Speculation Games: SLS Las Vegas To Become Cosmopolitan Jr.
Speculating on the future of Vegas is fun. This isn’t rumor or anything I’ve heard elsewhere. Just speculation on current news.
Subject: Blackstone may acquire more property in Las Vegas
On February 20th Vegas Inc. had an article the reiterated many of the big changes in store at the Cosmopolitan that were revealed the middle of December. Sort of hidden towards the end of the article is the following quote:
Blackstone will hold onto the Cosmopolitan for a while, and possibly acquire more property in Las Vegas
Speculation: Blackstone will purchase SLS Las Vegas.
SLS Las Vegas is off to a rocky start with employees being let go and restaurants being closed or rebranded. Their business model is similar to the Cosmopolitan where the casino generates 20-30% of the revenue and the rest comes from clubs, restaurants, bars, hotel rooms, etc.
If the financial woes continue at SLS Las Vegas throughout the year their owner, Stockbridge (90% owners of SLS), may look to cut their losses. If Blackstone can turn around the Cosmo’s financial woes to become profitable they may look to target SLS Las Vegas. The property is new and business model is similar to the Cosmo that it might be a perfect addition.
The two hotels are already linked through Blackstone. Blackstone owns Hilton and SLS Las Vegas is already a part of the Hilton Curio collection of hotels. Cosmopolitan is without an outside hotel partner for the time being but a Vegas Curio combo could help the collection.
Hotel room rates are rising rapidly and capacity is shrinking with the Riviera closing. Adding a second property to their Las Vegas portfolio makes sense to create more value for when Blackstone decides to sell. SLS Las Vegas might be the quickest property to turn around and sell again for a larger profit.
I see this potentially as a 1+1=3 scenario if A) Blackstone can create positive revenue at the Cosmo B) Stockbridge decides to sell SLS Las Vegas C) Blackstone can repeat a turnaround at Cosmo at SLS.