Last week, we were discussing United Coin‘s assertion that a Marriott-branded hotel-casino may be erected on the acre formerly occupied by the old Sport of Kings gambling parlor. I recently had a chance to scope out United’s Little Acre and am more puzzled than ever by the slot route-operator’s claim. The footprint of the site might barely hold a hotel tower (with a very small gaming floor — I mean tiny) but there’s no room whatsoever for the all-important parking garage. The latter would be a valuable asset during conventions, when parking along Convention Center Drive becomes a lucrative source of ancillary revenue for hotels and office towers nearby.
Besides, there’s already a Marriott not even a half-block away. Perhaps what the hotelier hopes to do is build a second tower, directly opposite the Las Vegas Convention Center (with a slot route for a “casino,” like a big-ass Dotty’s) but it would probably need to acquire and cannibalize the intervening land. That’s occupied by Piero’s, eatery and onetime sparring grounds for cronies of owner Freddie Glusman and the late, much-missed Bob Stupak, and by Piero’s parking lot. If Marriott can swing a deal to either buy Glusman out or subsume his restaurant into a greatly expanded Convention Center hotel, the scheme begins to make sense.
Trouble in paradise? Bit by bit, dark mutterings of Bad Things have been rumbling from Cosmopolitan of Las Vegas. Blogger Bess Levin mis-diagnoses the reason why Deutsche Bank may have trouble breaking even on the $3.9 billion property — its sheer cost (including some overstuffed pay packets: CEO John Unwin made only $100,000 less last year than did Caesars Entertainment supremo Gary Loveman) . However, if it’s not pulling in the gamblers — as she reports and Union Gaming Group‘s Bill Lerner corroborates — that’s real trouble. Gambling dollars may represent a smaller piece of the Las Vegas revenue pie (causing budgetary problems further down the food chain in Carson City) but they’re still critical. The Sahara was never going to pencil out for Sam Nazarian as long as he abstained from getting a casino license, and both Credit Suisse and Goldman Sachs have set up stalking-horse entities that can be licensed and enable the corporate parent to partake of gaming dollars.
Heck, the Cosmo redesigned its casino floor to put it all at one level and smack-dab on the Strip. Long story short, to make good on that four bil, Deutsche Bank needs fewer customers blowing chunks outside Marquee and more of them blowing their wads at the craps table.
You need to keep in mind that Marriott will try and buy Piero’s for the land. They can easily close the lower ADR Courtyard and Residence Inn for a larger footprint. In the meantime, they have the Suites and Renaissance on 2 sides, and what might be a model, Springhill Suites north of the Gold Lot with the vertical parking garage. The interesting point would be that Marriott hasn’t dipped into gaming, at least in the US. Yes, there’s a JW Marriott attached to the Rampart Casino but I don’t think they have any financial interest in Rampart. The deal with Cosmo seems to be more marketing than anything else. So what are they going to do with the gaming license? Doubt they will use it, more likely sell or partner with someone to take it.
Dave, I mentioned last week that Marriott owns maybe 4-5 properties (they may not be owned but franchised out, I don’t know) in that area.
Doing a search on Marriott’s website, I found 6 on Paradise within a mile of the proposed project (actually more like within half a mile), one of each of Marriott’s brands: Spring Hill, Courtyard, Faifield, Renaissance, Marriott, two Residence Inns (one on Hughes Drive, but it’s really off of Paradise) and the timeshare-eqsue Grand Chateau across from PH.
Regarding Cosmo, I too have heard some very bad things about their property. One thing which has been going around was that video poker players were offered $2000 or so to come in, then got stiffed on the offer when the play was complete. A couple got it in writing, called Gaming and got their money. More recently, last weekend I think, there was a giveaway, which was essentially a video poker pro’s convention, and Cosmo seemed to be aware of this.
Now, why am I mentioning this? Well, 70* has always found it amusing how hated they are by the casinos today, like if it’s their fault the casino has no clue how to protect themselves well, from themselves. What I have found always more amusing was that certain enlightened casino executives intentionally structure their programs to encourage professional play. You see, having all that break even play (taking a loss on the marketing), is not only good for your stock price, but your bond rating as well. It makes you look like your business is bigger than it actually is. Gary Loveman surely privately appreciates this, after all, it was dumb TPG/Apollo who didn’t understand some of this and paid, what was it, $92/share when it should have been more like 72$, if that. While Harrah’s (sorry, it will never be called Caesars, I’m never dissing Clifford and Stuart like that ever, or Bill Harrah for that part) will likely not get out of debt (unless last week’s DOJ action was a clever way for Harrahs to dominate the online poker market through the back door-wait and see) at least through the current game plan, when the go public again, and it’s inevitable they will, I didn’t need Loveman to remind us about that last week, watch the video poker become playable again, at least in Vegas.
One tribal casino in California took this approach, and essentially financed three expansions (70* remembers when they were a single tent, then two tents, but this was a few years ago) with it.
@Bob K- Marriott does not have any interest in any gaming activites at their properties worldwide because the Marriott family is devout LDS and believe gambling is immoral (they are remarkably liberal about bringing girls back to your room in known straight single male traveler destinations such as Bangkok however). They also feel that way about alcohol and caffeine, but understand the strong public demand worldwide for such products from cultures different from theirs’, and such are offered.
I don’t really see anything different going on here. Cannery Casinos leases the space at the JWM (fka Regent); I can see a similar deal with United Coin, or someone else for the proposed property. It would be a break from current policy to actually own their own casino. We’ll see how it shakes out.
Dave. I always look forward to your commentary “Heck, the Cosmo redesigned its casino floor to put it all at one level and smack-dab on the Strip. Long story short, to make good on that four bil, Deutsche Bank needs fewer customers blowing chunks outside Marquee and more of them blowing their wads at the craps table.” CANT STOP LAUGHING!!!