I generally keep this blog to casinos, gaming and travel between Atlantic City and Las Vegas but every now and again I’ll sprinkle in a taste of life I find exploring Vegas. I typically end up in casinos or other toursity spots so this works well. A few weeks ago I was driving around the suburbs drinking coffee on a beautiful Sunday morning when I noticed that formerly barren corners of Las Vegas were beginning to get some action. I thought this was a sign that something was happening but wasn’t sure what to make of it. Yesterday we got this news:
U.S. home prices spiked 10.9 percent in March compared to the same period a year ago, with all 20 cities measured in the most recent Standard & Poor’s/Case-Shiller housing report posting positive year-over-year growth for the third month in a row.
Phoenix has the largest annual increase in annual prices at 22.5 percent, followed by San Francisco with 22.2 percent and Las Vegas with 20.6 percent. Boston annual prices rose 6.7 percent, according to the report.
The increase in housing sales explains the activity I’ve witnessed in my corner of Vegas. The drive on this Sunday morning took me to the edge of civilization and the Red Rock mountains. I imagine that this land, like much of the other land around it, was probably desert just a few years ago before the last Vegas building boom. The road to nowhere on this day shows where the building ended (left side of the street) and where building has ramped up again (right side).
Las Vegas is still new to me since most of my travels end up in casinos and I often end up taking roads to nowhere when I want to clear my head. These are roads where the Las Vegas boom just stops. Roads are unfinished and there partially started construction sites. It’s kind of sad but also kind of cool to look at because it’s something I’ve never seen before.
The road to nowhere above used to just end. There were no machines moving and nothing happening. This Sunday morning they were resting like normal people…err machines but have been working during normal work hours. Looping back you can see that houses are being worked on right now.
The construction out in the Vegas burbs has resumed and that’s a good sign of the Las Vegas economy. The Vegas strip has also begun preparing for an improved economy with construction resuming last year with The Linq and this year with MGM and SLS Vegas construction.
I love the Vegas strip. There’s no place in the world like it. There never has been and there never will be. It’s awesome. That said, the strip has been changing a lot from when I first started visiting Las Vegas for bettor better and worse. Right now the center of the Vegas strip is where you’ll find plenty of construction for The Linq, The Quad and Bill’s but in the next few years the construction will be moving to the north end of the strip with Resorts World and SLS Hotel.
The Vegas strip change isn’t anything new. CityCenter, Cosmopolitan and even Wynn ushered in change over the past decade because their customers are changing. People don’t come to Las Vegas just to gamble like they used to. They come for the night clubs, fine dining and shows. In fact, people have been coming to Las Vegas for those things more often almost every year since 1990 and in 1999 when people began spending more money on things beyond the casino.
Revenue is the total amount of money spent and not profit. This chart only shows gaming and non-gaming revenue so let’s look at an approximation on gross profit. The house edge (ie. gross profit) on some of the worst bets in the casino is only 30% with the lowest house advantages being under 1%. Meanwhile, the markup on a bottle of wine in a 4 star restaurant can be 200% or more. Even a soda at a low end restaurant will be marked up over 1,000%. The markup on a bottle of vodka at a nightclub dwarves all both of those.
In todays, corporate run, Las Vegas every square inch of a casino has to show a profit. This information has to be reported every quarter and in order to show shareholders that the future looks bright they have to always show a profit. Sure the casino may lure you in but the real money is made on those awesome SW steak dinners or at a table in Marquee.
Even if the Cosmo only gets a percentage of the revenue from Marquee there is a nice chunk of money to be made their from small stake plus rent plus overflow spending at restaurants and bars.
Gambling hasn’t left Las Vegas. Far from it. While the chart above shows that 35% of the revenue earned on the Vegas strip is from gaming you’ll find that Downtown Vegas still earns the majority of its revenue from gaming.
Moving forward expect this trend to continue. If you’re a gambler you’ll probably find better gaming options and more people like you downtown. If you don’t mind worse gaming odds and don’t mind being around different people you will still be able to find fun on the Vegas strip.
Personally, I love the both the gaming and non-gaming Las Vegas and look forward to seeing what the future brings.
Yesterday it was announced that Resorts World Las Vegas would open in 2016. The renderings show a very impressive complex when construction is complete. The construction is supposed to be done in phases so don’t expect the casino to look like the renderings on opening date.
In February I mentioned that the SLS Hotelmay have begun construction on the land where Sahara once lived on the Vegas strip. SLS Hotel is scheduled to open in 2014. I still haven’t seen or heard a peep about construction progress and remain skeptical but they did make this snazzy sales video.
The Fontainebleau (above) remains a shell of a hotel today with no plans of opening. Since the bones of construction are completed I have to imagine that once construction is visible at both SLS Hotel and Resorts World we’ll begin to see movement on Fontainebleau.
That movement may with Fontainebleau be in the form of a sale first but the revitalization of the north Vegas Strip looks very real. The development of the north Vegas strip may be 10 years in the making but there is reason to believe that the Vegas strip will, once again, continue beyond Wynn.
This morning it was announced that Boyd Gaming would sell the site where they planned on building Echelon to Genting Group. The empty lot with a partially built building across the street from Wynnwill be home to Resorts World Las Vegas in 2016.
Resorts World Las Vegas is expected to open in 2016 with multiple restaurants and dining options, along with 250,000 square feet of retail, more than 500,000 square feet of convention space, a theater and outdoor pool amenities.
It looks like Resorts World will use all the land similarly to what previously planned for Echelon. When construction begins it will bring a lot of excitement to the north end of the Vegas strip which is barren with stalled projects. Fontaine Bleau is decaying every day and SBE says that the SLS Hotel has begun construction even if we can’t see anything.
It’s being reported that the SLS Las Vegas will be breaking ground today on the sight of where the Sahara once stood. Well, Sahara still stands but it’s not open. I’m still not sure that the SLS will ever be built and I’ll believe it when I see it.
I hope this casino does happen because I like new shiny things in Vegas. I’m conflicted on the reality of this so I’ll do a quick roundup of articles about the hotel instead.
Closed Casino Banks on U.S. Program – The Wall Street Journal highlights how the hotel will be funded. SBE raised half the money for SLS Las Vegas and will get government loans to fill the rest of the money needed to get started. This feels super sketchy.
Vegas Tripping’s good friend, Sam Nazarian, continues his push to get out of the reality TV ghetto and into the real estate mogul world with another interview. This time he says that the SLS Hotel in Las Vegas will be opening in 2014. Of course, they’ve yet to break ground so there’s almost no way this is likely to happen.
In March 2012, Nazarian plans to open a luxury hotel in Miami, the SLS South Beach. Various other SBE-owned businesses, including Katsuya Restaurant, Umami Burger, and Hyde Lounge, will also inaugurate franchises across the U.S., leading up to the planned opening of SLS Las Vegas and SLS New York in 2014. (He won’t say where in New York he plans to open but has signed a letter of intent on a Midtown property.)
It looks as if he’s telling the same BS stories to investors about potential for a New York City property that he is about a potential Las Vegas property. Call me crazy, but it will be more difficult to build (in NYC) since he doesn’t even have land yet.
All in all this article in (note: photo above from) Business Week is a quick read and it should be since it’s chock full of nothing.