Fontainebleau Development CEO On Success In Luxury Hospitality

Fontainebleau Las Vegas, a 67-story, 9M SF luxury resort and casino, opened its doors on Dec. 13, 2023, and is now recognized as one of the city’s top destinations. 

The project was nearly 20 years in the making, and it wasn’t always smooth sailing, Jeffrey Soffer, chairman and CEO of Fontainebleau Development, said on this week’s Walker Webcast, hosted by Walker & Dunlop CEO Willy Walker.

“Lehman Brothers was one of the banks, and when the banking crisis happened, everything stopped,” Soffer said. “The place was 70% built. Nothing was finished here. It was just steel with the roof on it.”

Carl Icahn of Icahn Enterprises bought the property in 2010, then sold it to another developer in 2017. Construction paused once again during the pandemic, and Soffer bought the property back in 2021. 

“It was just a big empty shell,” Soffer said. “The bones were great, but we had to reconceive a lot of areas and reimagine spaces. The market changed, so we wanted to go to the luxury side. We reduced some areas, made some bigger rooms and different venues — all in 30 months.”

Since its opening in 2023, Fontainebleau Las Vegas quickly became one of Vegas’ top luxury destinations, with 3,644 hotel rooms and suites, a 150K SF casino, more than 30 bars and restaurants, 550K SF of entertainment and event space, and 6,500 employees. It was even crowned with the Michelin One Key distinction this year, the only resort and casino in Nevada to earn this honor.

Soffer said Las Vegas traditionally had made about 60% of its revenue on gaming. But since the city has become a worldwide hub for corporate conventions, concerts, nightlife, dining and global attractions, such as Formula 1 Las Vegas Grand Prix, more people are coming to the city for different reasons. As such, revenue from gaming has decreased to approximately 25%, Soffer said. 

“The city has transitioned,” he said. “When I first came here, I built a lot of residential buildings. There were 700,000 people that lived in this town back in the mid-’90s. There's 2.8 million people that live here today. Everything has changed, [and] we have the ability to do things that other cities can't at a luxury level, and the quality of the product that we're delivering is probably the best out there.”

Walker said collecting data and creating loyalty programs are two important factors that help keep hotels of this caliber resonating with consumers. Fostering loyalty among consumers is a big challenge, however, especially in Las Vegas.

Soffer said that Fontainebleau Las Vegas' database is growing quickly, but his competitors include deeply rooted hospitality firms such as MGM Resorts International and Wynn Resorts, which have vast databases and millions of customers. 

“If you take a company like MGM that has 40 million people in their database, maybe there's 20 million people that are active,” he said. “They'll go out and send offers during the soft period, saying we're slow this week, we're going to send 40,000 offers, and we're going to get 5,000 rooms booked. We're going to give those people free rooms because we know what they're spending on because they're in our loyalty program.”

“That's really the driver of a lot of these resorts,” Soffer added.

Assuring excellence is one way to gain new customers and keep them coming back, Soffer said.

If a customer has been coming once a year to Las Vegas to game and for 20 years has booked a room at Caesars Palace, convincing them to bring their business to Fontainebleau is not easy, he said. That’s why making every inch of the resort a high-end, seamless experience is of utmost importance — from the moment guests check in to the service in their rooms and friendliness at the bars.

“They'll come to see the restaurants,” Soffer said. “That's where we’ve been able to get a lot of them, because we've got the best food and beverage restaurants in town. That helps grab them over here. But they are very loyal to their casino hosts. It's coming together, but it's taking time. You’ve got to touch them in every place you can.”

Outside of Las Vegas, Soffer owns Fontainebleau Miami Beach, which has undergone nearly $200M in renovations over the past two years, JW Marriott Turnberry Resort & Spa in Aventura, Florida, and the Hilton Nashville Downtown. He has also created several prominent residential developments in South Florida, including Turnberry Ocean Colony and Fontainebleau II and Fontainebleau III. 

The South Florida real estate market is steady, Soffer said. The overarching economy, however, has been slow. The tourism business for the region was off balance this year, down about 14%, but next year, with Miami participating in the FIFA World Cup as a host city, that is expected to change, he said. 

“The economy is a little sluggish. Hopefully, we see some uplift in that,” he said. “But the group bookings continue to grow, which is important for us. It's 50% of our business in Miami.” 

Walker asked if corporations such as Starwood Capital Group and Citadel moving to South Florida could be a signal that more companies will move to the region? It is hard to tell the future, Soffer said, but the companies that have moved into the area so far have undoubtedly brought more good jobs to Florida — along with high earners.

“There's a shortage of luxury housing, like in Miami Beach, for example,” he said. “People say it's so crazy, these houses on the water. But the problem is, there's about 1,800 homes on the water in Miami Beach. When you see these crazy sales, there's just no supply. The high-end condo market in South Florida is doing well. The midpriced inventory, that depends on where it is. It’s a little more sluggish.”

Looking into what the next five years hold for Fontainebleau Development, Soffer said the firm is focusing on ironing out inefficiencies among its properties, with artificial intelligence becoming a game-changer. 

“Our biggest expense is labor,” he said. “Obviously, that’s going to be there. But how do we get more efficient with services? People go on vacation. They're always going to go on vacation. As far as resorts and hotels that are in the right areas, they're just going to continue to get better.”

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This article was produced in collaboration between Walker & Dunlop and Studio B. Bisnow news staff was not involved in the production of this content.

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