Two Way Hard Three | Las Vegas Casino & Design Blog

April 5, 2008

Open Topic Discussion - April 5, 2008

Posted by detroit1051

The Wall Street Journal follows up on the condo-hotel bubble, and focuses much of the story on Residences at MGM Grand and Trump's new tower. The story should be available without a subscription:

"It's been a very bad investment," said Moji Adekunbi, a 47-year-old engineer, who bought a $550,000 condo-hotel unit in the Signature at the MGM Grand in 2005 in Las Vegas, where one of every four hotel rooms being developed is a condo-hotel unit. Mr. Adekunbi counted on the cash flow from renting out his unit more than covering his $3,000-a-month mortgage payment, leaving him with a tidy profit.
He said the developer's sales staff led him to believe that the hotel would have 94% occupancy and $350-a-night rates, Turns out, he said he is netting only between $400 and $1,800 a month before his mortgage payment."
Condo-Hotel Buyers See Investments Sour As the Market Weakens


Read archived comments (37 so far)
April 5, 2008 9:27 AM Posted by detroit1051

The Light Group's site has more information on Yellowtail which is replacing Shintaro at Bellagio. There is a link to a floorplan of the renovated space. The room looks a little dark to me, but it may just be the rendering.

April 5, 2008 11:37 AM Posted by Brian Fey

I have not read the article yet, so I shouldn't comment, but I will anyhow. :)

People should be smart enough to know, they can't buy a condo, pay MGM to manage it, and still make enough or more than enough to cover the payment. If it were that easy, everybody would be buying these places, because they would end up being free. Its not that easy. People just amaze me.

April 5, 2008 11:46 AM Posted by Brian Fey

Ok, I read it now. :)

That would be very romantic...I can see it now, I am checking into Trump in Vegas, and there are people fighting in the lobby to get my business. I think I'll just keep staying at Wynn.

Also, I love how people are suing and pissed that their investments have gone down. HELLO!!! Its called an investment people! For those that need educating, investemts are risky. That's why they are called investments, if they wern't risky, they'd be called savings. Notice how nobody complained when their property values went up 25-30% in the southwest just a few years back? What goes up, must come down. Investments can either go up or down. There are no guarantees when it comes to an investment.

Ok I'm done with my rant. :)

April 5, 2008 4:19 PM Posted by Roberta

I think the unregistered securities challenges may turn out to be an interesting part of the story.

April 5, 2008 8:51 PM Posted by BigRedDogATL

I looked into these condo-hotels with both the Trump and the W Hotel projects. I ran the numbers myself and came to the conclusion that they were way over priced to have the numbers work.

I wanted one of these to give me a place to stay in Vegas for the 6-8 times per year I was visiting at the time I checked into them. My hope was that they could break even or a worst not cost me more than I would pay for hotel stays during my trips. After I ran the numbers, and found that the developers would not guarantee any sort of occupancy rate or even a rental rate, I ran away.

The only people who seemed to have made out good on strip front condos are the people who got into the Jockey Club or Polo Towers early on.

April 5, 2008 8:54 PM Posted by Mike E

I'm working on my report now (by far my longest yet) which includes lunch with Steve Friess, Wynn Tower Suites, Alex, Okada teppanyaki, Le Reve's VIP package, and even ATV rides just outside Valley of Fire State Park among other things. Best trip ever.

I just thought I'd throw out some stuff that's piqued my curiosity for the ultra-deluxe. I recently saw these pictures on TripAdvisor:

There's no question these rooms haven't been updated since Mirage's opening--they look terrible. It begs the question, with so few of these types of accommodations available and in close proximity of one another, are casinos unable to renovate them for fear of disturbing their most esteemed guests? Bellagio's Web site shows that their villas have gone untouched as well. While I don't expect MGM Mirage to go ultra-contemporary with everything, there's no amount of upkeep that will prevent their most prized suites from needing a serious renovation.

April 5, 2008 9:35 PM Posted by detroit1051

Mike, are those the villas at The Mirage? I talked with my host at Bellagio today. I think she was just checking to see if I had died since I haven't been there in 18 months. I asked her if the high limit slot room had been renovated yet. It was scheduled before the end of 2006. She said CityCenter took priority on expenditures, but the slot room in now back on the schedule. I wonder if some of Mirage's capital expenditures were also deferred because of CityCenter.

April 5, 2008 10:10 PM Posted by DavidF

MikeE - Looking forward to that TR!

I am just starting to plan our Summer trip, if anyone else is planning a July visit let me know�

My thoughts on those Mirage photos � in order �

Picture 1 - Nick Papageorgio
Pics 2 and 3 � they look exactly and I mean *exactly* like the bathroom and bedroom in the Penthouse Suite we stayed in Nov. 06. I was even going to call BS on the pics being the Lanai � until I saw that Picture 2 in the mirror its leads into a Corridor, the Bathroom in the Penthouse connects directly to the bedroom.

I can�t believe they are still using the old school tube TV that raises, ours failed during our stay and Maintenance told me they couldn�t wait to get rid of them!

