Vegas Gang #25 is online.
This week on the show:
* Harrah's Suspends Caesars Palace Tower
* LVS v. ELAD v. WYNN
* Rumors Swirling Around The Mirage Sale
* Encore Media Week
Leave any comments below.
Categories: Business of Gaming, Caesars/Harrah's, Casino Design, Las Vegas Strip, MGM Resorts International, Podcasts, Vegas Gang Podcast, Venetian/LV Sands, Wynn Resorts
Truely. Killer. Punditry. I must confess I subscribe to VegasGang twice a show, and can't bring myself to set it straight.
A different view about Bellagio. I think the most premium brand in the minds of the masses, and myself, is Bellagio, if for no other reason than it is 10 years older than Wynn. If I were MGM, I would much rather know that I was getting the top end dollar from either CityCenter or Bellagio, rather than letting someone else own Bellagio. I would rather cannibalize my own company before I would want a competitor to attack my new resort, CityCenter, AND know the new owners were making a 40% gross profit margin attacking me with Bellagio.
As someone who does not live in Las Vegas, I think that the high end pecking order is Bellagio, Wynn/Encore, Caesars, and Mandalay Bay.
This leads to the question I have for my favorite pundits in the Whole Wide World--If you were MGM, would you rather sell Bellagio, or Mandalay Bay (Not counting the undeveloped land to the South)?
The 'pecking order' reminds me of Robin Leech's interview with Steve Wynn. When Wynn was talking about room rates being cut at Wynn/Encore he said something like "And then Bellagio would have to cut lower than Wynn, and then Caesars would have to cut lower than Bellagio, and then Mandalay Bay would have to cut lower than Caesars and then The Venetian would have to cut lower than Mandalay Bay - and then you get down to The Mirage and the TI, etc."
Wynn didn't mention Palazzo if I remember right, but my guess is he was thinking about it. And I agree with Wynn about this 'pecking order' - I've always thought Mandalay Bay was a fabulous hotel/casino (despite a few plastic edges in the place).
Jeff - This is a pretty easy choice to me. I am almost 100% forgetting fair price, etc, that given the choice, they'd sell MB before they'd sell Bellagio, any day of the week. For many different reasons, but just to name 2, Bellagio is their flagship, and second, is as easy as location. MB is a nice place, but it could do even better if it was located in the center of the Strip. I like MB, but rarely venture down that far. It would be cool if MB as where IP or Harrah's was.
To Jeff in OKC I don't think many here would disagree with you about Bellagio being the the most luxurious brand in the general publics minds. Number two for the general public is absolutely Venetian/Palazzo, not Wynn. Just look at the foot traffic in the Venetian, tourists everywhere you go taking pictures of the "art", A.K.A wallpaper on the ceiling.The Venetian rivals Bellagio for the amount of tourists taking pictures and being in your way. Number three would be Caesars then followed by Wynn. Every time I stay at Bellagio I never have to explain to my friends back home where I stayed. The fountains, made famous by Oceans Eleven, and CSI, the conservatory, the Dale Chihuly glass all make Bellagio a spectacle the general public remembers.
Of course as we all know here Wynn/Encore is not about the spectacle to mesmerize the general public, its about the spectacle to mesmerize the paying guest. My favorite Wynn experience is one that 99% of the general public know nothing about, lunch at the Country Club over looking the water fall. I stayed at Bellagio for the first time in about two years this past new years, I wished I stayed at Wynn. Once you stay at Wynn it's tough to go back to lady lagio. The real pecking order is:
5. Mandalay Bay
I agree with I believe Jeff Simpson, take advantage of the low room rates at places like Wynn/Encore, and Bellagio and stay their, don't leave. Why taint a stay at Wynn with a visit to MGM, Paris, etc. As for selling Bellagio, I really don't see it happening. At 7-8x projected 2009 earnings, or 2008 earnings that puts Bellagio at around 2.1-2.6 billion. Who has that amount of cash in this market besides Wynn? Not to mention that the buyer will need to spend an additional 200-300 million on upgrades to the old girl, have you seen the carpet lately, or the rooms? But who knows, as Hunter said MGM-Mirage may lay any property at the alter of City Center.
