San Manuel Tribe set to receive license to operate the non-nightclub-centric Palms

San Manuel Tribe set to receive license to operate the non-nightclub-centric Palms

  • Buck Wargo, CDC Gaming Reports
November 30, 2021 1:20 AM
  • Buck Wargo, CDC Gaming Reports
  • Other

The San Manuel Band of Mission Indians is closing in on becoming the first Native American tribe to own a Las Vegas resort by the end of the month, but the new Palms won’t be like its predecessor.

The Nevada Gaming Control Board will hold a hearing Wednesday on licensing the California tribe to operate the Palms. Red Rock Resorts, which operates as Station Casinos, said during its third-quarter earnings call that it plans to close on its sale of the Palms and Palms Place condominiums for $650 million by the end of 2021. That property has remained closed since the shutdown in March 2020 and Red Rock has since focused on driving customers to its other properties and its plans for a Durango Station casino in the southwest valley.

Once the Control Board makes its recommendation, the license process will move on to the Nevada Gaming Commission at its Dec. 16 meeting. No problems are expected.

The San Manuel Tribe, which operates a casino in San Bernardino, has already geared up for the ownership change by naming Cynthia Kiser Murphey, a former executive with MGM Resorts International who served as president of New York-New York Hotel & Casino, as the Palms’ new general manager. They’ve also assembled senior-leadership and operating teams.

The Tribe won’t comment ahead of Wednesday’s hearing, but analysts said it could be ready to go within three to four months of the approval, since the property underwent $690 million in renovations in 2019.

The Palms has 700 hotel rooms and suites, convention and meeting space, a 2,500-seat theater, pool, and spa.

The Tribe told the Las Vegas Review-Journal in October that it would open during the first half of 2022 and customers would notice some, but not many, changes. For example, the pool will open, but the nightclub will remain closed until the Tribe decides what will replace it, adding it wouldn’t make sense for their target customers, which are “gamblers.”

The San Manuel Tribe will face some challenges in getting a workforce in place and attracting customers from outside its database in Southern California to a property just west of the Strip, but analysts are expecting good things from the newest entrant to the market that operates one of the largest casinos in the U.S.

“Unlike other recent first-time entrants into the Las Vegas casino market, the San Manuel Tribe brings with it a sizable database of gaming customers from the greater Southern California region,” said Andrew Klebanow, principal at C3 Gaming. “This will allow their marketing team to immediately generate visitation from qualified gaming customers, with mid-tier players receiving midweek vacation offers and high-worth players getting weekend gaming packages.”

Josh Swissman, founder of The Strategy Organization, said the Tribe’s “dominating presence” in Southern California and its database give them the ability to drive traffic from that region, a big part of their strategy; the Tribe is also focused on attracting Las Vegas locals.

“It’s a different beast when you have just one casino in the valley, as opposed to ten, which Station had at the time when they took over the Palms and did the reopening,” Swissman said. “You can do a lot of things differently when you’re a one-property operation and that might benefit the San Manuel Tribe.”

Swissman said he expects the Palms to target the rest of the country with a direct-marketing campaign and host team, given the Tribe’s financial resources to attract customers. “It’s their first foray out of Southern California, so they have to do this well.”

While the Palms skewed with a younger demographic and nightclub crowd, Swissman said the San Manuel Tribe will take “a much more holistic approach” and target older customers than Station.

“If you look at the population that typically goes to their property in California, it’s a lot of middle-aged people and retirees,” Swissman said. “I wouldn’t be surprised to see them show up in Vegas at the Palms. The nightclub-driven days of that property are behind them with the San Manuel Tribe taking over the reins. I think they can be successful. The expense model will be different. You won’t have this gigantic expense tied up in the nightclub going forward. That changes the whole complexion of the property and makes it that much more appealing to the middle-aged and elderly.”

Brendan Bussmann, a partner with Global Market Advisors, said it will be good to have a new operator in the Las Vegas market and that the Tribe will bring a different approach. The Palms, which opened in November 2001, has had its “ebb and flow” and Bussmann said he would like to see the Tribe bring back that “hip coolness” back to a trendy property. “I think what would differentiate them is having something trendier to hit that mid-tier customer. You see it with what Virgin Hotels is trying (at the former Hard Rock) and what the Cosmopolitan has.”

As for the Palms’ future, Klebanow called Kiser Murphey one of the most experienced gaming executives in the industry with a deep knowledge of the Las Vegas market, serving on the team that opened the Mirage in 1989.

“Any operator re-opening and re-branding the Palms will face numerous challenges,” Klebanow said. “The Palms’ most successful days took place when the Maloofs operated it. No other operator was able to achieve the success that George and Gavin attained, because they worked their marketing and public-relations engines every day. They took a casino in a secondary location in a reasonably good building and made it the hippest, coolest place to go. Ms. Kiser Murphy and her team have their work cut out for them in re-creating the magic that was found in the original Palms.”

Swissman suggested that because “a lot of hiring will have to happen” before the Palms can reopen, it could reopen in phases, with the gaming floor and restaurants first, then the hotel and convention businesses.

“They may want to take that approach, as opposed to biting off and opening up everything all at once,” Swissman said. “But they’re no stranger to large operations and could open all at once as well. They have the experience and skillset, particularly after opening their hotel tower recently in Southern California.”

Lawrence Shen, a partner at C3 Gaming, said he’s heard that most of the former gaming crew at The Palms were extended invitations to go back to work when they reopen and many have accepted.