Two Way Hard Three | Las Vegas Casino & Design Blog

January 1, 2012

Biggest Story of 2011--Six Nominees

Posted by daveschwartz

Hunter's already taken a look ahead at 2012. While I've still got a few hours left in the first day of the new year, I'd like to take a look back at 2011 and talk about six candidates for "Las Vegas Casino Story of the Year." These are the stories that I think most defined the year and, when historians look back at it, will be the ones that get the most attention.

1. The Closing of the Sahara
This one got a lot of attention, but didn't inspire much reflection. For the first time in recent memory, a major Strip casino just...closed. No demolition date, much less firm plans for redevelopment. That's not what we saw earlier, even as late as the Stardust/Frontier closures. Plans for Echelon and the Plaza were already drawn up before those casinos were imploded. With the Sahara, it was simply a case of SBE tapping out, unable to withstand the drain of operating the property any more. There's plenty of blame to go around, but most of it can be laid at the feet of SBE, who didn't pull the trigger on a comprehensive but moderate Tropicana-style reboot when they could have gotten the money, instead hoping to elevate the place into the $200+ room rate category with a major reconstruction that wasn't to be.

It wasn't the dumbest idea at the time: Fontainebleau, Echelon, and the Kerzner/MGM project, which would have been built right across the Boulevard, definitely would have classed up the neighborhood. It's conceivable that the North Strip could have become the South Strip (well, the Center/South Strip) had the economy not deflated. But smart executives aren't paid to just ride the waves into shore with the rest of the crowd, and smart owners don't make money by following the herd. Those who reacted to the economic meltdown-either by shelving projects like Echelon or by scaling back renovation plans like the Tropicana--have been rewarded; those that didn't, like SBE and MGM, have faced adversity.

It's one of the imperatives of the Las Vegas hype machine that we never allow ourselves to dwell on our mistakes, publicly or privately. How many people remember Avenue Q at Wynn? Hairspray at Luxor? Columbia Sussex at the Tropicana? The Hacienda casino? It's as if these things never existed, and they've been swept from the collective Las Vegas psyche that's always focused on looking to the next play. That's not a bad mindset, but it can lead to myopia. 2011 will be remembered as the year that the Strip lost one of its oldest properties, modest recovery notwithstanding. Whether it's the exclamation point to an ending economic slowdown or a taste of things to come (the LVH is looking particularly shaky) remains to be seen. But we shouldn't forget that the Sahara existed, and we should remember its lesson: even the most solid casino can close, if the owners take their eyes off the ball.

2. Cosmopolitan opening
Technically this happened in 2010, but since there were only 17* rooms open, the property didn't really get put through its paces until the calendar turned. And turned. And turned. There was plenty to be excited about the Cosmopolitan: rooms with views (and balconies, though they weren't the first or even the only balconies on the Strip, despite the PR churn), new-to-market restaurants (I refused to say F&B concepts), a different spin on entertainment (hipsterism unleashed!), and a new nightclub. But the casino has still not produced the kind of results it should, the result of anemic casino marketing efforts.

One of the strengths of the Cosmopolitan has been its brand; this is by design, and I think that they've put the cart before the horse. They've meticulously created a social media presence that seems to do everything perfectly--maybe a little too perfectly. And that kind of bothers me. Remember that episode of Star Trek: The Next Generation where Data gets a girlfriend? No, not the infamous "fully functional" fling with Lt. Yar in "The Naked Now," but "In Theory," where he actually dates a woman. He builds himself a program that lets him simulate everything about being in a relationship, down to provoking a lovers' quarrel ("You are not my mother!"). And he's totally convincing, making you think there's real emotion there. But there isn't--he's just doing what the Enterprise computer tells him people do in relationships. At the end of the episode, he deletes those subroutines and its business as usual.

