Fontainebleau Las Vegas opens, catering to the luxury market

December 13, 2023 9:31 PM
Photo: Fontainebleau Las Vegas (courtesy)
  • Buck Wargo, CDC Gaming Reports
December 13, 2023 9:31 PM
  • Buck Wargo, CDC Gaming Reports

The Strip welcomed the $3.7 billion Fontainebleau Las Vegas, its newest luxury brand, Wednesday.

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With much pomp and fanfare and Justin Timberlake scheduled to perform, the Fontainebleau celebrated Las Vegas’s comeback story of the century. Shortly after the 67-story resort was topped off in 2008, Fontainebleau became a victim of the Great Recession, then a bankruptcy in 2009. It came full circle back to its original owners, Fontainebleau Development, the group behind the historic Fontainebleau Miami Beach. After a morning ceremony, it was scheduled to open to the public by midnight Wednesday.

The Fontainebleau’s unveiling comes during a much better time than the last resort to open on the Strip. When Resorts World Las Vegas debuted in June 2021, the marketplace was still in the throes of recovery from the pandemic. Las Vegas is edging closer to a full pre-COVID visitor count, expected to do so in 2024. Meanwhile, the city continues to set gaming revenue records in 2023, even after a historic 2022.

Visitors willing to spend more than ever in Las Vegas are behind the gains, despite visitation numbers yet to return to 2019 levels. The average budget for visitors who gambled in 2023 is $824, according to the Las Vegas Convention and Visitors Authority. It was $591 in 2019, an increase of nearly 40%.

Helping fuel record revenues are wealthier visitors coming to Las Vegas, targeted by the Wynn, Encore, Bellagio, Aria, Venetian, Palazzo, Cosmopolitan, Resorts World. Las Vegas’s hosting a Formula One race in November was part of marketing the Strip to higher-end visitors, especially those from abroad.

The LVCVA survey showed that 44% of the visitors who came to Las Vegas during the third quarter had household incomes in excess of $100,000. That’s up from 33% a year ago and 29% in 2019.

Luxury resorts offer fine dining, entertainment, and high-end retail, all three of which have seen big jumps in spending since 2019.

“Our brand is geared toward what we’re calling ‘assured tastemakers,’ sophisticated travelers in search of fun and invigorating once-in-a-lifetime experiences,” said Fontainebleau Las Vegas President Mark Tricano. “In turn, we’re positioned to provide unforgettable luxury moments with a wide variety of programming designed to appeal to all interests. With our 36 food and beverage concepts from award-winning chefs and restaurateurs to the incredible level of design and fine art we’ve curated throughout the resort and more, we’re certain that what we’ve created will greatly enhance the luxury market in Las Vegas.”

Casino consultant Brendan Bussmann, managing partner of B Global, said the opening of Fontainebleau is good for the north end of the Strip, following boosts from Resorts World and the new West Hall of the Las Vegas Convention Center adjacent to the Fontainebleau.

It’s taken time for Resorts World to ramp up its customer base and find its spot in the marketplace, but “it’s settling in and hitting stride,” said Josh Swissman, founding partner of GMA Consulting.

Bussmann said it’s too soon to tell how it will go with Fontainebleau, which is facing some of the same issues.

“The Fontainebleau has a database from Florida, but those aren’t necessarily Vegas customers,” Bussmann said. “They’re definitely competing for the upper tier that’s known to go to Wynn and we’ll see if they can compete in that category. It’s hard to compete with a product that’s been a staple for the high end in Vegas and the industry in Wynn Resorts. That’s the bar you have to achieve.”

Fontainebleau offers 3,644 hotel rooms and suites, a 150,000-square-foot casino, 56,000-square-foot salon and spa, 14,000-square-foot fitness center, 35,000-square-foot day club and 50,000-square-foot nightclub, and a 4,000-seat theater.

“I’m pretty bullish about it,” said Josh Swissman, founder of GMA Consulting. “They have a great management team in place and new restaurants and other brands new to the Strip and that will drive visitation as well. Every new property that opens has hiccups, but I have every confidence in the Fontainebleau management team.”

Symbolically for Las Vegas, the opening marks the end of an era of “that dark structure on the north end of the Strip that had no life inside of it and was the last bastion of the economic downturn in 2008,” Swissman said. “It’s nice to see that symbol go away. I’m always a fan of new high-end room inventory, particularly when Nevada and especially the Strip continue to show solid fundamentals in the market. It’s a good time to add that additional capacity.”

The geographic positioning of the Fontainebleau is part of a “shift in the gravitational pull” of the Strip from the south to the north and the opening is pushing that further along, Swissman said.

“Wynn has done that for so long and Resorts World has since it opened,” Swissman said. “I like striking that balance between the north and south ends. Ultimately, that leads to a healthier collection of offerings and leads to potential further growth on the Strip, because there are some vacant and underutilized parcels on the north end. When you have another world-class asset like the Fontainebleau opening near those real-estate opportunities, that drives more investor and developer eyeballs to that part of the Strip.”

The proximity of Fontainebleau to the Convention Center is expected to drive room bookings, especially since it’s even closer than Resorts World and has several hundred thousand square feet of convention space.

“Our prime location within steps of the Las Vegas Convention Center’s West Hall expansion provides a great advantage,” Tricano said. “It serves as the centerpiece for the north end of the Strip and presents unrivaled access and collaborative opportunity for meeting and convention planners.”

It’s not just the stay during the conventions either, Tricano said. A recent trend is a large percentage of business travelers adding a leisure day or two onto their trips.

“We aim to accommodate these ‘bleisure’ travelers, not only with meeting and convention amenities, but also with our restaurants, entertainment, wellness, and gaming experiences to help round out their stay,” Tricano said.

The Fontainebleau has been taking reservations for several months and Tricano said they’ve seen “an incredible response for transient bookings,” while group bookings are following the same trend with a “very strong response” through the next few years. “As we look forward to 2024 and beyond, we’re confident that the product we’ve created and experience we’ll deliver will generate interest and increase reservations.”

The Fontainebleau Las Vegas is a joint venture between Fontainebleau Development and Koch Real Estate Investments, the real estate investment arm of Koch Industries.

Jeffrey Soffer, CEO and chairman of Fontainebleau Development, was the original developer of the project that broke ground in 2007 before the Great Recession and real estate crash caused the project to go into bankruptcy in 2009. It was acquired in 2010 by billionaire Carl Ichan, who sold it in 2017 to New York developer Steve Witkoff. Soffer reacquired the property in February 2021 and construction restarted that fall.

“We’re making history with the convergence of the nearly 70-year legacy of the Fontainebleau brand with the legacy and dynamism of the Las Vegas Strip,” Tricano said during Wednesday’s ceremonies. “Our story, nearly 20 years in the making, is one of resilience, passion, and a testament to unexpectedly becoming a resounding truth.”

Fontainebleau Development partner Brett Mufson said the ceremonies are more than symbolic, but represent the celebration of a 70-year brand that has reinvented luxury time and time again. “Opening at this market level and coming here this way during this time is an incredible feat.”

LVCVA CEO and President Steve Hill said if someone took the story of the project and tried to make a movie of it, the studio would laugh at the concept. Because it’s been uncertain for so many years, it makes the opening more special. “This attraction is going to help the entire city,” Hill said. “What lifts one boat lifts them all and Fontainebleau will play a role in the next generation of Las Vegas.”