The best laid plans, timing, and restarting old projects in Las Vegas

The best laid plans, timing, and restarting old projects in Las Vegas

  • Ken Adams
August 1, 2021 8:54 PM

Marriott has posted on its website that a Marriott-branded resort-casino will open on the Las Vegas Strip in 2023. The company claims that the property will be a game-changer, ushering in a new generation of resorts — brave words for a long-challenged project. Both the site and the building that Marriott is heralding have an extended history of big promises unfulfilled. The Fontainebleau, a looming abandoned hulk on the north Strip, ran into several brick walls, due to changes in the economic climate, since construction began in 2007. Marriott, obviously, hopes the timing is better this time.

It is said that timing is everything and that applies to casinos as well. Take CityCenter in Las Vegas and Revel in Atlantic City.

CityCenter Las Vegas on the Strip/via Shutterstock

CityCenter was a bold vision, a multi-billion-dollar complex with multiple hotels, condos, retail, water features, and casino. It was meant to be what its name implies, a “city within a city” of Las Vegas where people would live, gather, and play. The original price was $4 billion, but costs soared all the way to $9 billion in the heaty economic climate of the time. Unfortunately, CityCenter opened at the height of the Great Recession. The condos did not sell, the hotel rooms were not filled, and the people of Las Vegas did not gather there in flocks. CityCenter managed to survive, though with considerable restructuring.

Revel did not open during the Great Recession; it was unfinished. Construction had stalled because of the economic downturn when then-Governor Chris Christie came to the rescue in 2011. Thanks to Christie, the project restarted and managed to open in 2012. Revel filed for bankruptcy in 2013 and 2014, closed, was sold, and resold, changing owners, names, and operating philosophies like Zsa Zsa Gabor changed husbands. Like CityCenter, Revel was intended to shift the casino paradigm. Revel targeted an elite customer base with an elite design and operating philosophy. It had 13 restaurants, two nightclubs, two live-entertainment venues, and a two-acre roof top with 30,000 live trees and plants, pools, cabanas, fire pits, and a pine-grove restaurant. The casino was on the sixth floor, smoking was not allowed, and slot machines and their players were tolerated at best; it was trendy and avant-garde. Still, it might have succeeded if the times had been different. The timing was bad. From its original concept to the debut, there was a major recession, construction prices soared, casinos opened in Pennsylvania, and its lenders got cold feet.

By Farragutful – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=72422096

Today, Revel is called Ocean Casino Resort. It is sixth on Atlantic City’s revenue chart, including casino, igaming, and sports — not what one would call a raving success. If Ocean City had Revel’s $2 billion in debt, it would not survive even today. But the debt is greatly reduced and it caters to smokers and slot players just like every other casino in Atlantic City. It appears to be secure as the market stands today.

Enter Marriott in Las Vegas. Like Revel and CityCenter, the old Fontainebleau/new Marriott has its origins in go-go times of the past. In 2005 and 2006, it seemed that any casino in Las Vegas or Atlantic City would succeed. Investors and developers believed cost and debt did not matter, as anticipated, gargantuan, cash flows would overcome all obstacles.

The property was purchased in 2000 by Turnberry Associates. Jeff Soffer was the chairman of Turnberry and owner of Fontainebleau Resorts in Miami. His idea was to recreate the magic of the original Fontainebleau in Las Vegas. The project was unveiled in 2005, it began construction in 2007, and was in bankruptcy by 2009. The property has changed hands and names several times over the years, but in an ironic twist, Soffer’s son owns the project now. After standing unfinished for over a decade, it has a new name and a new interior design. It will join Resorts World, Virgin, and Circa as the new generation of resorts.

Marriott is not alone in pursuing a two-decade old dream in Las Vegas. Station Casinos has announced it is going to begin work on the Durango project next year. Construction is supposed to take 18-24 months, putting the grand opening right there with Marriott’s. Station purchased the land in 2000. It had expected to start construction in 2009, but the recession changed the plans. Station is not burdened by an unfinished building, trying to reenergize a dated dream; it gets to start afresh. Station knows the Las Vegas market; when it opens, the Durango casino will be what its customers expect. With over 40 years’ experience in Las Vegas, Station has no grandiose plan, no need to be the biggest, the best, or anything other than another Station casino. Its only promise is a “state-of-the-art sports book.” Its revenue projections are likely to be spot-on.

On the other hand, Marriott has no resort experience in Las Vegas and its revenue projections are at best a guess. Unlike Station, Marriott has no identity. It therefore has to create an identity and will not be satisfied with anything less than startling. Marriot thinks it can redefine the Las Vegas resort using the bones of 20-year-old concept, a daunting task. Marriott and Station are on a comparable timeline; their respective successes will depend on the product they present to public, their debt, and the cash flows. But they will also depend on timing. A pandemic, recession, or another 9/11 could undo the best laid plans, whether by mice or men.