Gambling Gives Way To Gourmet: The Rat Pack Wouldn’t Recognize The Vegas Of Today
LAS VEGAS — It may be the town Sinatra built, but a shift in revenue stream means Sin City’s current crop of casinos and hotels must be a different breed than the gambling halls of yesteryear.
“The casino world is really scratching its head on how to attract millennial clientele. The hotel side is not that hard. They have high expectations, and it can just operate to a higher standard,” JC Hospitality CEO Richard Bosworth said Wednesday at the 2018 National Association of Real Estate Editors conference in Las Vegas. “The casino part is where there is the head-scratching.”
The Hard Rock Hotel & Casino in Las Vegas is in the middle of a renovation that will result in its rebirth as Virgin Hotels Las Vegas. Hard Rock majority owner Brookfield Asset Management sold the resort located one mile east of the Las Vegas Strip in March to JC Hospitality, which hopes the Virgin flag will elevate the profile of the hotel. While the resort was popular in the years following its 1995 launch, the Hard Rock has gained competition in recent years and lost premium customers to resorts on the Strip looking to woo travelers who are coming to Vegas to do more than gamble.
“The hotel’s database is one that had not kept up with the trends of Las Vegas,” Bosworth said. “When we sized brands, we wanted one with sizzle, databases and demand-drivers.”
Nongaming sectors drove overall Nevada resort revenues to record levels in 2017, up $939.8M or nearly 4% from 2016. Lodging, food and beverage expenditures accounted for 57.6% of all resort revenue, according to the Nevada Gaming Control Board. Gaming was 42.4%, meaning JC Hospitality is going to have to do more than spruce up the casino floor to get visitors to its resort. Bosworth thinks the Virgin brand will do just that.
The developer is mindful during its Virgin transition of over half of all resort revenue going to restaurants and not slot machines. When the resort opens in late 2019, there will be six new restaurants, six new bars and two nightclubs. Bosworth is confident of the refurbished property’s potential, as two Virgin Group partner companies, tour operator Virgin Holidays and Virgin Atlantic Airways, already provide a stream of tourists into Las Vegas.
But tour feed is not the only recipe for hospitality success, even beyond Sin City. Hotel guests are increasingly looking for local flavor and improved on-site dining nationwide to feel better connected to the city they are visiting.
“Dining used to be a throwaway space because it was rare you would have dinner at a hotel,” said Manny Dominguez, a principal of design firm Cooper Carry’s hospitality studio. “A lot of our clients now want something that’s authentic, so it’s really about creating a destination for both the hotel guest and the community.”
Cooper Carry’s more recent projects include Kimpton’s Tryon Park Hotel in Charlotte, North Carolina, and Dominguez said the 200K SF, 217-room hotel is an example of how a hotel company can embrace the city it is in. The North Carolina hotel has a rooftop bar overlooking the nearby Romare Bearden Park and Angeline’s, an Italian restaurant in the lobby that is popular with local residents.
“A hotel’s programming now has the message of not only do they want you there, they want you to have dinner there,” Dominguez said. “There’s a lot of specialization, and for the hotel side of the equation, it’s very profitable.”
Leaving (The Old) Las Vegas
In Vegas, Bosworth isn’t ready to entirely write off the gaming side of his upcoming resort. He doesn’t view overall gambling revenue as having gone down; it just means food and beverage sales have gone up. Virgin, which has a 50% female client base, will add a new twist to the equation, as JC Hospitality looks to soften the hotels' image from its former Hard Rock design.
It is the latest example in the Nevada city’s decades-long push to win over travelers who have no intention of spending much time on a gaming floor. While gamblers looking to be treated well are a factor in the Las Vegas tourist industry, Bosworth said there are four other types of travelers who also add to the economy: conference attendees, leisure travelers, entertainment customers and locals.
The 1989 opening of The Mirage ushered in the era of the Las Vegas mega-resort, and it has been joined in the ensuing decades with openings like the Bellagio, the Venetian and MGM’s $9B CityCenter. While each resort still has gaming opportunities, they also have A-list musicians in residency, substantial retail offerings and celebrity chefs backing a litany of restaurants throughout each property.
Longtime gamblers still view Las Vegas as their mecca, but the food and beverage push and new client base mean developers need to break the former Sin City mold and account for consumer demand.
“They’re not going to stop coming here to gamble,” he said. “But when you look at the customer base you’re servicing, there needs to be a reprogramming.”