Gotta agree, MB goes before Bellagio. I think the odds of the Bellagio being sold is next to zero.
Doug, I also think MB tends to get a bad rap on this blog. From a design and quality standpoint, it doesn't hold a candle to Bellagio or Wynn, but I think the overall package works well, and I have enjoyed the times I have stayed there, most recently this last June.
As for the pecking order, if it is based on high-end (i.e., baccarat) play, I would argue the pecking order is Wynn/Encore, Bellagio, Venetian/Palazzo, MGM, Caesars, MB.
Does anyone know how much cash Wynn actually has? I am not sure that he has the cash to buy any other property right now. Isn't he focused on Encore Macau? While I have not seen or stayed in any of these hotels, I would rate Wynn number one followed by Bellagio, Caesars, Venetian, then MB.
I read recently that Wynn Resorts is sitting on $1B in cash. Encore at Wynn Macau is the next project and is scheduled to open 12/25/09. It's more of a 'hotel tower plus' addition than building an entire sister property a la Encore Las Vegas.
Hunter and I talked about what could be next on their hit list the other day and I don't think we came to any consensus. Cotai is definitely on the drawing board, but they are waiting for demonstrated demand before green lighting development & securing financing. The golf course could very well be the next project, unless another opportunity presents itself - i.e. Bader Field AC, Taiwan or one of the rumored real estate deals in Las Vegas.
I may be wrong, but I thought Wynn has $1.7 billion in cash on hand as of late last year. My gut tells me he won't buy a thing, he said on mulitple occasions how happy and sad he is that he's the only guy in town that can make his employees feel safe. Unless its the bargain of the century, I think he won't spend a dime and protect himself and staff. I will be shocked if he buys.
Chuck - Don't forget Japan, that does have great potential, and is definitely a possibility.
Its hard to say about Wynn's cash. I follow the company financially about as well as anyone on this board, and I'm a bit fuzzy right now. He had 1.4-1.7, but had that was including some cash set aside for both Encores. So that number fell, but then they did another public offering, and brought another $600-700 million in. But then, Wynn paid down some debt that was coming up due or something. Not exactly sure how much debt they retired early, but it was a substantial amount of that, I believe. All the companies should be announcing their reporting date any day now, and most should even be reporting in the next few weeks, so I'm very curious to hear for myself exactly where they stand. However, many of the Encore LV bills won't be paid and settled until this quarter, so even this new number coming will not be fully accurate. Encore Macau isn't as important, because its budget is so much smaller, when compared to LV. Bottom line, I'm pretty curious to hear all the detailed Wynn current financials, including, debt, and unrestricted cash. I expect to see the number somewhere around what Chuck stated, $1 Billion would probably be about as good of a guess as any though.
I find it interesting that no one included the Trump Hotel in their pecking order of hotels. Just because it doesn't have a casino, or is 1 block off the strip, doesn't mean that it still isn't one of the top tier hotels in Las Vegas.
Having never stayed there, I figure Trump to be somewhere in the realm of THEhotel and Palazzo. Am I wrong?
Yeah, as far as 'high-end-play' goes MGM has to be in the mix somewhere. On more than a couple of visits I've seen some 'very heavy' dice games going on. And they've always had big baccarat play.
I think one of the stories we'll see this year is Harrah's selling the Rio. They have a ton of debt and the cash could help them finish Caesars. Of course, what Harrah's is going to do with Ballys and the IP will be more interesting.
I have never stayed at trump, the pictures I have seen look nice, as Mike said THE Hotel would be a nice comparison.
Since Trump doesn't have a casino I don't think it really ranks in the realm of a total Las Vegas resort experience.
Unless you want to count TI as the Trump casino, some believe now that Ruffin has TI he will partner with Trump to bring guests to his casino for play. However that is idle speculation at this point.
mike_ch... I bet ur right. From what few pics i have seen of trump lv vs. The rest of the strip. Its a safe bet that wynn/encore will be on top for years to come... Even beating out aria at city center obviously.
