As I've said for months now--and proved, using geometric logic, quarterly reports, and benchmarks for the Strip--the Cosmopolitan has not done a great job of marketing their casino. Like the Paris balloon, it's an inside joke that's not even so inside anymore. With the appointment of Tom McCartney as property COO, some people (me included) have guessed that this would change. And, less than a week into his tenure, I've got some evidence that it is.
A little while ago, the Cosmopolitan eliminated its free wifi. After the jump, I talk about the broader significance of taking away what has already been given.
The Cosmopolitan of Las Vegas has released its 2nd quarter results, giving us a glimpse into how the Strip's latest resort is faring. The answer? Not so poorly, though there's room for growth.
My focus here--and I'll be quick, I promise--is comparing the Cosmopolitan's revenue breakdown with the rest of the Strip. In some ways it isn't a true comparison, since I'm pulling the Strip average from the Average Big Las Vegas Strip Casino, 2010 report, which is a year behind the Cosmopolitan numbers. But I think that it still gives a good sense of what the average numbers are on the Strip.
More after the jump.
Late last week, the Cosmopolitan of Las Vegas unveiled its latest secret weapon--a purple truck. Since its existence was confirmed on Twitter, speculation about its true purpose has been running high. Would it dole out free indie rock and hipster glasses to the unwashed masses of Las Vegas? Would it spontaneously curate streetside happenings? Or would it actually do something useful, like provide free shuttle service? As usual with marketing promotions that want to go viral, it was shrouded in mystery.
Well, word has it they've been active this weekend, and I ran into the Cosmopolitan street team quite by accident this morning.
To learn what's going on with the purple truck, continue reading after the jump....
Some notes from my trip, now two weeks past:
- Hotel: Stayed at Cosmopolitan and tried their lowest end room product, the City Room (which I believe is the only room offered with two beds). I took my brother along on this trip, who is 29. This was his first experience at the Cosmopolitan and he absolutely loved it. Everything from the design, to the room to the pool - right up his alley. It was interesting to see the place through someone else's (significantly less jaded) eyes.
- Cosmo: Generally, things went well. The room was clean and we got in right way. I visited the spa and while I appreciated the design, the attendant allowed towels and used cups to stack up all over the place and they didn't have any combs or brushes for your hair. Weird. In the casino, I was informed that none of the bars have Stolichnaya Vodka (they have flavors but not the normal stuff). It's such a common brand, that seemed odd to me as well. Service was pretty good throughout the resort. Friendly workers and lots of curious folks wandering the property. I didn't see a lot of gaming action.
- Food: Hit some places I'd already been or had been recommended to me: China Poblano (twice - so good), Tacos al Gordo (near Encore ; very good taco stand style - highly recommended. It seems their new Strip outlet was a surprise to some based on the Twitter reactions), Steak and Shake (South Coast ; was fun and worthwhile but the line was loooooong). Drinks at Sinatra where we had a long talk with the bartender - he'd actually served The Chairman long ago.
- CityCenter: Took my bro through CityCenter for the first time. He's an artist and really appreciated the work they've installed around the campus. He didn't care for The Crystals very much though ("this place is a disaster. WTF?")
- Construction: Ruffin is removing more of the TI lagoon to add a Starbucks and some sort of margarita debacle. The area being torn up is the southern tip, between the porte-cochere and the front of the hotel. Further down The Strip, the Tropicana is looking more 'finished' - less jarring moments as you move from a renovated part of the hotel to one that hasn't been touched. At Cosmo, Blue Ribbon was having it's floors replaced (it's since re-opened) - in talking to employees, it sounds like it was pretty dramatic when that pipe broke (I can't believe we haven't seen any random customer video). The Sugar Factory at Paris is just as ugly as I expected it to be.
- Sahara: Went by for what might be the last time. It was medium busy in the casino but the employees looked pretty sad and tired. Being in there was a bit of a bummer but I'm glad I got the opportunity to take some pictures.
- Crowds: This was a Tuesday and Wednesday night but it was crowded. There were people everywhere. Nice to see.
- Vegas Video Network's Pub Crawl: On Wednesday, I went to a taping of Pub Crawl at the Vegas Video Network studio. This was a lot of fun and if you're a fan of the show, you should consider it on your next trip. Everyone was super friendly and they're a laugh riot. Bring booze.
