Downtown Vegas is rocking and there are lots of people knocking.
when April’s numbers came out last week, it was downtown’s revenues that raised more than a few eyebrows. Downtown’s casinos raked in more than $48 million, a nearly 25 percent jump over April 2011.
If you follow any Las Vegas blogs you have had to notice a shift of news from the strip to downtown. Besides The Linq, there’s not much exciting being built on the strip. Downtown Vegas is another story. There has been non-stop rejuvenation over the past few years. Right now major hotel renovations are happening at Golden Gate and the D, which used to be Fitzgeralds.
While the strip shuns gamblers to attract people looking to drop $1,000 on a bottle of Grey Goose, the gamblers are heading downtown to be with other gamblers. And the hipsters are heading to the cool Fremont Street Bars.
I love the strip, but I’ve been spending more and more time downtown. It’s much more relaxed downtown. It feels fine to eat pancakes at DuPar’s for every meal when I’m staying downtown. When I’m on the strip I, almost, feel forced to enjoy a more upscale meal and stay.
Both are great and both are different but not everyone can afford the upscale prices. This separation has always been in Vegas, but with downtown being not being a dump any longer it’s a real viable option for many.
While downtown probably shouldn’t expect 25% gaming revenue increases every month, they should expect that growth to continue while the strip continues to shun gamblers.
Today Caesars Entertainment set it’s IPO price range in an effort to go public to raise funds.
NEW YORK (MarketWatch) — Casino operator Caesars Entertainment Corp. on Thursday said it plans to offer 1.8 million shares at an estimated price range of $8 to $10 a share in its upcoming initial public offering. Based on the midpoint of its estimated price range, Caesars will raise $16 million in its IPO. Caesars plans to trade on the Nasdaq under the symbol CZR.
Caesars previously filed for an IPO in October 2010, under Harrah’s Entertainment. That deal, estimated at $500 million, was delayed partly because of investor concerns about its debt.
That’s a huge difference in what Caesars is looking for by going public. $16 million for Caesars won’t cover many substantial costs or debt. I’m not sure what their plan is for this, but I don’t see any reason someone would invest in a company with so much debt and no plan.
I don’t think the costs of Project Linq have lessened. Maybe the money raised will go towards the timeshare owners that are supposedly in the way of the supposed Project Linq.
The state’s gaming properties earned a record high 34.1 percent of their revenues from spending on “food, beverage and other (related offerings),” the control board reported. But gaming revenue sank to a historic low of 46.2 percent of the financial pie, a figure that stood as high as 60 percent in 1994.
So, while you and I may go to Vegas for gambling first, followed by good eats and drink it seems that less and less people are doing that. While this isn’t too much of a surprise, it just proves that there are less ECG-type visitors in Vegas and more Red Foo’s going to the club and spending money on anything but tables.
Still, there’s something to be said for catering to the gambler. There’s a lot of money there and that’s probably the difference between losing million dollars a year and being a profitable business.
Cosmopolitan may have been the wise one here focusing on what the future holds for revenue figuring they can play catch up on casino marketing. Time will tell.
I love Vegas and you love Vegas, but does Wall-Street love Vegas? Maybe they don’t love Las Vegas. In a year-end review of MGM Resorts International’s stock price, The Motley Fool said that MGM’s poor performance was, in part, due to Las Vegas being a has-been gaming market.
The first problem MGM faces is that it’s largely centered in Las Vegas, which has become the has-been of the gaming world. With rivals Las Vegas Sands (NYSE: LVS ) and Wynn Resorts (Nasdaq: WYNN ) increasingly focusing on the strong Asian gaming markets, MGM has to depend largely on the health of the Vegas Strip, where gaming wins have fallen steadily since their 2007 peak.
While the take-away that Las Vegas is a has-been seems strong, it’s fairly accurate. The world is changing and so is where people gamble. In the past we’d see Wynn fly their Asian high roller to Vegas, but it’s much more economical for them just to fly to Macau where the player will still get signature Wynn service at a brand new casino.
With 48 states making money from gambling and online gaming becoming legal in the future we will continue seeing casino companies diversify out of Las Vegas searching for new income streams. New York, Miami and Boston are among the major cities looking to expand their gaming in the next few years while Philadelphia already has a casino in the city while there are multiple options in the Philly suburbs.
This is not to say Vegas won’t always rule our gambling vacation lives, but it is to say that there are other places inside and outside of the country that will be getting the attention that we’ve come to expect.
I’ll have more thoughts on the future of comps, with this being the case sometime next year because there’s a lot to consider.
I was reading this article about Goldman Sachs denying that they’re foreclosing on the Las Vegas Hilton in order to keep the Stratosphere alive and I got to thinking which of these casinos would I rather see go away.
The Hilton “speculates that Goldman Sachs Mortgage Co. may have orchestrated events to favor its interests in the Stratosphere to the detriment of the Las Vegas Hilton, but does not offer a single fact to support those suspicions,” Goldman Sachs’ filing said.
