Two Way Hard Three | Las Vegas Casino & Design Blog

July 18, 2010

Vegas Gang #49 - July 15th, 2010

Posted by Hunter

Podcast-a-palooza - Oct. 30th, 2010. Full details coming very soon.

* Wynn Wins Tip Battle
* Cosmopolitan of Las Vegas Discussion
* Riviera Bankruptcy
* 10 Years of MGM Mirage Resorts International, Inc.
* Vegas Gang 'Sure Bets'

Check out the show:

Feel free to leave your comments below. If it's a question that you want asked on the show, please make that clear in your post. You can also send those to


Read archived comments (12 so far)
July 18, 2010 12:27 PM Posted by mike_ch

I'm kind of somewhere there between Jeff and Dave on this one. It really is more of a demand problem than a supply problem. If the Strip was like the big theme park complexes all run by one company, the MegaCorp would probably close everything south of MGM Grand and north of Encore and run the Boulevard with less hotels. After 9/11, Disney closed one hotel for a period and halted construction of another (which still sits there rotting away behind fences in the swamp) in Orlando. And maybe MGM would have had it better off if they could simply have the option to close down the Manadalay trio on the south end of the hotel, turn off the lights, drain the pool, put some fences around them and ask people to not look in that direction. ;) But that's not a very realistic option, and the effect on jobs would be catastrophic in a town that's already starting to boil close to the panic level.

I find this discussion about how the top end was so overestimated is kind of amusing, because years ago I was complaining that ALL new development were targeting Mike E and his AmEx card and in years past the development had been focused on the most amount of rooms in a building possible with rates all across the board. And there simply wasn't anything like Treasure Island or MGM Grand being built anymore, not so much in the theme hotel sense but in the "room for everybody" sense. At the time, you guys kind of laid it between Steve Wynn and Phil Ruffin, the former's customer niche and the latter driving property rate into orbit with the Frontier sale and making it unfeasible for something like a modern day Flamingo or Stratosphere to ever be built again when the ground costs as much as it did.

But I guess my point is, if some of these enormous resorts simply disappeared or went offline, they'd consolidate their customers in fewer towers and have a lot less people to pay, and would look a lot of healthier than they do. There's simply just too much Las Vegas right now for the number of customers there are. MGM and Harrah's need like, three or four good hotels with varying range in room rates, and they have seven or more.

I've long been Mr. Doomsday in the Vegas opinion sphere, and always felt the city was due for some big contractions. After seeing this opinion in Vegas Seven the other week, I kind of wonder if it's catching on. The non-gambling element of the city seems like it's going to shrink massively, but can the Strip?

I doubt it will, so long as you continue to have leadership like you see at MGM and Sands.

And it gets really weird, since I just got to the point where Chuck talks about how wrung out MGM shareholders have been. I wonder if they will have a shareholder confidence fracas on their hands soon, but given that the name change just sailed through on the thinnest of justifiation perhaps not.

July 18, 2010 12:40 PM Posted by mike_ch

Okay, now I'm listening to the wrapup.

The other thing to keep in mind regarding MGM is the waning influence of Kerkorian. He used to basically be as close as you can get to a final say-so on how things go, but after Dubai got involved he lost the power to checkmate any option he wanted. Some blame the Dubai folks lack of confidence in MGM management and subsequent witholding of funds for the near-shutdown of CityCenter last year.

Really, all it's going to take is one big shareholder going to Dubai World and saying "hey, let's throw this Murren fool out on his head" and you'll have one of these massive confidence vote arguments similar to HP during the Compaq takeover, or Disney during Comcast's takeover bid.

There's a certain breed of executive who comes in, usually from the finance department, and announces with a badge of pride of s/he has no experience with the company's product personally and has no interest in cultivating any. Carly Fiorina did this at HP, Michael Eisner did at Disney ("We have no obligation to create art, we have no obligation to make a statement"). Both barely squashed revolts and basically suffocated their companies. Murren's 'never would have visited Bellagio if I wasn't in charge of it' attitude seems more of the same. He's an interesting character, but everyone like him who has tried this before eventually runs out of rope.

July 18, 2010 6:30 PM Posted by parchedearth

Cosmo will also have a 3 story $60M pool/club complex run by the Tao group. DB seems to be putting all the right pieces in place for Cosmo to succeed, I am certainly rooting for them. While $300/night on weekends is certainly high, the rate drops to $155 on Mon nights. We saw similar bloated room rates this far in advance for Aria. I expect Cosmo will lower rates as the opening approaches and should end up being comparable to Aria.