I took a load of photos. They're available here in case you want to see them.
Jeff's back with his latest piece and this time he's examining the performance and challenges facing The Cosmopolitan.
Click through for the full text, it's a good read.
I was just at Cosmo last week for another stay. I've got a bunch of scribbles and other notes that I'm (slowly) working to turn into a piece of my own.
Cosmo has filed it's first 10-K for the year 2010. This comprises a year of opening expense but only 17 days of operations.
More analysis to come (I'm hoping Dave and/or Jeff will share their takes and I may have more to say too) but a few interesting figures:
We incurred a net loss for the year ended December 31, 2010 of $139.5 million
The Company's gaming revenues were $4.3 million for the 17 days of operations during the 2010 fiscal year. Non-gaming gross revenues over the same period were $14.0m. The Company's gross room revenues were approximately $4.2 million. Average daily rate ("ADR") and occupancy for that period were $319 and 97.8%, respectively, generating revenues per available room ("REVPAR") of $312. Other non-gaming revenues included gross food and beverage revenues of approximately $9.3 million and convention and retail revenues, including the spa and salon, of approximately $0.5 million.
Revenues for the 17 days of operations in 2010 include retail value of accommodations, food and beverage, and other services furnished to our guests without charge. These amounts totaled $7.6 million and, in accordance with industry practice, have been deducted from revenues as promotional allowances.
Perhaps some of this stuff will show up on EBay?
We recorded an expense of $10.1 million in 2010 primarily relating to certain construction in progress ("CIP") related assets that we deemed had no future value to the Company. These abandoned assets consisted primarily of fixtures and furnishings, including assets which were in various stages of completion at our suppliers, as well as cancellation fees charged by some suppliers against deposits held by them. These assets were identified following the finalization of certain interior designs in the period leading up to the opening of the Property on December 15, 2010.
A big chunk of 2010's expenses were advertising related:
Total advertising costs were $44.3 million, $0.1 million and $0, respectively, for the years ended December 31, 2010 and 2009 and the period from July 30, 2008 (inception) to December 31, 2008.
Looks like John's taking home $800k per year:
The annual base salaries for Mr. Unwin and Mr. Burge have been set at $800,000 and $400,000, respectively.
That makes him a bit of a bargain, especially compared to his neighbor, Jimbo Murren, whose salary, not including stock or bonus, was $2.0 million in 2009.
If the hotel is sold, they want Unwin to stay...
Each of Mr. Unwin and Mr. Burge is entitled to earn a retention bonus based on continued employment through the date on which a sale of The Cosmopolitan is consummated. If, during the term of their respective employment agreements, The Cosmopolitan is sold to an unrelated third party and their employment has not terminated as of the completion of such sale, Mr. Unwin and Mr. Burge shall be paid a retention bonus of $4,500,000 and $1,000,000, respectively, within 60 days following the completion of the sale.
... and if it's shutdown, he still cashes in:
Similarly, if at any time during the term of their respective employment agreements, each of Mr. Unwin and Mr. Burge's employment is terminated due to a shutdown of The Cosmopolitan, they shall be paid 100% of their respective retention bonus.
As for the data itself, 17 days isn't much to work with... But, given the past few years of property openings, we do have some other resorts we can compare against.
According to the Las Vegas Sun, Aria generated operating income of $7m during it's first 15 days of operation. Aria is a much larger hotel than Cosmo though neither were able to ramp up all their rooms out of the gate. As Aria headed into the first quarter of 2010, it famously had occupancy of only 63%.
Wynn Resorts reports WLV and Encore together so we don't have specific figures for the latter, which opened in late 2008.
UPDATE: Dr. Dave here. Here are some of my thoughts.
It's notoriously difficult to evaluate opening numbers like these; there's never enough information to make a good comparison. What's a "good" gaming revenue number for a casino that's opening without a legacy player database? What kind of F&B numbers should the place be pulling in? There aren't any real benchmarks, which is kind of scary when you think about it. People invest billions in building these things and don't have any way to define what makes them a success. Or at least no definition that they'll share with the public.