I’ve recently visited both casinos and have mixed feelings. First of all, I think both the Strat and Hilton are going away sometime soon. I thought that Station would take over the Hilton because they share financial backers (Colony Capital), but I’ve recently learned that Colony and Station aren’t interested in the Hilton.
Anyway, the while visiting the Hilton it felt big, old and dirty. That sportsbook was only passable because it was so big. Still it was dark and dirty. Meanwhile, the Strat has been recently remodeled and the casino looks pretty fresh and the room I saw was clean. It would be a shame to see that cleanliness go away.
Neither of these casinos will ever play a part of my life because of their location and independence from the rest of the strip. Neither seem to have much of a future and I don’t think saving one versus the other makes much of a difference in my life.
Gary Loveman of Caesars Entertainment was on Nightly Business Report on PBS recently to talk business. Nothing he said was too surprising, but he did have a couple of interesting nuggets including;
“…we need more visitors and more visitors spending more money.”
“…we have the same amount of visitors, but they’re spending much less.”
The discussion revolved around President Obama‘s plans for employment and how to fix the problem. In addition to the quotes above he also said that Caesars isn’t looking to hire more and was critical of some of what the President’s plans were without coming off as cranky as Steve Wynn.
The Linq seems to be aimed at the middle class and besides the rent from the 60+ stores, I’m not sure this will bring in more affluent customers. In fact, he doesn’t seem to think that it will draw more people, but it will give more people a reason to spend their money on Caesars land. I’m not sure I see a goldmine if The Linq ever gets off the ground.
I’m not sure what the right answer is for the economy and Caesars Entertainment to do better is, but I don’t think I’ll be looking for a job there any time soon. Skip to 5 minutes into the show for the Gary Loveman segment, which lasts about 5 minutes or click here to go to the shows site.
Colony Resorts (part of Colony Capital) announced yesterday that they’re ending their relationship with Hilton at the end of the year and that Las Vegas Hilton would be no longer and that a new brand partnership announcement would be announced before next year. While looking for other brand partners for Colony Resorts, I can across this press release announcing a strategic partnership between SBE and Colony Capital from January.
sbe, a leading hospitality, real estate development and lifestyle company, today announced that an affiliate of Colony Capital, LLC, a private, international investment firm, has made a strategic investment in its enterprise. The partnership will focus on the national and international expansion of sbe’s award-winning hospitality platform.
I don’t really see the Sahara name moving over to the Hilton location, but it would be funny to see. They may opt to bring the Station Casinos brand to the Hilton and make that more of a locals casino. They may also opt to take a non-casino brand to Las Vegas similar to what they did with the Hilton brand. I think something similar to the former idea is more logical, but we’ll see.
Good thing Matt Goss isn’t at Palms any longer or George Maloof may not be able to tell people that he’s the Chairman of the board a la Frank Sinatra. George Maloof sheds (spins?) a little more information about TGP Partners owning 98% of the Palms in a Vegas Inc. interview today.
What about all of the speculation that Caesars Entertainment is taking control of the Palms?
When TPG got involved (with Caesars Entertainment) a couple of years ago, speculation was now that they own part of Caesars Entertainment, Caesars would own part of the Palms. But that’s not true. It’s not at all true. It’s never been true…..
….Do you still have full authority to run the Palms?
I’m in a management agreement, you could say, as chairman of the board of the Palms. I still have that authority.
I’m a skeptic by nature and while the Maloof’s have run Palms since they built it I still find it hard to believe that TGP won’t have Caesars take some part of management of the property at some point.
It would be really interesting to see the Maloof face working with the Caesars brand. It doesn’t mix today, but it may make both stronger in the long run. Maybe he chose the words “Chairman of the board” as some kind of a subliminal message (I know that’s a stretch).
I’ve written about the Cosmopolitan’s lack of marketing to gamblers and how I don’t understand why they they would avoid such a large part of the market before. The NY Times has more information on this fact and it seems as if the stuff may hit the fan on this sometime sooner than later.
“When you build a $4 billion casino in the middle of the Strip, it is important to have a base of gamblers,” said Mr. Lerner of Union Gaming, who previously covered the industry for Deutsche Bank. “They have zip.”
“With the world coming to an end in 2008, I wouldn’t have done that project if someone had a gun to my head,” Mr. Lerner said. “I suspect they will look for a liquidity event over a short period of time.”
I’ve had both good times and mediocre times at Cosmopolitan, but never a bad time. I happen to really like the joint despite their hit and miss service to the masses. While their marketing doesn’t appeal to the gambler in me, they have enough interesting things happening that appeal to me…unfortunately for the Cosmo, I’m not the typical gambler.
Sensational headline? Maybe. Judging what Steve Wynn says in this video it seems as he doesn’t like nor agree with the Barack Obama and his staff’s current political policy. This isn’t the first time Wynn has gone off on a politician, but it is a new interview which, seemingly, was meant to discuss the excellent first quarter earnings Wynn had. Thanks to @brian_fey for the heads up.