Speculation: Downtown Grand Won’t Be Sold Until 2016

Downtown Grand at Night
Downtown Grand at Night

If you follow Vegas news then you’ve probably seen speculation that Downtown Grand is for sale (on Vital Vegas) or possibly sold (Travel Zork).

I’m told that Downtown Grand is on the market but there isn’t a buyer in sight.

My semi-educated view on the real estate market in Vegas is that there won’t be a buyer for Downtown Grand until after Derek Stevens announces his plans for the future of Las Vegas Club (see Las Vegas Club news at Travel Vegas and info on its sports theme at Covers).

The former Las Vegas Club has 400 hotel rooms that can be renovated and rented once the property is re-opened. It’s unlikely that an investor would make an offer on Downtown Grand until they know what Derek Stevens plans to do with those hotel rooms.

Added hotel room supply could (should) drive down hotel room prices in Downtown Vegas. If nothing else added hotel room supply should keep hotel room prices low in Downtown Vegas.

Downtown Grand has 634 hotel rooms between its two towers. Prices for those rooms will be effected if Stevens’ plan is to open those extra 400 rooms at Las Vegas Club. The revenue potential of those 634 rooms should help dictate a price for Downtown Grand.

Derek Stevens says he should have plans set for the former Las Vegas Club by VIMPF which is October 16-18. Unless overall room capacity in the area doesn’t matter to the buyer of Downtown Grand I don’t see anyone making a purchase before the year is end – especially if Downtown Grand is trying to position its sales price as if they’re a luxury property.

Photo: Vegas Photo Blog

Speculation Games: SLS Las Vegas To Become Cosmopolitan Jr.

SLS Las Vegas Blackjack Table
SLS Blackjack Table

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, restaurantsbars, 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.