In the absence of those kinds of apples to apples comparisons, I figured the best thing to do would be to take the daily average in each of the categories that Cosmopolitan reported and compare it to something I have: the daily average revenues for big ($72 mil plus in annual gaming revenue) Strip casinos for fiscal 2010. If you want to see that report, it's over here (pdf).
As you can see, the Cosmopolitan's got a lot of heavy lifting to do. In gaming, it woefully underperformed, lagging the Strip average by a whopping 55%. I'm not totally sure whether the casino took that million dollar hit from baccarat cheaters in December or January, so that might be skewing the results.
In rooms, it's also underperforming, but that's not surprising since it didn't have all of its rooms online.
The big surprise is food and beverage; here, the Cosmopolitan significantly outperformed the Strip average, by 172%. Of course, you might have casinos like Circus Circus and Riviera in the group, so it's hard to compare these numbers with, say, Aria, Bellagio, or Wynncore. But with this limited data, it looks like the "new to market food and beverage concepts" (I've got that burned into my brain now) are a success.
"Other" revenue is mostly retail and entertainment, and since the Cosmopolitan's big theater isn't yet open, and it doesn't have a staple show that will consistently bring in big bucks, this isn't a surprise.
So all in all, it's hard to say exactly what's going on, but judging from what we see here, in December the Cosmopolitan struggled with its casino, about par with its rooms, doing great with f&b, and straggling along with everything else.
So, here's my 4,200 word set of notes on my stay last week at The Cosmopolitan of Las Vegas.
I hope you enjoy it - please leave your comments below.
If you want to see photos from my stay, a complete gallery is located here.
Keep reading after the jump.
Our special guest this week is Steve Friess of The Strip Podcast.
This time on the show:
* The Cosmopolitan of Las Vegas Opens
* Vegas Gang 'Sure Bets'
Check out the show: http://www.vegasgangpodcast.com
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 email@example.com.
That could almost be a headline on the cover of Cosmo, the magazine. As you might have guessed though, this is about The Cosmopolitan of Las Vegas, which opened this week on the Las Vegas Strip.
What sort of problems?
Well, I plan to write another post with more detail on this topic but to give you a flavor: our room wasn't ready until three hours after we were told to arrive for check-in, neither of the TVs in our room worked properly (one of them could not be shut off without being unplugged and on the other you couldn't change channels), neither bathroom had a bathmat so water made the marble floor very slippery, we did not receive the turn-down service either night we were there, and the TV couldn't be used for many of the built in services such as checkout and reviewing of messages.
That's a partial list of the problems I recorded with the room. It doesn't include any of the good stuff either - that will be in a dedicated post about the room and the stay that discusses some of the great things about the design and a few things that really bugged me from a functional standpoint.
The question I want to ask is this: what should a guest expect of a brand new hotel and how should a brand new hotel market itself before it is running like a finely tuned machine? Are opening night guests asking for abuse? Should new hotels make disclaimers or offer discounts?
To set the stage for this discussion, I'd like to include a few important bits of information about this week:
* The per night rate for the Cosmopolitan this week was significantly higher than comparable rooms at other Strip resorts (traditionally this is a very slow time of the year).
* The front desk staff told us that all the rooms had been extensively checked for problems prior to any guests checking in. It's hard to imagine how this could be correct given some of the basic issues like TVs not working.
* Cosmo CEO John Unwin was quoted in several interviews saying the staff was ready and excited to open the doors and to welcome guests. If anything, I'd say expectations were raised in the pre-opening press, not lowered.
* There was no disclaimer or notice to incoming guests that kinks were still being worked out and that they may need to be patient, etc...
Based on the comments on Chuck's post and some of the stuff I read on Twitter, I get the impression that some folks believe that this is just what happens with new hotels and the first guests should just deal with it. Maybe most people feel that way - I'd like to find out.
I think it's an interesting question but for me it boils down to getting what you pay for - they promised a lot and didn't deliver on that promise, at least in terms of hotel operations. Based on that, I think that the complaints are justified, even if we're not talking about curing cancer here.
None of the problems I encountered are even close to terminal. If they pivot and fix these issues, then this will be a distant memory in no time. Early signs indicate that they're serious about raising their game. We'll see.
Let me know what you think in the comments.
