The Strip’s New Monkey Business | Vegas Seven

Here is this week’s Green Felt Journal, on the opening of SLS–and what it means:

The Sahara’s closing on May 16, 2011, was significant in more ways than one: It was not only the demise of one of the Strip’s few remaining classic casinos, but it essentially marked the depth of the Great Recession. So the August 23 rise of SLS Las Vegas from the bones of the Sahara says a great deal about where Las Vegas is heading—and how it will get there.

via The Strip’s New Monkey Business | Vegas Seven.

I’ve got a lot more to say on the subject–hopefully on a future Vegas Gang.

With Oseland Aboard, SLS Could Be a Winner in Vegas Seven

As you might know, a month ago, sbe Entertainment Group sent out a press release with some details of the financing of the putative SLS Las Vegas. I was skeptical, as were others. Last week, the company sent out a second press release, which provided more details. I still had questions, so, wearing my Vegas Seven gaming and hospitality writer hat, I put a call into sbe. After some back and forth, I had a 45 minute conversation with Rob Oseland, which answered many of my questions. The result: the latest Green Felt Journal, which talks a little about why, if this project is going to go forward, Oseland is a good guy to have in the driver’s seat:

Sam Nazarian’s SBE Entertainment Group made headlines last week by announcing that it had secured $300 million of the $415 million it needs to transform the shuttered Sahara hotel-casino—which the company bought in 2007, at the height of the casino real estate boom—into the SLS Las Vegas, a “refreshing, fun and accessible take on Vegas luxury.”There are still a host of concerns about the project, however: skeptics say that it’s too far away from the center of the action to compete; it’s too small; no one will invest in the north Strip; in any event, it’s not completely financed.Rob Oseland, recently hired as the president and chief operating officer of SLS Las Vegas, is the guy to answer those questions.

via With Oseland Aboard, SLS Could Be a Winner | Vegas Seven.

I look forward to a real back-and-forth about this on the next Vegas Gang.

I’ve gotten a few questions via email about this. The biggest one is: am I still skeptical? I’m not running for office, but I’m going to equivocate here. I have no idea whether sbe will be able to get the funding it needs. I’m not plugged into the investment banking/equity community, so I have no real insight about how competitive SLS Las Vegas is with the million other things that people could invest in.

Assuming a total project cost of about $415 million, you might have an annual average interest expense of $42 million or so. Could 1,600 rooms produce the kind of revenue that would enable them to make that nut? Possibly, if it does Cosmopolitan-like numbers for F&B. Will it be able to do Cosmo-like numbers in that location? It’s certainly possible, but it’s no slam dunk.

Then again, if it was a slam dunk, there would be a half-dozen other projects under construction. At one point very smart people in Las Vegas thought that a huge residential component at CityCenter was a slam dunk. Or taking on $20 billion in debt to go private. So is it possible that Nazarian, Oseland, and company see a value that others don’t? Definitely, because the crowd isn’t always right.

Of course, the crowd often is right, which is the rub.

According to Oseland, we should know by October–November at the latest–whether sbe gets its funding or not. This is going to be a great topic to debate up until we see construction start, or we get a tersely-worded press release announcing the project is “suspended.”

We had a few years of predictable success on the Strip, followed by a few years of predictable flops. Now we’re entering the unpredictable phase, where just about anything is possible. Should be a fun couple of years.

Selling the Camel in Vegas Seven

My contribution to the coverage of the Great Sahara sale is in Vegas Seven this week:

At the Sahara, NCL put 600,000 items for sale, from camel-base lamps ($150; they were the most consistently pilfered item from hotel rooms) to the wooden doors from the House of Lords restaurant ($825). The two-month liquidation sale is open to the public; for its first four days, NCL levied a $10 entrance fee to help keep the crowds manageable, but since then there’s been no charge to browse and enjoy the Rat-Pack-meets-flea market ambiance.

via Selling the Camel | Vegas Seven.

Walking around that sale was one of the most depressing things I’ve done for a story in Vegas–about on par with last year’s WSOP where I was wheeling around like a vulture waiting for the first bust-out so I could interview them.

To me, this was the most poignant reminder that people’s lives have been changed because of the place going under:

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Sahara Vs. Trop in Vegas Seven

This week I’ve got three separate pieces in Vegas Seven. The first is a short news item comparing and contrasting two Strip casinos with similar origins and dissimilar fates:

The Tropicana and the Sahara are a study in contrasts despite some shared history; at opposite ends of the Strip, both holdovers from the 1950s managed to survive into the 21st century. Both drifted further and further down market as they faced larger and more luxurious competitors. And, as of today, they are facing profoundly different fates. One is closing, while the other has a new lease on life.

via A Tale of Two Casinos | Vegas Seven.

Why did they end up going in different directions? I’d say it’s equal parts decision-making and geography. Obviously, the Tropicana’s going to get much more walk-in action and attract more people who want to be around other casinos. The Sahara, as of today, is almost in a no-man’s-land. The decision making part is: the Sahara folks (SBE) wanted to go for a massive renovation project that would have aimed towards the luxury market, and missed the timing. Two years earlier, and they’d have gotten funding, no problem. The Tropicana, on the other hand, took a smaller approach, simply remodeling its rooms for the mid-market.

Sahara signals Strip woes in LVBP

I’ve got a new column in the Las Vegas Business Press, in which I consider the meaning of the Sahara’s impending closure.

