All systems go at Trop … but more trouble on Paradise

As new owner Onex Corp. continues with a full-court press of renovations, the Nevada Gaming Control Board has given the new ownership consortium its thumbs-up. The makeover has continued apace since my visit in June. An inside look at details of the makeover can be found in the Desert Companion omnibus feature “You Make Me Feel Brand New.” In addition to my coverage of the Trop and several other repurposed Las Vegas buildings, it contains a report by Eating Las Vegas co-author Al Mancini on the redemption of the Gold Spike, once Vegas’ skankiest casino, bar none.

Told ya so. When some $770 million was splurged to buy the Hard Rock Hotel & Casino, I figured it was the death knell of Echelon and might take down purchaser Morgans Hotel Group, too. Today comes news that the Hard Rock might be the next Vegas casino to go into foreclosure (a fate which even the Riviera managed to avoid via a prepackaged bankruptcy). “After completing a $750 million expansion of the property early this year that included 865 new rooms and suites, the property appears to be having trouble filling all the new rooms at profitable rates,” reports the Las Vegas Sun.

Update: The Sun has corrected its story, now stating that the HRH is not at risk of foreclosure but — should that happen — Morgans could get booted from its management contract.

No surprise there, I guess … unless you’re a Morgans executive. They seem to have boundless reserves of denial and Panglossian optimism. They doubled down on their Vegas investment with downright execrable timing, especially for an off-Strip property. The new CEO is trying reposition the Hard Rock as a locals-friendly joint but it’s late in the day for that. Projected cash flow of $5.3 million in the third quarter  implies an abominable ROI for the property. Had Morgans kept the HRH at its original size it might have been able to defend its ADRs and occupancy rates in these tough times. That wouldn’t have been a bad idea. Not buying the place at all would have been downright brilliant.

A Vegas-centric strategy continues to hurt MGM Resorts International, as does an upside-down recovery in which the high end remains solid but weakness manifests itself at lower tiers. Convention business is driving continued improvement at Aria, now up to 95% occupancy and $175 ADRs but Mandarin Oriental is a disaster: 44% occupancy and negative cash flow. (Bellagio continues to be tops in ADR and occupancy.) Crystals may be flipped as soon as occupancy hits 80%. The stunted Harmon is “unlikely [to] be completed using the building as it now stands.” (Sounds like code for “demolition.”) M life is driving improved performance at MGM Grand Detroit and Beau Rivage, two of the company’s star properties. Oh and the opening of The Cosmopolitan won’t impact CityCenter. Make of that last contention what you will.