On Cosmo's second and third levels, between restaurants and retail stores, the hotel has installed a bunch of furniture in walkways that would probably look pretty awful with it.
The idea is to create a sort of hotel lobby feel, but spread over the different levels instead of just in the check-in area... and not just chairs and couches - there are pool tables, foosball and a ton of other funky furniture.
It actually looks pretty cool but we'll see if it turns out to be problematic at all - there was a long period where Bellagio removed all of the furniture from their lobby due to people just hanging / snoozing there all day.
The idea is that people can not only hang out and do work, meet friends, grab a quick few minutes of rest but also that they can get some take out food from the restaurants, many of which are setup to make that pretty easy.
One of the things I've noticed as I've been touring Cosmo are the interesting uses of technology in the new resort.
As CEO John Unwin would say, as a new company, they are free of legacy tech. The result is interesting uses of the latest and greatest. A few examples:
* LED/LCD displays are everywhere, not just for ESPN but for tons of art from Chicago firm Digital Kitchen.
* The casino floor way-finding machines are not only touch based but also include a slot, video poker and table game finder based on several criteria including denomination and game type.
* Each check-in desk has an embedded iPad, tuned to a special 'guest services' app. Right now this appears to only be the Cosmo Web site but I expect this to expand over time. I was tempted to install the Aria app for kicks but I restrained myself.
* The in-room TV allows you not only to view info about the resort but also the acts appearing in venues like Marquee and Book and Stage, as well as the ability to show a personalized itinerary of your activities on property. This is a few steps beyond anything we've seen in-room elsewhere in Las Vegas.
* Much of the digital art is generative, meaning it deviates from its baseline using stimuli from the environment - for instance, the digital pillars in the lobby will animate more bubbles as you walk by, based on sensors in the base.
That's just a taste but for a nerd like me, I love this stuff. I've gotten a hint of some of the backend software they're using and I hope to bring you some detailed information on that soon.
I'm on the ground this week for the Cosmo opening and today was my second chance to tour the property, this time in a more extended fashion than last week. It was great to be able to spend a little more time and really check things out.
I'm still excited. The rooms really are drop dead gorgeous and the terrace views from the upper floors are insane. They make you gasp when you step out for the first time.
I also got a chance to join a David Rockwell interview with Blackjacker1979. Rockwell had a hand in a large amount of the property design. That should be posted soon - it's only about ten minutes but was quite interesting. Thanks to Eric for letting barge in.
Hotel check-in is tomorrow afternoon starting at 1pm, followed by a chance to try some nibbles from the various restaurants. The curtain goes up for the public at 8pm - I'll be at the craps tables.
The big week is here - Cosmopolitan of Las Vegas opens on Wednesday. I'll be in town most of the week to cover the event for for my favorite Internet readers, you.
The fun starts on Tuesday with another set of tours and interviews, continues on Wednesday with a ribbon cutting ceremony and then wraps up at 8pm when the doors are open to the public.
Two Way HQ will be setup in my Cosmo suite so that I can bring you all photos, video and commentary from me and a bunch of other interesting folks too. Should be fun and it's the last one of these we'll get to do for awhile.
For those that are also in town, there are several meet-ups planned:
12/14 10:11pm Mandarin Bar - Mandarin Oriental
12/15 6:11pm Chandelier - The Cosmopolitan
12/15 8:00pm THE COSMOPOLITAN OF LAS VEGAS OPENS
12/15 11:11pm Vesper - The Cosmopolitan
12/15 1:11am Bond - The Cosmopolitan
Hope to see you there.
In addition to the opening coverage, I'll be performing a final round of 'boots on the ground' testing for Vegas Mate 3.0, which is about to be completed.
I'm writing this post several hours after getting my first look at the Cosmopolitan of Las Vegas with my good friend Chuckmonster, following an interview with CEO John Unwin. Let's be honest - the hype machine surrounding the opening has been running overtime for the past few weeks. Cosmo has been getting a lot of ink, most of it positive, even if tentative. I won't be coy: I was impressed with what I saw. In some cases, very impressed.
Given that, when discussing this new property I think it's useful to turn back the clock a year. When I first toured Aria in November of 2009, I found a few things I liked there too. Based on my glance today, there's more to appreciate in the design and innovation of Cosmo than there ever was at Aria but it underlines a fundamental truth: without great service, no hotel will matter very much to any customers that matter very much.
