The Nevada Gaming Commission Thursday signed off on the ownership of the Rio Hotel & Casino taking over the operations of the resort from Caesars Entertainment in October and its president said they’re trying to change the social-media perception that it’s outdated.
The Commission issued a gaming license to New York-based Dreamscape Companies and its executive team headed by founder and President Eric Birnbaum.
Dreamscape acquired the 2,522-room Rio from Caesars Entertainment for $516.3 million in December 2019, then leased it back to Caesars under a four-year operating agreement that will end in October instead of the original date in December.
Dreamscape, a real estate development company, is focused on hospitality, residential and now gaming, Birnbaum told the Commission.
“When we bought the Rio from Caesars, we had no idea that three months later, the world was going to end. But the way we structured the deal gave us an insurance policy while we prepared a business plan and hired a team. We didn’t realize it would turn out to be a true insurance policy as the world shut down during COVID.”
Dreamscape refinanced the asset in February, which provided for $338 million in renovations that will begin in August. Some upgrades are already under way to the property that opened in 1990.
“We’re starting to renovate some of the rooms a couple of weeks from now and in October, we’ll officially detach from Caesars and begin operations ourselves,” Birnbaum said. “We would have never stopped the lease with Caesars unless we knew our team was ready to take over. We have 65 days and that’s where our attention is now. We’re working hand in hand with Hyatt, our exclusive partner on the reservations systems, and we’re working with Caesars. Historically, Hyatt has had no presence in Las Vegas (under a franchise agreement).”
After one commissioner suggested that the Rio is taking “unfair hits” on social media, Birnbaum said he hears every negative comment and is aware of the perceptions and doesn’t disagree with them.
“We wouldn’t be putting $350 million into the asset if we weren’t trying to change that perception, but you can’t really change the perception until you deliver a better product,” Birnbaum said. “Some of the commentary is deserved, so our job is to change the narrative and product, stand on our own two feet, and get critiques that we deserve. Hopefully, after we spend $350 million, it will be different.”
The Rio is “doing quite well from a cash-flow perspective and our renovation will happens over time,” Birnbaum admitted.
He said when guests arrive later this fall, they’ll see some changes, but it won’t be all at once and won’t change perceptions immediately.
“The true verdict of what the new Rio will be ultimately won’t be finalized until the 18-month renovation is done,” Birnbaum said. “That’s a challenging thing to do from a marketing perspective, but we’re very conscientious about it.”
The first-phase renovations cover 1,500 rooms, seven food and beverage venues, convention facilities, and the pool area.
Birnbaum said people ask about bringing back the “nostalgic Rio,” including the famous buffet, but he averred that people no longer want buffets in this era given the pandemic and fear of germs. Most of their competitors have eliminated buffets.
“I think it would be very cool to reinstate the buffet, because I know the Rio was well regarded for that, but sadly, times are different and need to adjust,” Birnbaum said. “We’re going to have an exceptional food hall that makes a name for itself.”
In helping with its marketing, Birnbaum said Dreamscape purchased five years of Caesars’ database for their use and mined it to create their own. Rio will have its own rewards program called Rio Rewards and will be the “most lucrative” in the market, he said.
The Rio sent out 1,510 letters to retain employees and more than 90% are staying with the company.
