Harrah’s had announced–in very unspecific terms–what it plans to do with its fantastic assortment of Strip acreage. From the LV Sun:
They didn’t announce their intentions at the time. The economy was still humming, and with tourism booming and new resort construction expected by consumers and demanded by investors, the decision was something of a dirty secret.
Their plan was nothing less than a rejection of the implosion-punctuated business model that has defined Las Vegas for decades. In place of a new casino resort, Harrah’s came up with an idea that was more Bourbon Street than Las Vegas Boulevard.
Internally dubbed “Project Link,” the plan calls for a collection of about 20 restaurants and bars to be built along a winding corridor between the company’s O’Sheas and Flamingo casinos, on the east side of the Strip.
With a mix of “eclectic” and “mostly casual” restaurants and bars opening to the street, it’s an attempt to create the kind of entertainment district that has developed organically in cities such as Los Angeles, Memphis and New Orleans yet is lacking on the Strip, with its enclosed, casino-centric zones.
This may be a great idea. Or it may be an underwhelming under-utilization of an expensive, unbroken swath of Strip real estate that stretches from Harrah’s to Paris and just about the I-15 and Koval.
Positives: Harrah’s built itself as a company that caters primarily to the middle market. This move caters to the middle market. Harrah’s isn’t going to be borrowing a great deal of money anytime soon. This project sacrifices minimal cash flow and should be less expensive than building something from scratch. Between Wynncore, Bellagio, and Aria, there is going to be a great deal of competition for the finite high-end market in the near future. This doesn’t threaten to intrude into that market.
Negatives: Harrah’s has assembled a pretty big portfolio on the Strip, and it’s hard to see how Project Link takes advantage of this. As the first phase of something bigger, this could be a great idea. Indeed, the artist’s rendering shown in the Sun article has a great deal of undeveloped space fronting Koval. But if this is it, it doesn’t seem to take advantage of all of that land. Besides that, there really aren’t any.
On the other hand, things don’t look so hot for Imperial Palace. Its Strip frontage seems to be replaced by a massive billboard for a show across the street, kind of like when Bally’s was wrapped with a mega-size ad for “The Producers.” Clearly the casino is still there, but it’s not going to be as visible a part of the Boulevard as before.
I think that Project Link is, overall, a positive, in that it rejects the cookie-cutter thinking that’s permeated the industry. Just because Steve Wynn can profitably cater to the high end doesn’t mean everyone can. I think it’s about time that companies started focusing on their strengths and presenting distinct products as opposed to trying to do the same thing.
In a sense, I think that Project Link will solidify Harrah’s Strip holdings as the anti-City Center. Instead of a newly-built collection of luxury hotel space with a single big casino, you’ve got an assembly of already-built mid-size and larger casino hotels. Outside of Caesars Palace, there’s not much retail. If the Crystals and Aria are the axis of City Center, you couldn’t pick a better contrast than Project Link’s food court (which is essentially what it sounds like) and O’Shea’s/Flamingo.
Whether Project Link is heralded as a brilliant strategic move in ten years depends, I think, on how City Center does. If it’s successful, then this will probably be scuttled mid-way in about 2 years and replaced with plans for something more upscale. If it doesn’t, this will be seen as genius.
Will City Center be a success? We don’t know yet. There are just too many variables. Room rates are down, but high-end play seems to be up. What’s that going to mean in December? It’s anyone’s guess. The political and economic situation is just too fluid to make any predictions with any real confidence. Even if the project comes in under budget and is executed flawlessly (neither of which seems to be true), if gas rises to $5/gallon and airline capacity continues to fall, it’s hard to see how it would be a success. On the other hand, if 42 million people have the means and desire to visit Las Vegas in 2010, it’s hard to see how it wouldn’t make a ton of money. The most frustrating thing about making this kind of gamble has to be that most of it is out of your hands. Casino executives should be watching the players down at the WSOP for some tips on how to handle bad beats…or not to handle them. Because if the past two years have taught us anything, it’s that there’s a far bigger element of gambling to the casino-operating business than anyone’s been willing to admit for the past twenty years.
And yes, that is a Deep Space Nine reference in the title.