Two years ago, I was in Las Vegas reporting a story when a publicist from MGM Resorts International compelled me to take a meeting with Chuck Bowling, president of Mandalay Bay—which I had long viewed as one of Vegas’s forgotten casinos. It was cool when it opened, got bought by MGM Resorts, supposedly, because it contained land that was needed for the completion of CityCenter and it turned into a bit of an orphan. While other casinos had received Cinderella treatments, getting spruced up and improved, Mandalay seemed to be left in the 1990s.
But I took the meeting anyway. The first positive sign was that Bowling had mangosteens in the fruit bowl of his reception area. It’s a Southeast Asian fruit that’s as delicious as it is rare in the United States. Then, sitting at a conference table in his well-appointed office, Bowling said something that I found more surprising than his exotic fruits. He vowed that Mandalay Bay was embarking on an eight-figure improvement campaign.
Verbally, I said something like “That’s great.” Internally, I remember thinking, Now? Considering that Vegas was in the doldrums, it seemed unduly risky; like being on a losing streak at the craps table and rebuying with a fresh marker because you think things have to get better for no good reason other than they just have to. Casino projects at the time were being abandoned and all you heard about was how Vegas had gone to financial hell. Hotelier Sam Nazarian, whose SBE purchased the Sahara with the intention of turning it into SLS Hotel Las Vegas (a spin-off of the LA original) put a hold on construction. At least one half-finished structure had been capped to prevent it from deteriorating in the desert. Even the mighty Wynn spread $10-minimum blackjack games on weekend nights. Word had it that the only thing keeping Vegas afloat was revenue generated in Macau.
Just a couple of years later, it’s an evolving world and Bowling looks prescient. This past May, during a swing through town, I came across plenty of executives who’ve become true believers. Unexpectedly positive developments are popping up all over the Strip. They include an offering from the Malaysia-based Genting Group (which is positioning its new casino/resort to be the go-to spot for Asian gamblers in Vegas), Nazarian’s SLS (it’s in the midst of full-on construction at what had once seemed like a weird move at a bad time) and Shops at Crystals, the high-end mall at CityCenter where five new luxury retailers are poised to open. There is even a new terminal at Vegas’s overworked McCarran International Airport.
Executives at the above entities have all become true believers in the bright and shining future of Las Vegas. Numbers look promising. Last year’s 39.7 million visitors was a near record, 2013 should be even better and international flights into the city are on the rise. South American business is said to be booming, and those customers are known to do so much shopping that they fly in bereft of luggage. The idea is to buy a new suitcase and fill it with fresh clothing. So there are reasons to be bullish.
Whether or not that news justifies hundreds of millions of faith dollars remains to be seen. In terms of overall bottom lines, the numbers sound less than spectacular but they are no longer downbeat. “The market has seen a small uptick, low single digits, and it seems that way for the rest of the year,” says Joe Magliarditi, president of Palms, which spent $50 million to overhaul rooms, its sports book and the casino’s center bar. “If our growth finishes in high single digits, everyone will be extremely happy; low single digits and that is the forecast. But we have already hit bottom and going up is a good thing. The bar is raised, we anticipate growth coming and now is the time to build and expand.”
Fittingly, I begin my tour of the Sin City Optimists Club with a visit to Mandalay Bay and Chuck Bowling. Same office, same conference table, no mangosteens, but also no bemused look from me when he reveals what he’s up to. There are new restaurants, an overhaul of rooms at the adjacent Four Seasons, and total transformation of The Hotel. The last of these is an all suite operation, also attached to Mandalay, which was all too discreet. It’s being remade into Delano Las Vegas complete with the cool décor that the trendy chain is famous for. He’s banking on drawing fresh customers to what he describes as a “new and exciting and interesting” property on the grounds of Mandalay. “We will create a soul and energy for the Delano.”
In discussing his new property, Bowling leaves little doubt that he’s gearing up to engage in a pillow fight for some market share. He acknowledges that he will be going after the same young, style-conscious patrons that Sam Nazarian will be courting with his SLS Hotel Las Vegas. Bowling also makes it clear that new nightlife and entertainment options, including the just premiered and surprisingly compelling Michael Jackson ONE tribute show by Cirque du Soleil, will give customers good reason to stick around after dark. “The longest line at Mandalay Bay was the cab line to get out of here,” says Bowling. “I did not have the nightlife that a lot of competitors did. That has changed.”
