading the culinary offerings (his Bazaar Meat at SLS made the prestigious Top Ten list in the new 2016 edition of Eating Las Vegas) and the nightlife scene seemingly finding its niche, time will tell if the property can hold out long enough for some of the other promised nearby developments to come to fruition and inject some still much-needed life into the resort and its environs.