We saw a lot today and to be honest, I'm still processing everything.
One thing though, stood out so dramatically that I can't stop thinking about it - the views, from the terraces in the tower to the restaurant patios to the windows overlooking the lake at Bellagio from the Identity Lounge - they are stunning... beyond stunning.
The Cosmopolitan appears to be embracing it's place on The Strip and reveling in it - personalizing it and making it an integral part of it's identity. Doubling down on it even. Unlike CityCenter, where designers seemed almost ashamed to be part of the legacy of their neighborhood, The Cosmopolitan of Las Vegas seems to be all about providing a window to the excitement that's both inside and outside it's doors.
I had a lot of fun on our tour today. I love the little details like the varied light fixtures and chandeliers (not THE chandelier, though that is stunning as well), the Japanese soaking tubs (again, with great views), the huge suites with their wine fridges and complete cocktail gear, the varied and interesting restaurant designs, the at-first-seemingly-random but at closer-examination-definitely-not collection of LP covers leading the way down to the now not-so-secret pizza place, and one gaming innovation: casino cabanas.
That last item is a simple but unique idea and I'll be very curious to see if it plays - table games, separated via beaded curtains, allowing you and your buddies to have a semi-private experience without running afoul of state law.
In our interview, Mr. Unwin repeatedly gave us the phrase 'different that matters'. It appears that's something of an ethos for the new resort - change and challenge the operational and design status quo but not just for the sake of doing so - it has to be done for a reason. I like the sound of that philosophy but it's too soon for me to judge if that's just a catch-phrase or if it means something tangible.
I'm back here next week and I'm looking forward to it. It will be a lot more fun to write about this stuff when I have photos and tales of customer service to share. Right now the place is all promise.
I hope that promise is fulfilled because that would be a lot more fun than the alternative.
UPDATE: We got permission to post a few new, blurry photos of the joint - the lobby, part of the casino and the Vesper bar, which is right off the lobby. We'll have full-on, real, non-blurry photos and video in a few days.
This time on the show:
* Special Edition - Hunter and Chuck interview John Unwin, CEO of the Cosmopolitan of Las Vegas.
Check out the show: http://www.vegasgangpodcast.com
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 firstname.lastname@example.org.
Treasure Island owner Phil Ruffin doesn't seem to think CityCenter was such a hot idea. Ok, that might be a bit of monday-morning-quarterbacking but he's also going out on a limb to say Cosmo is doomed, in his talk with Nevada journalist Jon Ralston.
He also revealed that his $1B offer for The Mirage was turned down by MGM's board just over a year ago.
Ruffin's typically one of the more restrained casino owners when it comes to making public comments. Interesting to see him coming out full on, including bashing President Obama.
Thirty days to go.
Thanks to a trusty source, here we have a few shots of some Cosmopolitan of Las Vegas casino interiors, one of the ingress/egress areas (perhaps right inside valet, up to the restaurant level?) and then three videos of the West Valet, showing some of the really cool work the multimedia team is doing.
I've bemoaned the lack of technology being used in modern casino-resorts - well, here we are at least seeing something more inspired than using LCD panels for restaurant menus. Perhaps just a taste?
It's sort of James Bond meets the Bat Cave. If you want to know who Cosmo's ideal customer is, it's Bruce Wayne, no doubt.
I dig the look and I'm excited to see more.
My buddy Mr. Friess has a few more, including what to me looks like the centerpiece chandelier I've heard so much about:
From there, we were off and into conference calls, some of which included a few interesting tidbits. MGM told us that both Bellagio and MGM Grand will be getting room refurbs next year, while Steve Wynn explained that their Cotai development work was wrapping up and they'd start moving dirt around any day. The best part of that call was The Steve's ludicrous assertion that they're not secretive about their hotel designs - he practically laughed the questioner off the call. We'll see detailed models and drawings of Wynn Cotai just as soon as some inept outside designer posts them online, not because the company was feeling generous.
Speaking of leaks, they continue at Aria, where we've learned that they're working on a massive new signage package to lure Cosmo visitors and that they're even considering building The Strip's largest marquee. I've got loads of new CC stuff to share with you as soon as I'm done digesting it all.
