Sunday, October 26, 2008

Caesar's Octavius Tower Preview

Caesars Palace's new Octavius Tower is nearly completion and the Las Vegas Sun has a preview of the rooms. Designed during the pre-downturn heyday, they are going for the "boutique" hotel look that is so popular this days with the acommpanying prices, of course. The only problem, which is the same that MGM faces with City Center, is that the debt load taken on to build these super sweet top of the line rooms will not be able to be supported by the cash coming in the door. The days of the casino subsidizing thier insane construction budgets with $300 meals are over and they certainly wont be able to get away with $500 a night to pay the bills. The new 665 room tower with some additional convention space and restaurants cost a billion dollars. By comparison, the new Eastside Cannery tha opened in August was build from the ground up for a quarter of that.

The bottom line is that while all of the new luxury rooms built in the past few years are certainly nice, they cost way too much to build. Sadly, I think there may be a bankruptcy or two in the near future due to the crushing debt load some of these companies have taken on, Harrah's and MGM Mirage in particular. Upside is that when it happens, the winner will be the Vegas visitor who will be able to experience the best of Vegas at reasonable prices once again.

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Wednesday, October 22, 2008

Some Vegas Nuggets

It's been a little while since my last update. I work for a big financial company so as you could imagine, the last couple of weeks have been chaotic to say the least. Fortunately, we haven't been all that negatively impacted by the mortgage crisis and my company still exists!!! Anyway, I hope to be making a few updates in the next few days including some new property maps that are WAY overdue to get posted.

Continuing with the economic crisis theme, an interesting tidbit was run on CNBC yesterday talking about casino stocks. Anyone who has been following them knows they have been absolutely slaughtered in the past year but one stat jumped out at me. At this time last year, Sheldon Adelson's (builder of the Venetian and Palazzo) share in his company, Las Vegas Sands, was worth $30 billion. He was even the richest man in America for a brief few days. Today, it is now worth $3 billion. Now that is no small change and he is hardly poor but could you imagine losing 90% of your net worth in 1 year. Brutal!!! The numbers were similar for MGM Mirage's Kirk Kirkorian. Jim Cramer commented while MGM's stock chart was on the screen that it was the "ugliest chart he has ever seen in his life!" Of course, I would also happen to be the proud owner of some of those shares too. Ughhh...

In other Vegas news, some pieces of good news emerged on the downtown scene recently. If there was a ever a place that needed some good news, rumors have it that the shuttered Star Trek attraction from the Hilton will reappear downtown at the long struggling Neonopolis. This is excellent news if it turns out to be true. Neonopolis has been a ghost town since it opened and anything to bring people in will be a huge upgrade. It also will help bring people downtown who probably would never go there otherwise. I hope it works out for them but I am not holding my breath. The other downtown news involves the Plaza. Apparently, the owners, Tavares Group, are planning a remodel of the place. They have setup several different prototype rooms to decide which way they want to go. They want to "elevate the Plaza to just a notch below the Golden Nugget." That indeed is a worthy goal since the Plaza has been pretty crappy for a long time. However, I have my doubts about the management at the Plaza. Tavares has owned the Plaza as well as the Vegas Club for years now and they haven't done a single thing positive to either of those properties. If anything, there are worse off than when they took over. I know downtown has its issues and big capital projects are hard to justify but there just hasn't been any effort on their part to really make a difference. As with the Star Trek/Neonpolis news, I wish them the best of luck but there has been a lot of talk downtown in recent years but not a whole lot of action.

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