Jeff Simpson is back with his latest column. This time around, Jeff looks at a sometimes complicated choice for casino operators - whether to invest in a renovation project and if so, how much to spend.
There are many examples of this on The Strip - some, like MGM Grand, have been dramatic and raised the bar significantly. Others, not so much...
Anyway, keep reading after the jump for Jeff's latest.
Happy Fourth of July to all!
The biggest casino operators on the Strip face a lot of tough decisions when it comes to their investments in resort properties. One of the most difficult is whether they can revitalize an aging property -- and, if so, how to do it.
Since arriving in Las Vegas a little more than 11 years ago I've seen a number of attempts to remake or at least refresh casino properties. Some wholesale, some half-ass; some expensive, some on the cheap.
Let's grade a few of those changes: The good, the bad and the fugly.
Note: I'm not going to include much about a couple of recent trends that most resorts are cashing in on, bottle-service nightclubs and day-life pool clubs, although those "enhancements" (the quotation marks betray my age and general Andy Rooney-like generational disdain) can be quite expensive to build and lucrative if run right.
MGM Resorts has been the operator most willing to invest in revitalizing its big inventory of Strip hotels, and some of its changes have been significant ones. I visited Las Vegas in 1994, less than a year after the MGM Grand, Luxor and Treasure Island opened, and the company that eventually grew into MGM Resorts has continually changed the Grand, mostly for the better. Eliminated were the giant lion entry, its amusement park, the ridiculous Oz theme; added were a major conference center, the Mansion, significant room and restaurant upgrades, the lion habitat and "Ka." Unfortunately, its horrible parking garage remains. One important change that was made was the decision to get in on the ground floor of the hotel-condo craze with the Signature towers, the most distant of which seems almost a time zone away from the casino. The hotel-condo market's deterioration and the unhappiness of the Signature buyers probably hasn't been enough of a negative to offset the money the sale of those units brought in. Overall, the MGM Grand's transformation has been a positive, financially and aesthetically. Remodeling Grade: B+
MGM Resorts may have dropped the "Mirage" from its corporate name but the company has not shortchanged the property in terms of reinvestment. The casino floor was enhanced with a couple of new high-limit areas, the restaurant inventory was refreshed, nightclubs were added and the volcano attraction was improved. "Love" replaced Siegfried and Roy. Unfortunate changes included replacing the white tiger display with a burger joint, removal of the sculpture from inside the front doors, the toning down of the island theme and the elimination of the iconic Mirage palm trees logo. Grade: B
Some of the biggest changes at Luxor were made before MGM Resorts bought Luxor and the rest of Mandalay Resort Group. The indoor river and ride were removed, and two ugly, boxy hotel towers were added to boost room capacity over 4,000 before MGM took over. Since then MGM has tried to tone down the Egypt theme (tough mission in a pyramid with a giant sphinx out front), and added nightclubs, restaurants and the city's worst show. No, not Carrot Top. Cheesy shows were stolen from the Trop (Titanic and Bodies) The property has never lived up to its early promise as a serious competitor to the Mirage and seems destined to remain a middle-of-the-pack fixture. Grade: D
The former Aladdin needed a dramatic investment to improve the poorly designed, executed and run property, and the owners who bought it out of bankruptcy just didn't have the money to make enough changes to really transform it. Some of the design problems that remain include a parking garage positioned to benefit the shopping mall that surrounds the resort rather than the casino, a main vehicle entry off of a side street rather than the Strip and an elevated Strip-front that discourages walk-in (or even walk-by) traffic. Positive changes included a new name, eliminating the Arabic theme and the seemingly Taliban-inspired artwork and redesigning the casino interior to add energy. The exterior changes mainly consist of improved escalators and the addition of walls of LED screens on the Stripfront, including a new one facing Harmon as it exits CityCenter that looks big enough to hide a jumbo jet. Entertainment offerings have mainly been a string of failures, but the property is clearly better than it was when it opened in 2000. Now that Harrah's owns the property it should do better financially, but if the company's record with Rio and Paris are any indication, a long period of milking money without significant reinvestment has begun. Grade: C+
The grand dame of the Strip seems to be the one property that Harrah's doesn't mind reinvesting in. Of course, adding a few multi-hundred-million-dollar hotel towers improves room inventory, but they also exacerbate the property's crazy-quilt footprint. (Caesars and MGM Grand seem to be in a contest to see how far they can make people walk on the same property.) Caesars' former owner added the Colosseum and the entertainment venue may be the single best improvement made to a Strip property, both because of its design that perfectly fits the property's theme and because of a strong lineup of artists who have given visitors a non-Cirque reason to see a Vegas show. The restaurant lineup has been seriously improved and one of the city's biggest, if not freshest, nightclubs added. The pluses outweigh the minuses and show that an aging property can be kept relevant. Grade: B+
Of course many other properties have had significant makeovers, and others are supposed to.
Several top properties have added new hotel towers and refreshed restaurant and nightclub lineups, including Bellagio, Venetian and Mandalay Bay. Venetian deserves special mention for the way it has turned around its awful entertainment assets into what is (along with sister property Palazzo) the city's top entertainment spot. Mandalay made a big improvement when it added a big convention center.
In the middle- and bottom-tier groups Tropicana is in the middle of a makeover that is slated to cost about what MGM Grand spent to build and stage "Ka," $165 million. I see that as a small investment to keep a terribly worn property from fading into irrelevance while its bargain-hunting owners wait to unload it after property values rebound.
Flamingo made a partial attempt at a makeover, updating some rooms and improving entertainment offerings, but the property still feels like it's on the decline.
MGM invested a decent amount in Treasure Island's update and many changes were for the better (not including the removal of the cool skull-and-crossbones marquee and the sexing-up of the pirate show) but I think new owner Phil Ruffin will be content to milk revenue from the property if and when the economy rebounds, as he did with the New Frontier.
Monte Carlo has had a decent amount invested it it, but unfortunately some of that money went into destroying much of the property's19th-century European look with the hideous-looking Diablo's.
Among the remaining low-end properties, a couple of properties should be operated frugally and then imploded as soon as the economy allows. The Riviera and Trop are included in this category. The Sahara is supposedly slated for a big-money makeover, but I'll believe it when I see it. There's a big difference between turning an old 300-room hotel in a trendy Los Angeles neighborhood into a hip spot than remaking the Sahara. The Sahara should also be on the near-term implosion list.
Harrah's makes enough money operating the Imperial Palace, Harrah's and Bill's to justify their continuing operation as long as the company's dramatic plans for the east side of the Strip are on hold. It would be nice for Harrah's to mimic MGM Resorts and sink a little money into those stale properties.
Bally's, Circus Circus and the Las Vegas Hilton have long-term redevelopment value and should be operated until implosion and redevelopment pencil out. I think Wynn Resorts would be a logical buyer, imploder and redeveloper of the LVH (and maybe its neighboring Las Vegas Country Club), as the Hilton's site next to the Las Vegas Convention Center would allow Steve Wynn to surround the LVCC and benefit from its shows without having to build his own convention center, further antagonizing his buddy Sheldon, who hates both Wynn and the convention authority.
-- Jeff Simpson, July 2010