That brings us to today, with the only piece of news this week that really surprised me - Wynn Las Vegas superstar Andrew Pascal has decided to leave the company, to be replaced with the reliable Marilyn Winn Spiegel (someone we considered as a VPP guest before we settled on the excellent Tom McCartney). What is Andrew going to do next? He's a young man, I can't believe that he's ready to retire.
Pascal has worked for Wynn for a long time but before this current stint, he was in Silicon Valley as Chairman of WagerWorks, a company that provided online casino games, playable for points. Is he headed back to tech? Chuckmonster is betting on Icahn but I just can't imagine that sort of transition.
Ichan's not really in hospitality, he's in hospitality finance - moving money around from distressed property to distressed property, a far cry from actually serving guests. Nope, I think for Pascal I'd put my money on a few months time off and then into some new entrepreneurial venture of some kind - more likely Silicon Valley than Spring Valley though. Maybe Aunt Elaine has eyes on angel investing - we know she can afford it.
What's more interesting is Wynn hiring a veteran Harrah's exec for such a tough job. The last HET (or should I say CZR?) alum to have the gig, Don Marrandino, didn't even make it to opening day. Spiegel is well regarded but the properties she's overseen for Loveman have very different guest satisfaction aspirations. Hopefully we're not in for a rocky transition just as Las Vegas starts to ramp up again.
Interesting stuff... In other news, I've been thinking recently about re-calibrating this blog and it's content. The landscape has changed dramatically since I started doing this and in a world where my time is limited, I want to make sure I'm spending it to do something that matters, not just be the second, third or fourth site to post on the same topic. More on this as decisions are made.
One last thing - if you haven't already, maybe go ahead and nominate this blog and my app Vegas Mate for The Trippies - you have three days left before they close. Maybe, just maybe, I'll be so pleased with being nominated that I'll spill a bunch of new juicy secret details about everyone's favorite massively overpriced, failing joint venture project.
** Mad Men Spoiler Alert **
Do you love furry little creatures? The Cosmopolitan hopes so.
The hotel broadcast their first TV commercial during the finale of Mad Men, the popular AMC advertising drama. During the final episode, viewers were shocked to see that Don Draper fell in love with his secretary and got engaged, all in the space of about 42 minutes.
Sure, 'Megan the Secretary' is good looking and seems to actually be capable of a real conversation but come on, Don's clearly emotionally damaged since his marriage broke up and it's hard to look at this as a long term thing. I think most viewers cringed when they watched him dial Faye Miller, the seemingly substantive woman that looked really good for Don, only to blow her off.
Will your flirtation with the Cosmopolitan be longer lasting? There's been a good amount of gushing about the property in advance of it's opening. I've said more than a few kind words myself. Will that last when the credit cards start swiping?
We're now at the point when the resort starts to go from a set of interesting concepts that are easy to appreciate into a 'why the hell didn't housekeeping show up and where the hell are my bags' potential reality.
How will the Interwebs react if Cosmo has the same sort of sputtering opening that Aria had, one year ago? Has Cosmo built up enough goodwill to get the benefit of the doubt if there are major snafus? It will be an interesting test of both the hotel and all of us that write about this stuff.
As for the commercial itself, I don't know what I was expecting but I wasn't totally sold. For me, it seemed a bit like they were trying too hard to establish their cool and edgy bonafides. The commercial felt a little like a live-action version of a nightclub half-pager you'd see in the Weekly or Vegas Seven. For a casino ad, it has resulted in a remarkable amount of commentary, which of course means they accomplished at least one goal.
This first ad didn't give us a look at the resort - none of it was actually shot on property. What we don't know is if they'll be following it up with more television advertising and what those spots could be like.
To my eye, the spot was squarely aimed at fun, taboo and youthful vitality (as well as those older folks desperately clinging to youth by any platinum card necessary). As we've seen in abundance since May 28th, when you target the Hard Rock / Palms crowd, it's very hard to filter who comes through your front door. Will this be a hotel full of Surrender patrons? Personally, I'm hoping the answer to that is no but we'll have to see - I bet some people are already planning how many rollaways they can get into a wrap-around.