Saturday night in Las Vegas and—no surprise here—the clubs are popping. It’s been that way for years. Spearheaded by splashy spots like XS at Wynn Encore and Marquee in Cosmopolitan, big beats of house music attract deep-pocketed club goers who also like to gamble big at the casino tables. But this year things are really blowing up with the addition of Hakkasan at MGM Grand and Light inside Bowling’s Mandalay Bay.
Both clubs are gigantic and loaded with state-of-the-art sound and video. Light features Cirque du Soleil performers doing sky-high gyrations over the dancing crowds. Hakkasan, a spin-off from the internationally known Chinese restaurant group, also offers what’s said to be cutting-edge cuisine. Both spots come aligned with cash-cowing dayclubs—which run like nightclubs under the sun, complete with pools and DJs—and both are built around rental agreements rather than the more traditional management deals. This means that the club owners put up their own money, rent the spaces from the casinos in which they are located and operate independently without financial participation from their landlords. Clearly, the nightlife operators believe enough in the direction of Las Vegas to take these financial risks.
Andrew Sasson, who started Light Group (which owns or manages clubs and restaurants throughout MGM International properties) and is now on the board of directors for Morgans Hotel Group, viewed the dayclub, Daylight, to be a no-lose investment. “I am 100 percent over the moon to be on the equity side of Daylight,” he says. “I never knew the beach club business would get to this magnitude. I put my money there based on location and competition.” Three years ago, the Palms’ Magliarditi, told me that, conservatively, pool clubs can generate $1 million per week. No wonder then that Sasson was happy to be putting up the money.
As for the nightclub, Light, he acknowledges that it’s operating in a much more competitive and less certain market. “Nightclubs need to keep changing and moving,” he says. “Things get old pretty quickly. We’re super confident [about what we’re doing] but we need to see how the public takes it and where it goes.”
What Sasson and just about everyone else in Las Vegas seems to be sharply focused on are new demographics in a changing market that will soon be dominated by younger customers. He says that by 2015, 50 cents of every dollar will be spent by Generation X or Y consumers and that Las Vegas operators need to prepare for it. If that does prove to be the case, then Gary Selesner, president of Caesars Palace, has his bases covered. He and his company recently made a splash with their debut of the Nobu Hotel at Caesars. Designed with input from the famed Japanese chef, it comes complete with his signature restaurant and rooms reflecting his aesthetics.
The guest quarters were built into Caesars’ old Centurion Tower and represent a major improvement that will appeal to a cool crowd. But what seems to have Selesner particularly chuffed is what’s going on across the street.
The casino company had long owned a dumpy operation that seemed underutilized. Called The Barbary Coast, it was later rechristened Bill’s Gamblin’ Hall and Saloon and barely hung on as a cut-rate operation, best appreciated by late-night partiers who enjoyed its after-hours bar, Drai’s. The once neglected and decrepit property will emerge in 2014 as a new and shiny and happening spot, which Selesner anticipates will be a magnet for the millennials that Sasson believes must be catered to. “We’ll have rooms that are hip, romantic and sexy, not your typical Vegas hotel rooms; plus there’ll be a rooftop pool and Drai’s nightclub, all on the Strip’s best corner.” He’s not exaggerating on that last point. With the property centrally situated at the intersection of Flamingo and Las Vegas Boulevard, it will afford iconic views of Caesars Palace and the Bellagio fountains. “You’ll be in a boutique hotel, truly removed from the mega-casino environment, but with a room key that will allow you to charge at all of our restaurants and shops.” He sees the Gansevoort joining the battle with SLS and Delano—as well as The Cosmopolitan, Hard Rock and Palms—for the hearts and wallets of Generations X and Y.
The Caesars expansion continues hot and heavy just north of the soon-to-be Gansevoort gone Vegas. There the old Imperial Palace, yet another nicotine stained holdout, once stood. The property dates back to 1959, when it was called the Flamingo Capri and became the Imperial Palace 20 years later upon being purchased by Ralph Englestad. He’d go on to give up his casino license amid allegations that he hosted Nazi-themed parties in his so-called War Room. Among its World War II
artifacts was a portrait of Englestad as Hitler. In 2005 Caesars purchased the star-crossed property.