Even in flush times, running a Las Vegas casino was never a license to print money. Casinos have changed hands, declared bankruptcy and even closed their doors. But the recently announced closing of the Sahara, a fixture on the Strip since 1952, is a worrying sign for everyone. Should no one step in to buy the casino and keep it open, it’s a sure signal that the gaming industry faces more challenges ahead.

For much of the past, when casinos found themselves mired in red ink it was usually considered an opportunity, not a calamity. Those running the casino naturally were amazed that their surefire plans to become Las Vegas moguls were fizzling, but there were always others who could see some upside. An individual property might be taking on water, but faith in the broader market was airtight.

via Las Vegas Business Press :: David G. Schwartz : No takers for Sahara means Strip is hitting its limit.

I spent some time at the Sahara on Monday, and I’ll be sad to see it go. It reminds me a lot of the casinos in Atlantic City in the 1970s and 1980s, and it’s a real contrast to the sleeker, bigger casinos that dominate the Strip. Then again, I also got nostalgic smelling the back of the house smell at the Fremont, which brought me back to my carefree days at the Taj.

Requiem for (a Vegas) Methuselah

It’s pretty rare for a Strip casino to get knocked out. Sure, more than a few have taken the standing eight count of bankruptcy, but usually, no matter how far in debt a casino gets, it produces enough cash flow that the lenders would rather see it open than closed.

The Sahara’s scheduled May closure, however, is as bad as it gets. Not only has the current owners’ business model gone belly-up; they can’t persuade anyone else to take the casino off their hands, make a few changes, and hopefully ride out the storm.

By a strange coincidence, I just talked about the Sahara in my GAM 495: History of Casinos class, so its history is fresh in my memory.

The property opened as the Club Bingo, a 300-seat bingo parlor, on July 24, 1947. To put it in perspective, the first Strip resort, the El Rancho Vegas, had been open six years (and was right across what was then called the “Los Angeles Highway”). Further south, the Last Frontier was just starting to assemble the Last Frontier Village, and the Flamingo was barely a half-year old. Local builder Marion Hicks was putting together the Thunderbird with a little help from “the Big Juice” Clifford Jones (then the state’s Lt. Governor) and, it was later learned, Meyer Lansky.

When the Club Bingo was remodeled, expanded, and rebranded as the Sahara in 1952, it was the first Vegas rebirth. In the past few years we’ve seen the San Remo get some plastic surgery and re-emerge as Hooters, and the Aladdin turn into Planet Hollywood. The Sahara was there first.

So the Sahara officially opened, as the Sahara, on October 7, 1952. The Desert Inn had opened a few months earlier, and Moe Dalitz and Allard Roen were just starting to kick around the idea of a golf course. Jake Freedman and Jack Entratter were watching the Sands take shape; it would open that December. People were just starting to call the stretch of road with all that construction “the Strip” instead of “Highway 91.”

And the Sahara saw booms and busts, right from the start. It did so well that it added rooms a year after its opening When several casinos declared bankruptcy in the aftermath of 1955’s over-expansive boom, the Sahara soldiered on. Not every casino made it out of that slump intact, but the Sahara did.

The 1960s might have been the golden age of the Sahara. For the price of a drink, Don Rickles would insult you in the Casbar Lounge. But the story beneath the surface was even more interesting. In 1961, Del Webb acquired the casino from Milton Prell and his partners, becoming the first publicly-traded corporation to own a Nevada casino. Because of the restrictive gaming ownership laws of the time, they had to create a series of shell operating companies, but this was a real milestone.

Architect Martin Stern, Jr., raised the Sahara’s profile with two tower expansions in the early 1960s, putting the Sahara at the cutting edge of casino resort design. He applied some of the lessons he learned there in the iconic Sands tower and the International (1969) and original MGM Grand (1973).

In its later years, the Sahara coasted along, drifting further into the value-oriented market, but filling an important niche in Las Vegas nonetheless. The casino’s closing, no matter how you try to spin it, is awful news and a real loss to the city.

Glimpse into Sahara’s future?

An LA Times article about Sam Nazarian’s plan for a nearly-finished hotel he just acquired in Hollywood got me thinking that this could be a model for at least one of the towers at the Sahara–if things ever turn around enough to justify the renovation:

The former Palihouse, which Nazarian estimates is about 85% complete, is already different from traditional hotels. Its average room is 800 square feet and contains a kitchen, washer and dryer. The target customer is “a new generation of bohemian do-it-yourselfers,” Nazarian said, who are tired of “big box hotels that are over-designed and over-built.”

He hopes to attract guests in the entertainment industry who come to town to work on extended projects, he said.
“The size of the room and its apartment-like nature allows people to stay short term or long term,” Nazarian said. Room rates haven’t been set yet.

via Sam Nazarian to take over, finish Hollywood hotel – latimes.com.

Could something like that work on the Strip? There are plenty of people who come to town for extended people and, if they have the budget, would want something on the Strip.

Nazarian’s SBE Entertainment owns the Sahara, and it’s no secret that it was going to be major-ly remodeled before the economy took its nosedive. From what I remember of the plans, they were premised on appealing to a similar demographic.

Maybe this is how Vdara or Veer Towers should be repositioned: an extended stay Strip option, with weekly rentals. No washers and driers that I know of in Vdara (I didn’t see all the suites), so laundry service would be an issue.