More than three years after the Blackstone Group took over The Cosmopolitan of Las Vegas, one of the Strip resort’s executives told the casino industry he likes the property’s position in the marketplace.
Last summer, Blackstone, a private equity investor that bought the resort from Deutsche Bank, announced more $100 million in upgrades to the 2,895 rooms, the first since the Cosmopolitan opened in December 2010. The room renovation will be completed by the end of 2018.
The property has come a long way since Deutsche Bank took over the property after the owner defaulted on its loans. It converted, what was to be a high-rise condominium project, into a hotel-casino. The $4.1 billion price tag made the Cosmopolitan the most expensive project on the Strip.
Last week, Kevin Sweet, vice president of slot operations and marketing at the casino, told a UNLV William F. Harrah College of Hospitality-sponsored conference on the future of slots and the casino floor that operating with fewer slot machines has created a better environment. The move improved what the resort had to do in order to increase revenue.
When Blackstone took over the property in 2015, Sweet said the new ownership knew it wasn’t getting “anywhere near its fair share of gaming revenue” on the Strip. Management dedicated hosts to slots, marketed a loyalty program, invested millions in new machines, and spent more than $3 million on a new high-limit slot room.
The music was changed, chairs, lighting and carpet and focused on loyalty reward enrollment, and hotel rooms were made available to slot customers on peak rate weekends.
Because of a change in Nevada gaming regulations, the privately-held Cosmopolitan no longer publicly reports its gaming numbers. Still, Sweet said “people know we had quite a bit of success over the past three years since Blackstone took over ownership and slots specifically have made a resurgence.”
Sweet also credited the marketing efforts.
“When we first got there, we realized we were underserved in our slot marketing,” Sweet said. “We didn’t have dedicated slot hosts and a dedicated slot marketing department, and so we created those things and marketed our loyalty program and our point program, which is far and away the richest program in town. We spent millions of dollars on new slot machines, which does matter. You can walk on some of the floors up and down the city and can tell if their floor has been refreshed with the same level of new product out there. You might see a bank here or there. Thankfully our ownership understands the need for reinvesting in the property, and they have given me tons of latitude to get things done and our performance has shown that new machines make a difference.”
Sweet said there’s a perception the Cosmopolitan skews younger than other casinos, but it’s like its neighbors in the Bellagio and Aria in the upper 40s. Breaking that public perception that it’s a “club crowd” has been the “most important thing for us to do” and grow the slot business. It has gone from a net donor of gaming revenue to closer to its fair share and “hopefully soon” will be a net receiver, Sweet said.
The five-year strategic goal for 2019 was to grow net revenue by 70 percent, but by the end of 2017 it had already grown by 84 percent with overall departmental cash flow up more than 400 percent, Sweet said.
Not everything on the floor, however, is about slots. Sweet said the casino removed 160 games to build a premium sports book he said has turned into “the Boardwalk of sports books.” Customers, he said, bypassed slots near the casino entrance along the Strip.
The Cosmopolitan, which leases its sports book to CG Technology, put in 23 bar-top video poker games that do 80 percent of the win of the 160 games in the space, which Sweet called an “incredible stat.” The space also has low-limit blackjack and electronic games and a recently installed Konomi Fortune Cup horse race slot machine. In addition, there’s shuffleboard, pool tables and foosball.
Sweet called it a “place to hang out” while targeting younger casino customers.
The changes were evident, he said, during the opening four days of the NCAA Basketball Tournament. March Madness fans made the Cosmopolitan casino “the busiest our casino has ever been without a doubt.”
Sweet said between 1,000 to 2,000 people visited the Cosmopolitan sportsbook non-stop during the tournament.
“Where were those people before?” he asked. “They didn’t have a spot to go. It’s OK to market yourself in different ways. There are 40 million people coming to Vegas. We don’t need every single one to play slots.”
As part of its improvement, Sweet said they put a renewed focus on service to try and do things differently from their competition. The Cosmopolitan has some of “the coolest rooms in town with the balconies,” and people have wanted to “stay with us, but we didn’t really feel they wanted to game with us,” he said.
“We have really done everything we possibly could do to change that narrative,” Sweet said. “People might not be able to afford our rooms, which run the top one, two or three (average daily rate) in the city, but they want to spend time in our place because the way the service is and the way it feels when you’re in the Cosmopolitan.”
What’s happening at the Cosmopolitan has the attention of other companies. Caesars Entertainment Senior Vice President Melissa Price, who sat on a panel discussion with Sweet, congratulated him on a “great turnaround story,” for the Cosmopolitan.
“Many of us as we have watched this property flounder and some of us have tried to buy that property over the years,” she said. “I have always felt it’s such a great location and really a great opportunity.”
