Happy Halloween!
This time on the show:
– VIMFP Recap
– Downtown Grand
– Caesars No Good, Very Bad Week
– SLS Progress
– Casino Firm Quarterlies
and more. Leave comments here on the site!
** Sure Bets **
Chuck – Wall Street Journal | “All Is Lost”
Dr. Dave – Pizza
Hunter – @MagicRecs | “Red Obsession”
Play MP3
Listen on Stitcher Radio
Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.
Great episode, but first thing I noticed was how good the audio was. Sound quality was excellent.
Interesting.
We recorded the same way but there were two differences:
– I used the brand new version of Apple’s GarageBand for the first time.
– I did a but more editing than usual.
I have a question and a comment.
1. My question is about the investment that is currently going into downtown Vegas. I understand that the idea of the new investment is to sell the entertainment experience, not just gambling. But gaming revenues are down one percent which indicates that traffic is not increasing significantly despite the capital outlays. I would think that if traffic really was materially increasing that we would see some increases in gaming. When it be time to conclude that the rebuilding downtown is a failure?
2. My comment is this. It is quite apparent what Cesar’s is doing. They have moved every property that is not underwater over to the new company. Cesar’s got local partners to put up the money for the the Ohio and Maryland casinos which are doing well. The fact that so few properties are moving to the new company is just an indication of how sick the rest of the company is. If additional properties were making money they would be moving to the spin off. Internet gaming should be quite profitable given the size of the company rewards program and the customer databases the company has.
Once the new company starts up owners of the old company will watch the company go into bankruptcy while they make their money at the new one.
Great show, as usual. I find It getting better every episode. These are truly the salad days for the show. When VIMFP becomes as big as the New York Marathon, I hope you will look back fondly at these as simpler times.
I got the vibe that Chuck’s comments about the Downtown Grand had a negative undercurrent to them. As a body shop psychologist, I attribute this to a couple possible causes: 1. Post VIMFP depression. B. Fatigue from having a bunch of Wynn level high minded, self important BS pumped into him by young people who refuse to acknowledge that they are downtown casino managers, not owners. 3. His (our) seduction by the fine folk at the D has made him (us) overprotective of any perceived threat to their rise to the throne at the top of downtown properties. Or X. One of the pugs just pissed on the corner of the sofa and he knows even Febreze won’t get the smell out enough to where his wife won’t notice when she gets home, and there’s gonna be Hell to pay in about 2 hours.
Having snarked that, I agree with the sentiments expressed about the backstory silliness. Personally, I am a bare knuckles history fan, and anything else is a disservice. I fear this trend is a sign of a hipsterization of some parts of downtown, and I am concerned about that.
Please help me with one thing, if possible. Chuck’s comments left me with the impression that the Downtown Grand regular rooms are a small as the Golden Gate. Do you have any idea how large they are and how they compare with the standard rooms at Fremont Street hotels?
Bob–I think that as on the Strip, the visitor profile is changing. People just don’t have the same discretionary income to gamble that they did 7 years ago. Downtown doesn’t have the Asian high roller cushion that the Strip does, which makes this shift more obvious. Baccarat win is about 20% of the total Strip casino win in most months, which is incredible. If you cut that in half (to about where it was in 2005), the Strip numbers would be catastrophic.
From all indications that I can see, Downtown is full, but the people aren’t gambling the way they used to. A lot of this is because of the rise of Southern California tribal casinos, which really cut into the Downtown base. The Boyd properties are somewhat insulated because of their built-in Hawaiian trade (which might be why they haven’t been as aggressive with renovations–they feel they don’t have to be) but it’s hurt everyone.
I think that, as with markets like Atlantic City and Reno, there are still opportunities for long-term profitability–the owner just has to get in on the right terms and have realistic expectations.
Another great show guys. It’s going to be interesting to see how many locals and tourists visit SLS at Sahara and the Strip when it opens. I wish Sam Nazarian luck and I have to admit once the Sahara closed I thought that property would be empty until around 2020 or so.
The Fontainebleau is just an enormous piece of junk and belongs somewhere in the vicinity of the World’s Tallest Thermometer in Baker, California. That being said Carl Icahn paid around $150 million dollars for Fontainebleau back in 2010 and he wants to make some money off the World’s Tallest Piece of Junk so it will sit empty for awhile. If there was ever a need for a “Greek Lightning” occurrence the Fontainebleau would be at the top of the list.
Bob – you’re right on about Caesars shell (corporation) game. They’ve been playing this for ages. Eventually, they’ll run out of investors to screw and places to hide the debt.
Paul – I was about to add to the FB discussion Carl Icahn’s activist intentions as a large shareholder of Apple, but I feared Hunter’s head might explode.
JeffOKC, ever the jokcster –
All kidding aside. I loved a lot of Downtown Grand. The casino floor looks great. The pool deck will be a great addition. The high end suites are some of the best in the neighborhood. Plus, I’m fascinated by dt3’s real “urban” concept – the attractions, dining and entertainment are an actual neighborhood. dt3 is more city center than City Center.
When relaunching a hotel whose actual history is well documented, touting a fake history for it is inane. As discussed on the show, creating a creative narrative makes some kind of sense when trying to tie property concepts together, but those stories need to be left in the design room. Maybe they think that these little vignettes will make good fodder to content farm bloggers who will write about anything regardless of how inconsequential.
If I were the boss, I’d explain WHY someone should visit, answering “The Dad Question” I ask at live events. “From the time you arrive you’ll have an adventure ranging from heart pounding excitement to sublime relaxing reflection, creating a personal, unique experience that lasts long the after glow fades into half forgotten memories preserved in a digital junk drawer.” Then move on to each vertical of offerings before wrapping the whole thing in the value proposition and a cozy reminder of how Vegas is just fun anyways.
Who would’ve thought that casino marketing folks have no idea to how sell the idea that when you stay at their property, you’ll have a great time that will live with you forever.
Maybe I’m just a jerk.
Re: The standard room sizes, DG’s are slightly bigger than the Golden Gate rooms.
Re: Post VIMFP depression, one day I was a little blue, but it passed very quickly. I’ve got too much VT work to catch up on that was deferred while doing VIMFP planning!
Dave
Boyd’s has one big problem with expanding anywhere. They have an immense amount of debt and are heading to Chapter 11.
The three downtown casinos are only marginally profitable, even with the Hawaiian niche. The three downtown properties only cash flow about 35 million a year. They only get room rates of $34-$38 a night.
Which is why I think the Downtown Grand will not make it. They will not get high enough rates to make money off that hotel.
doesn’t Vegas have some sort of derelict building code where the city will force the owner to tear down Fontainebleau? It seems crazy that the city would allow the strip to have such an eyesore on it indefinitely.
@kevin. Seems to me that the City of Las Vegas (which starts at Sahara Ave and goes to downtown and areas north) and unincorporated Clark County (all of The Strip and going to Laughlin, plus) both seem to have an approach to owners of large properties that gives them a lot of leeway when it comes to finishing challenged projects. I think they have had more messes to clean up than any other area in the country in the post-war era, and they have usually made things work out.
However, I think that this Tower of Hubris that is the Fountainebleau is an assault on the landscape that must be removed. It can never be anything other than a big, ugly, blue blob.