Having said that reading the accompanying review on TR these pics came from - I notice they saw it as part of the suites tour, maybe the other Lanais are updated, maybe as they are used by the high end customers they don�t get as high a wear and tear as said residents are busy in the Casino? Maybe they don�t need reno as they have been more highly maintained than the other parts of the hotel� I guess I could speculate until I am blue in the face�

April 5, 2008 10:12 PM Posted by Mike E

Detroit, those would be the Lanai Bungalows. The villas are further down the same hallway. Several months ago, I stumbled upon some recent Mirage villa shots as well and sure enough, they had not been renovated.

April 5, 2008 11:16 PM Posted by Hunter

Heh, those Lanai pics are *exactly* the same as the Lanai I saw when an friend-of-a-friend stayed in one in ~2000. I mean *exactly* the same.

April 7, 2008 10:01 AM Posted by detroit1051

Wynn hires new Senior VP of Design. I'd like to know Leonard Stern's opinion.
LAS VEGAS, April 7, 2008 /PRNewswire-FirstCall/ -- Architectural Interior Designer Jerry Beale has been named Senior Vice President of Design and joins Roger Thomas to assume the creative leadership of Wynn Design and Development, wholly owned subsidiary of Wynn Resorts. Beale will commence with the company on April 21, 2008.

April 7, 2008 11:22 AM Posted by David McKee

Pardon my ignorance, but is Encore opening earlier than expected because construction is progressing faster than anticipated, or is it a "soft opening" to capture end-of-year business?

April 7, 2008 3:09 PM Posted by Jeff Simpson

Wynn all along told me he hoped for a December opening this year, but the corporation at first publicly announced a 1Q '09 because Wynn said he prefers to under-promise and over-deliver on openings (particularly since Encore is builder Tudor Saliba's first Wynn hotel and Wynn wanted to be absolutely certain they'd finish on time).

And yes, David, Wynn does prefer the mid-December time to open as it allows time to ramp up to the frenzied activity of NYE, Super Bowl and Chinese New Year. It won't be a soft opening in the Venetian/Palazzo sense (where big chunks of the property weren't open) but in the calendar sense, as it's a traditional slow period.

April 7, 2008 4:39 PM Posted by Brian Fey

Encore was opening in Dec of 2008, then they moved it to early 2009 to be safe. Now that they are on schedule, he wanted to suprise fans and shareholders, and is back to December 2008. It will not be a soft opening, you know better than that. Wynn don't know what a soft opening is. He does want to open, in December when its slow i'm sure to help train all the people. And I'm sure getting $799 a night during the NYE celebrations sure wont hurt anything either.

April 8, 2008 6:52 AM Posted by LeoNYC

People here seem to know a lot about Wynn Las Vegas. I have stayed at Wynn 3 times in the past 2 years. I always booked a salon Suite. Las time tried one of their Villas, but asked to change back to a Salon suite as soon as I found out that my Villa was right next to the construction site. I'm planing to spend my birthday (07/07) at Wynn. This time I am thinking of booking a smaller suite and try an upgrade. Does someone knows if I can get upgraded to a Salon suite if I book a Parlor or even an Executive? Of course, I'll tip the GSA. But I was wondering if they can see me as a loyal guest + my birthday. Thank you all, and this is by far the best Vegas blog.

April 8, 2008 9:19 AM Posted by David McKee

It would indeed surprise me if Wynn ever had a soft opening; it's never been his style. But with the economy so uncertain, I wasn't prepared to completely rule it out. But I'm glad to know that's not the case.

April 8, 2008 12:36 PM Posted by Mike E

Leo, as a customer who I like to think has very personal friendships among the Tower Suites front desk, I've never received a complimentary upgrade as a courtesy even when occupancy was way down. I have, however, received complimentary upgrades through American Express (a perk of my card). Still, it of course wouldn't hurt to try, but those of us who have stayed in both Parlor and Salon suite can attest that while the Parlor is smaller, it's every bit as luxurious as the Salon.

April 9, 2008 10:10 AM Posted by Brian Fey

If MGM gets much cheaper maybe Wynn should make an offer. Wouldn't that be crazy, if Wynn could buy his old places back. I realize MGM is still a bigger company, but MGM is worth about half what it was just 6 months ago. I just cannot believe how hard their stock has gotten hammered. I know i'm living in dream world, but stranger things have happened. Companies have boughten companies larger than themselves before. Maybe Kirk, would ok the deal, since he's in his 90's now. :)

April 10, 2008 6:39 AM Posted by detroit1051

I know this blog isn't a news clipping service, but, boy, there's a lot of news today:
When will Dubai be the principal owner in Las Vegas? First, MGM and now Fontainebleau:

Guggenheim closing at Venetian. This is a loss for the city of Las Vegas:

Sands Expo Center: How can this be ready in two years? The article says the plans are on file with the County, but I can't find anything on the meeting agendas yet.