By the end of this year, if all goes as planned, guests will be staying at a reworked version of the Palace called the Quad, shopping and dining at a retail/entertainment space dubbed the Linq, and thrilling to aerial views of Vegas from the High Roller, a giant, deluxe Ferris wheel, designed by the same people who did the very popular London Eye. Selesner anticipates that there will be 5 million people riding it per year. As Selesner sees it, the property plays directly into the large, midrange of the younger demographic that he and Sasson and just about everyone else seems to be pursuing. “Gambling is secondary to this market,” he says, indicating that he’ll provide plenty of other opportunities for the spending of money with popularly priced restaurants and drinking spots. “Plus, because of the Linq’s location, we’ll be bringing people into the Quad, Flamingo and [recently opened] Margaritaville Casino & Restaurant.”
If everybody’s rationale for spending more money is to lure young customers, then John Unwin, CEO at The Cosmopolitan of Las Vegas, a property that evolved out of Deutsche Bank getting stuck with a condo project gone bad, totally gets it. But his big-money play does not involve more rooms or a new tower or some trendy thing that will allure Generation X. He already has plenty of those consumers showing up for rooftop ice-skating, poolside concerts, boozy ice cream and a secret pizza place.
Ahead of the curve when it comes to attracting youthful patrons, Unwin is playing it old school and putting in a space that will allow his casino to more competitively lure convention business. Set to be called The Chelsea, it’s still under construction and using up a good chunk of the Cosmo’s $80 million capital improvement budget for 2013. The flexible space has been designed for concerts, speaker series, parties, boxing matches and large-scale meetings. He expects it to increase group and convention revenue from 28 percent to 34 percent of the property’s income.
That said, he’ll still be holding tight to his vision of what makes a casino alluring in the 21st century. “Our model was Elizabeth Street,” he says, referring to a stylish shopping district comprised mostly of small boutiques in downtown Manhattan. “We’re trying to create a neighborhood where people want to go to discover new things that they don’t see everywhere else. Gambling is legal in 35 jurisdictions. You come to Las Vegas for something other than gambling. Right now there’s a lot of new capital coming into Las Vegas and people are nipping at our heels.” He hesitates for a beat and smiles before delivering a dig disguised as advice to competitors who are bringing in high-style collaborators and adding fashionable adjuncts to existing properties. “It’s hard to put a hotel within a hotel. You need to really believe in what you are doing. Just putting a name up there is not enough.”
As properties on the Las Vegas Strip go through their gyrations to upgrade and stay relevant, a whole new scene brews downtown. Some of it is driven by Tony Hsieh (pronounced Shay), the young, unconventional CEO of online shoe retailer Zappos, who will relocate his company to the former City Hall down there and has put aside some $350 million to spend on downtown development. While much of it was in motion before Hsieh even entered the picture, his presence alone has helped to coalesce progress. Cool bars like Commonwealth (with a semiprivate enclave called Laundry Room), happening restaurants such as Le Thai and La Comida (a Mexican restaurant from Michael Morton who previously co-owned the food/nightlife operation N9NE Group at the Palms), and old-school casinos such as the historically landmarked El Cortez are fixtures of the burgeoning downtown.
The neighborhood will soon have its own new, potentially iconic hotel in the form of the Downtown Grand, opening where the Lady Luck had once stood. Running the project? Seth Schorr, formerly a young executive at Wynn and son of Marc Schorr who had been Steve Wynn’s right-hand man since the casino magnate’s Golden Nugget days in the 1970s. After leading a tour of his under-construction property—which will have a massive faux picnic spot on the roof—Schorr says, “I’ve been in Las Vegas for 30 years, and for many of those years the town has been about the Strip and strip malls. It’s never had a heart and a real downtown like what we have now. It’s historical and real. In New York, I lived in Tribeca; in Las Vegas, I keep an apartment down here. You can no longer be a naysayer about downtown. It’s just a matter of how long it will take to happen.”
Downtown Vegas tends to be cheap and a low-rise respite from the Strip. For a segment of Vegas’s anticipated sweet-spot visitors—those young and open-minded travelers without preconceived notions that the Strip amounts to the be-all and end-all of Vegas—it may be the perfect destination. “Things like the Linq and downtown are going to be happening,” predicts Sasson who has made his name and the bulk of his living via high-end high-profile endeavors on the Strip. “Lower range and mid-range offerings are where the boom will be in Vegas. Vegas is still the greatest entertainment capital in the world, and it will hurt places like Ibiza and Greece. Europeans will say, ‘Screw this. I will buy a ticket to Vegas and have a great time there.’ ”
No doubt, the true believers would nod in agreement.
Michael Kaplan is a Cigar Aficionado contributing editor.