Las Vegas Sands and it's down fall.
The Vegas Gang discussed the history of Big Risk/Big Reward in Las Vegas as well as some stories of Big Risk-Big Failure.
Liz Benston writes about this subject in her lengthy piece on Las Vegas Sands.
"...a combination of factors were at work: bad luck, bad corporate blood, and hubris."
"Years from now, what happened to Sands could be the stuff of business school case studies."
Fascinating! When MGM bought Mirage Resorts, who could have imagined that Steve Wynn and Sheldon Adelson would each be in the position they find themselves in. I personally don't believe LVS is going to be able to right this ship given economic forecasts for the next few years.
You're about right. We did one night there and the room was very nice but it's almost impossible to get over the feeling of isolation... not just no casino, but nothing truly next door.
I will probably post these links again when I write up the past few days but for those that haven't been to Encore, these videos may give you a little perspective just how much the light enters the building.
For both videos, I'd suggest the 'Watch in High Quality' button on the page.
Only one video was available? The second link didn't have a video.
Looks like YouTube is still processing the other video.
What I know is that there's some guests, and one of the Gang I think pointed out their existence, who aren't players. To them, a casino is just an annoyingly large, smoke-filled room between the elevator and the pool. Or, the elevator and the restaurants, or the elevator and the nightclub, etc. If you've been to Vegas before turning 21 you have been one of these people and can understand what I'm talking about, and there's also adult-age people who are also just trying to get through the casino as quickly as possible (hint: I don't think they're staying at MGM Grand.) You would think these people would be attracted to Trump but clearly they aren't.
That Trump II space needs to be not another tower but other amenities, that would make the place worth going to. Right now there's a hotel, a token restaurant, and that's it. They're right next to the mall, so they don't need shopping. Add a showroom and a seafood restaurant or something. You don't need a casino, just make it a little bit of a destination in it's own right and then link it to TI with a shuttle.
I don't remember clearly, so hopefully someone can help me. Isn't the shopping across the street from Trump? Honestly, I don't think Trump is ever going to be a destination resort, in the Las Vegas sense. I think it is more a condo tower with some hotel floors. more like TheHotel, as someone said, or the Westin (I think it is across and down by the Sahara) mixed with Turnbury Towers.
Encore glass and pool at night.
Compare that to Hunters day video, its striking how much brighter it is. Their are many more videos on youtube that show Encore at night this is just mine.
Jeff, Trump is just west of Fashion Show Mall. I believe it is directly across the street from the entrance to Nordstrom, so it's a long walk to the main part of the mall across from Wynn.
Fashion Show Mall, Shoppes at Palazzo and Venetian's Grand Canal Shoppes are all owned by General Growth Properties (GGP) whose share price is down 97% in the last year and is near bankruptcy.
re: Encore Media Week-saw the designer walking the media around Tuesday. Encore is awesome, loved Cafe Society-Pumpkin Waffle is yummy-j
You can walk from Trump to the FSM - you cross the porte cochere, that service road and then another walk way... and then you're at the very far end of the mall.
I can say that when we stayed there, we felt *extremely* isolated, even though you might not think it would give off that vibe since it's not physically all that far from other stuff.
Part of it was that the place was just empty... Three people at the pool, no one in the lobby. More employees than guests.
Actually, the doorway to Trump faces the doorway into Nordstrom, and Nordstrom is very close to where the Apple store and all the best stuff is.
The Fashion Show Mall is poorly designed due to it's Caesars like "add-on atop of add-on" development, but so long as you understand that there's two entrances to the one Macy's on either side of the mall, you learn that by just going through Macy's you can cut off a lot of time spent wandering in the wrong direction if you want to get from the Nordstrom/Apple area to, say, Treasure Island.
The Fashion Show used to confuse the hell out of me when I felt like I was seeing three Macy's in one mall.
I can second everything Hunter says about Trump tower, where the predominant sensations are emptiness and isolation.
$89 per night at Trump? This is beyond a bargain. It is very scary for Strip area hotels.
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