That's what the Cosmopolitan's brand-building and social media efforts feel like to me. I just don't get the substance behind the style. It's great that they share links about fifteen unique hot dog stands and houses made out of Legos, but you don't have the same real personality that you get from a lot of other casino tweeters. I don't want to single anyone out but I've had, in the past few weeks, personal interactions with M Resort, El Cortez, the Caesars properties, and the Casino Royale that reminded me there's a real person in a Vegas casino behind that avatar. I still don't have that for the Cosmopolitan. But that's a minor problem compared to its iceberg dead-ahead issue: not enough casino play. I'm not convinced that high-end play is going to work there, and I think a major overhaul of the casino marketing approach is the only thing that can make the casino viable.

Turning off the free wifi didn't earn the place any goodwill as a cool place to just hangout, either. Maybe if they can somehow restrict free wifi to people playing slots....

3. CityCenter Survives

CityCenter should be out cold. One of its major components, the Harmon Hotel, wasn't finished when the complex opened in 2009, still isn't finished, and will never be finished. Beso, a signature nightclub, went into bankruptcy. Hardly anyone likes shopping at Crystals, which takes up most of the project's Strip frontage. In July, the place suffered an outbreak of Legionella. There was also that "death ray" non-story about refracted (or reflected--I'm a doctor**, not an optician) solar rays scorching Vdara guests. Elvis is leaving the building. You'd think that the much-ballyhooed MGM property would be taking a standing eight count right now. But it's not--occupancy rates are up and the casino is actually performing well. It's doing a good job of drawing and keeping high-end guests--something that its hipper next-door neighbor hasn't yet done.

Clearly, there are major structural problems with CityCenter--perhaps fatal ones--that virtually guarantee that the project will never be what its creators envisioned it to be: a new, urban recreation of the Las Vegas tourist experience. The condo market doesn't seem to be coming back anytime soon, either, meaning that critical component of CityCenter isn't just delayed--it's never going to arrive.

But that doesn't mean the elements aren't working. They might not have knocked the ball out of the park with the project's overall design, but the MGM folks are good at running casinos, and Aria is faring better these days. With some rejiggering, it could be that CityCenter becomes a project where the parts are worth more than their sum.

4. Renovations

Wynn--and the ongoing Wynn Tower Suites saga--at the high end. The Stratosphere, the Tropicana, the Plaza (more on them later) at the lower end. This was a year with no ribbon cuttings, but with several quasi-new room products and public spaces unveiled. Until developers (and, more importantly, banks) get stars in their eyes again, that's what we have to look forward to.

Some look at the renovation wave as a sign of diminished expectations: instead of lighting the fuse on a place like the Trop, they're sending in the painters. But I see it as a commitment to the future of the Strip. People are putting capital expenditures into maintaining the look of their Las Vegas casinos. That tells me two things: they believe that there's a future in the market, and that it's going to be competitive enough that they need to sink this money in to maintain an advantage. That's good news.

Look for the renovation wave to continue to crest in 2012, with MGM Grand finishing a major room remodel and Caesars Palace adding the Octavius Tower and continuing its revamp that, by 2014, should completely refresh its room product.

5. Downtown Las Vegas
The Plaza's improbable rebirth in September is just the most conspicuous change in Downtown Las Vegas over the past year. I say "improbable" because when they first closed the hotel towers for renovation, I was extremely skeptical, to say the least, that the property would ever re-open. After all, Binion's hotel tower is still closed, and we all know how well those tower closures at the Sahara worked out. But they did it, thanks in part to the Fontainebleau garage sale and an ownership group that is committed to Downtown Las Vegas. That doesn't mean they're blindly throwing money away--they moved to close the under-performing Western--but they've made some strides.

There's other big news: The owners of the Golden Gate have begun an expansion project and have acquired Fitzgerald's, promising a much-needed revamp for that Downtown warhorse. Lady Luck is also slated to get a new life as the Downtown Grand (if MGM doesn't have exclusive rights to the Grand name in Las Vegas, that is). The new city hall is almost complete, and the Smith Center will be welcoming its first concert-goers early this year. Ditto for the Mob Museum. With Zappo's Tony Hsieh encouraging an army of start-ups to settle Downtown, things might be looking up.

But that's all in the future. This past year had some real gains for the long-suffering market. The El Cortez might be the best example of the area's new focus. By recommitting to its Fremont East neighbors and not forgetting its past as a value-proposition joint, the El Cortez continues to be successful. That might be the best blueprint for the area's casinos, notwithstanding any residential gentrification, for the years ahead.