April 10, 2008 8:32 AM Posted by Hunter

The Fontainebleau investment was only for Miami, no?

April 10, 2008 9:29 AM Posted by detroit1051

Hunter, my understanding is that the hotel arm of Dubai World invested $375 Million into Fontainebleau Resorts LLC, the parent company of both the Las Vegas and Miami Beach properties. Glenn Schaeffer is CEO of Fontainebleau Resorts. They say the investment will be applied to Miami Beach with 50% ownership, but I look at it as another step in Dubai World's increasing influence in Las Vegas. With Dubai's presence with MGM in CityCenter, the proposed CityCenter North and now Fontainebleau, Dubai will have a major investment in Las Vegas and/or Las Vegas companies.

April 10, 2008 2:58 PM Posted by Brian Fey

I think LVS could easily have that convention center up and running in 2 years. Its not a terribly complex building. They built the Palazzo in under 2 years, and this is much easier. Also the land is clear and ready to go.

April 10, 2008 8:55 PM Posted by John

Brian, it took them a little over two years, actually. One has to remember that their giant hole in the group took forever, and, really, they didn't begin vertical construction until December 2005.

April 11, 2008 6:29 AM Posted by Michael Lu

Doesn't Packer's PBL have a 20% stake in Fontainebleau Resorts as well?

April 11, 2008 8:39 AM Posted by Brian Fey

Yes, Packer made a $250 Million dollar investment in them I think. If that works out to 20% or not, I don't know.

April 12, 2008 8:10 AM Posted by detroit1051

"The greatest nightclub in the world???"
With a name like xs (excess?), will it be a more wild place than Tryst?
From Norm in the RJ:

A 40,000-square-foot nightclub will go into Steve Wynn's Encore, the sister property to Wynn Las Vegas, it was announced late Thursday. "It will be the greatest nightculb in the world," said Victor Drai, co-owner of Tryst at Wynn and the new club, which will be called XS. A December opening is planned."

April 12, 2008 4:50 PM Posted by Mike E

Unless they start doing some serious marketing on industry nights of Tryst and Blush, I predict a renovation of XS within a few months after opening. Looking back, no nightclub has successfully opened with a resort. All the big venues are renovations of previous spaces or additions to existing properties. The reasons, I think, is that the hype is spread too thin/lost among a resort's grand opening. Nobody was aware of Le Bete and Lure at Wynn because they couldn't stop hearing about those amazing rooms and restaurants.

April 12, 2008 8:50 PM Posted by Brian Fey

I don't drink, so I don't do the club scene. I've been to Tryst once, just because I wanted to see how nice it was. But they always seemed insanely expensive to me. But when I read this article, and he discuess how going to a club, is cheaper than taking 3 couples to a top show, I have to say, he makes a compelling argument. Granted most shows can be had for far less than the $200 per seat which he stated, most CDS shows are still $100-150, but It makes sense never the less.

April 12, 2008 11:05 PM Posted by Mike T

Mike E:

You are way off base about clubs getting lost in the hype of a newly opened resort. The club's target demographic will be zeroed in on that venue's opening, I promise you.

April 13, 2008 12:23 AM Posted by Mike E

Thanks for the link, Detroit.

I honestly hope for the best. They need to keep the momentum of the nightclub's hype going from now until Encore's opening. At least Wynn has Drai's expertise from the get-go this time around.

Sign of the Vegas times: XS will be about two-thirds the size of Encore's casino floor. Wow.

April 13, 2008 5:57 AM Posted by Brian Fey

That is a bit misleading though, as much of that 40,000 sq ft, is part of the main pool deck.

April 13, 2008 3:29 PM Posted by mike_ch

I would sooner go to a top show than a nightclub because a show gives me something to look at. A club, you're basically supposed to entertain yourself. Also I have an aversion to noisy environs, but that's just me.

I've given up paying the high end for seats, though. I bought $150 seats to a show about a year ago and wound up on the far left side of the house. A centred view from the cheap seats would theoretically been a more enjoyable experience.

April 16, 2008 1:18 PM Posted by DavidF

I don�t know if anyone follows Hotel Chatter, but have started a multi-day in depth review of the Palazzo. They do disclose that they room was supplied Courtesy of the hotel, but the review is definitely impartial, including pics of handles falling off the Minibars.

Today is the room, over the next few days they will be looking at other parts of the Hotel.

April 17, 2008 1:20 PM Posted by Mike E

Danny Gans will become Encore's headliner. Spamalot will close.

April 18, 2008 7:58 PM Posted by Mike E

Encore's site finally went up today. Not much to see yet, but it's enough to give me butterflies (no pun intended on its subtle theming):

April 18, 2008 8:49 PM Posted by John

Mike, funniest thing: I just sent an e-mail to Hunter about the website launch, mentioning the whole butterfly thing. Actually, I'm sort of intrigued because I've always thought that a butterfly theme, ala Neiman Marcus, would make for interesting marketing techniques. However, I've always thought of a butterfly style resort carrying the name Le'papillion.