Aria is hosting a legal convention in August and offered a group rate of $105/night which covers 2 weekends (3 days before and after the actual convention). I interpret this low rate as a sign of desperation to attract convention business. This is surprising because I am seeing signs of pricing strength at Wynn (resort fees) and Caesars (increased rates).

July 19, 2010 11:11 PM Posted by worldpool

The Cosmo of las vegas i am happy with the twitter and all the stuff they are doing to open the place up i love the idea that a new place will open After city center i like what u guys said about it to me i think cosmo meet bring the younger kids to the casino and bring in people becuse of the waiting we been waiting for so i hope cosmo will tell more about what to expect when it opens and update there info soon

July 20, 2010 1:24 AM Posted by tcfrombostonn

Ok I have to bring this up, who on the table agrees to do the show, but only if they can keep working? The show sounds so unprofessional when us listeners are listening intently but members of the panel are not. Hunter you need to uninvited whom ever this problem guest is and make the show listenable once again.

July 20, 2010 1:51 PM Posted by Jeff in OKC

I have no complaints about the panelists paying attention. I think they do a fine job and are worth every penny they are paid.! :-)

July 21, 2010 1:54 PM Posted by Jeff in OKC

TC, after relistening I'm guessing you are referring to the typing sounds in the background? I have heard that on many shows and always thought the panelists were working the internet in order to expand on the subject at hand. Kinda like the way CNN started making some of their reporters on some studio shows have their laptops open and were supposed to look like they are multi-tasking while on air.

July 21, 2010 2:41 PM Posted by TCfromBoston

Yea, I'm referring to the typing. Sorry I made my comment on the way into work on my phone, and I wasn't very clear.

I have no issues with panelist researching the topic at hand. But that damn typing keyboard sound is so distracting, and just gives the podcast an overall sound of unprofessionalism, which is the exact opposite of what Vegas Gang is. Most phones have mute buttons, and you know the panelist talking isn't the one doing it, becasue the sound in the background is almost like the person is writing a paper.

Just in the future mute the phone and type, most people have been on conference calls and do other things, just mute the phone is all I request.

July 24, 2010 3:01 PM Posted by Ibiza Hotels

Jeff and Dave are right on it with this...

July 28, 2010 9:28 PM Posted by Ted Newkirk

I've been unabashed in saying we have a supply problem. We can't expect demand to revert back to boom times anytime soon. That's why it was called a BOOM.

People built based on thinking that boom-time numbers were normal numbers. Kind of like all the people who moved here in the 2000's who are freaking out because the Vegas that they moved to (anybody with a pulse can fall out of bed and make $60k a year) is gone. The Vegas of today is SO much more like things were in the 90's. This is so much closer to normal than the boom was.

The length of time it takes for all the new rooms and the stagnant housing market to rebound will create many years of Las Vegas being a very affordable place to visit and live.

Which will unfortunately probably lead to another boom... which will lead to overbuilding... you get the picture.

August 10, 2010 8:44 AM Posted by Gray

Great podcast! I think it was pretty arrogant of the developers to assume that if they built more and more resorts, it would draw more people to town to fill the rooms and hotel room rates all over the city would rise accordingly....that seems to be very faulty logic to me, driven more by greed than rationality. Especially since the new resorts don't offer much of anything new over the ones that already exist. There's always a finite market for anything. Did they even do a feasibility study to determine if the numbers were there?

On another note, I was fascinated by the discussion about a comps program for the non-gamblers, those who are putting all their money into the bottle service and spas and high-end restaurants and whatnot. I've been privy to complaints from the mid-level gambling crowd about how they're being ignored now that the resorts are going after the young nightclub crowd, but this was an eye-opening discussion for me about the flip side bias. Certainly, it does only seem fair that if the non-gamblers are spending as much on property as the gamblers, they should also be rewarded with comps. I'm sure they're already tracking the amount of money each guest spends on site. It would probably be easy to implement.

August 10, 2010 3:52 PM Posted by American Gaming Guru

Hunter, you mentioned the concept or lack there of for rewards for customers spending a significant amount of their budget on F&B rather than the gaming floor. To my surprise, the Borgata actually rolled out a Nightlife Rewards program for all their bars and clubs this past year. Any indication of how it is going? I really like the idea.