6. The Changing Casino Floor
As I've said time and again, gambling always changes to keep pace with technology. Many times in history, it's pushed that technology. I'm not going to talk about Internet gaming here--I do enough of that elsewhere--but technology's still transformed the casino floor.

Server-based slots is part of the story, but just a small one. The real change isn't in that kind of back-end system, which is always evolving, but in what casino floors look like. They're getting smaller, with fewer and fewer slots found on them per year. Partially, that's because slots are now multi-tasking, with a single machine having several games and several denominations. But it's a look into the future, when casino games aren't tethered to slot terminals but are instead multi-platform programs that jump from slot machine to smartphone to tablet and back.

Smaller denomination games continue to expand their market share, although steppers (spinning "real" reel machines) are still found in large numbers, mostly because older gamblers tend to resist change. And themed machines, which seemed to be on the wane a few years ago, have returned with a vengance. IGT's Sex and the City, while it hasn't knocked off the Wheel of Fortune franchise in terms of overall machine count, was a breakout winner, as was its Hangover game. Both Bally's and WMS had similar success stories.

The casino floor got a bit more spacious, with fewer machines, but also brighter and louder, as the remaining games fight for attention.

As online and mobile gambling become regularized, the very nature of casinos will change. It's hard to predict exactly what shape that's going to take, but since this is an industry that abhors standing still, we'll see a flurry of small changes that, when added together, will totally transform the casino floor.

That's all I have for now--I'm sure I've missed a few big stories. Share yours in the comments section.

* Under-exaggeration for comic effect; this is not a serious estimate of the rooms open in the Cosmopolitan in late 2010.
** Not a medical doctor.


Read archived comments (4 so far)
January 2, 2012 12:04 AM Posted by donnymac

Great column. I have thought that Comopolitan was more style than substance from the beginning as well. So much so that I didn't even go there last trip and in October only went there for a mediocre meal at Comme Ca. I like the casino bars but can get as good or better cocktails at Bellagio, Aria or Downtown Cocktail Room. I hope they figure out the casino as I would like to see an independent survive.

You forgot the Bellagio in your renovation bit.

January 2, 2012 8:44 AM Posted by doc_al

Outstanding summary. Lots of good lead-ins to 2012, with continued action downtown, sale of the LVH, online gaming and more, on tap for the new year. Probably another whole article could be written on the club and restaurant changes within properties and where that might lead.

January 2, 2012 11:06 AM Posted by Dave

@ donnymac: Good catch--Bellagio should have been on that list.

@ doc_al: True--with F&B and clubs delivering more of the bottom line, there's going to be much more attention paid there.

January 2, 2012 2:34 PM Posted by Ted Newkirk

Good read.

To me, Cosmo is living proof that Social Media isn't as effective as hyped. It is a nice tool, but it won't make or break most businesses. The only people getting rich in new media are the new media gurus selling the "get rich with social media" crap.

Cosmo won a big advertising award for their grand opening media efforts. What?!? I subscribe to or follow tons of travel magazines. CityCenter got much more attention when it opened.

A pretty serious mistake that has been overlooked was their original insistence on booking rooms only through their site. (They have since acquiesced and have started working with the discounters). What's the big deal? An example is i4Vegas who (besides moving a ton of hotel rooms on their own) are the hotel booking partner for us, Las Vegas Advisor, lvol/a2zvegas and many, many more. If we can't book a hotel, we're don't have the incentive to cover them. (We're here to sell rooms. We're not doing this for our health).

I'm glad somebody pointed out what a non-story the Vdara death ray was. If I had $1 for every time a strip resort had blinded me while I drove the 15...

Per CityCenter, I thought that Paul Stillman had an interesting indirect comment on it when he said that you shouldn't design a hotel casino to look like an office building, only reminding people of where they work.

The Strip condo market will not only never be back, it never was. Except for Turnberry (which is a legendary luxury condo brand), condos on The Strip have been a failure. Who would want to own one? For the price of a million dollar condo, you can spend 1000 nights in a $1000-per-night suite. With no contract or obligation.