In the go-go 1990s, when it seemed like announcements about new casino megaresorts were annual occurrences, the prevailing wisdom was “the more the merrier” and “a rising tide raises all boats.”
But that philosophy came into question in the late 2000s as Las Vegas and the rest of the country weathered the worst economic downturn in recent history. Local tourism numbers fell, hotel rooms sat empty, resort profits plummeted and proposed projects were abandoned.
Monday's announcement of the first new megaresort in years signaled a potential sea change. The Genting Group, a Malaysian multinational company, announced that it will spend between $2 billion and $7 billion to build a 3,500-room Asian-themed resort on the Strip on land Boyd Gaming had planned for its Echelon project.
Some analysts worry that Southern Nevada hasn’t recovered enough from the Great Recession to expand room capacity by more than 2 percent. They fear that a new player such as Genting could cannibalize an already fragile high-end market.
But most experts and industry observers agree that Genting’s planned Resorts World Las Vegas is a big boost for the Strip and for the city, primarily because of the company’s reputation for being able to deliver what it promises.
“I think we’ve turned conventional wisdom on its head today when you see the type of investment we have here with this Genting group,” Gov. Brian Sandoval told VEGAS INC. “I think people will see that this is a part of the evolution of Las Vegas. It’s a great opportunity, and it’s on a part of the Strip that needs some help.”
“This is the real deal,” said Clark County Commission Chairman Steve Sisolak. “You hear a lot of stuff about projects coming in potentially to Las Vegas and Clark County, and they’re more or less pie in the sky and they never get built. But this is real. When you see the substance behind this company and what they’ve done and what they’re still doing worldwide, this is real and you’re going to see a transformation on Las Vegas Boulevard.”
Besides, when Genting celebrates the resort's grand opening, slated for 2016, Las Vegas' competitive landscape could look very different.
Southern Nevada’s gaming industry executives say they are confident about the future, in large part because of several projects that recently have been announced or broken ground — Caesars Entertainment’s Linq project, the Cosmopolitan’s 3,000-seat auditorium, the Las Vegas Convention and Visitors Authority’s revamped Convention Center, and MGM Resorts International's 20,000-seat arena.
“It’s exciting for the destination,” said Terry Jicinsky, senior vice president of operations for the LVCVA.
Although gaming revenue isn’t at historic levels, visitation was in 2012.
“Speculation about a new resort brings excitement to the Strip, and energy for one is energy for all of us,” said an industry insider who asked not to be identified.
Even one of the closest neighbors to Resorts World Las Vegas was enthusiastic about the plan.
Rob Oseland, president and CEO of SLS Las Vegas, said competition should spur market growth in Las Vegas.
“We’re very excited about the news,” Oseland said. “I'm assuming the scale and size of this property is going to grow the market and be a positive thing, and it will continue to drive business to the north end of the Strip. We hope there’s continued optimism about making more investments here.”
Genting’s resort would be by far the largest Asian-themed destination on the Strip. That’s a smart move considering Las Vegas’ popularity among Asian gamblers, RCG Economics principal John Restrepo said.
Asian and Asian-American visitors made up between 2 and 3 percent of the region’s tourist traffic from 2007 to 2011, according to the LVCVA. If that percentage continued last year when Las Vegas had a record 39.7 million visitors, there would have been 1.2 million Asian and Asian-American tourists here in 2012.
Genting’s project also would help revitalize the northern part of the Strip, where the mothballed Echelon project is a regular reminder of the building bust.
“It has been a bit of an eyesore the last few years,” Restrepo said, using a term also used by Sen. Harry Reid, D-Nev., in reaction to progress on the site.
Genting bought the 87-acre property from Boyd Gaming, which started and stopped construction of Echelon, for $350 million. The land sale was scheduled to close Monday.
By comparison, Phil Ruffin sold the 36-acre New Frontier property in 2007 for $1.24 billion, a Las Vegas record.
Genting is one of the largest casino companies in the world, and its executives had been looking to build or buy a project in Las Vegas for a while, said John Knott, global head of gaming for real estate brokerage Newmark Grubb Knight Frank.
There has been little demand for land on the Strip because property values of existing casinos have fallen alongside their business performance. But if Genting’s megaresort comes to fruition and is a success, it could spur other projects, Knott said.
If Resorts World and the SLS on the site of the former Sahara are successful, Knott believes there could be movement at Fontainebleau Las Vegas, the unfinished 68-story resort that investor Carl Icahn bought out of bankruptcy three years ago for $150 million. The resort is 70 percent completed but sits untouched.
The Strip doesn’t need developers “who have ideas but no money,” Knott said. But Genting has both. It paid cash for the Echelon site.
“How many of those guys are there?” Knott asked of companies that can pay cash for a Strip property. “Not very many.”
The fact that Genting is a foreign company making an international investment in the state was not lost on Tom Skancke, president and CEO of the Las Vegas Global Economic Alliance, Clark County’s regional development authority.
“I think this is the first project to deliver the new mission of our community, which is to attract global businesses to invest in Southern Nevada,” Skancke said. “It’s going to deliver on us being a global destination for tourism, and starting today we are a global destination for international business investments.
“We have not seen this type of investment in our community before, and this really sets the pace. It really is the message we want to capitalize on, that we are a global business destination. I think this is just the first step. The bar starts here, and we can only go up.”
Las Vegas casino designer and architect Paul Steelman, whose company is partnering with Genting, also views the project as historic.
“Showcase projects have changed the course of history, and we are thrilled to collaborate with such a dynamic and innovative team,” he said. “Great Las Vegas resorts ought to be a sketch of a journey. We’re all homesick for places we’ve never been, and we want to deliver our guests to that place.
“There have been a couple times in my 35-year career that I thought we were going to change history. Working on the Mirage in ’86, doing the Sands Macau in ’04. Today, I know that with (Genting chairman and CEO) KT (Lim) and Genting, we’re about to create a historical event once again for this awesome city.”
Clark County Commissioner Chris Giunchigliani, whose county district includes the Resorts World site, said she’s encouraged that Genting has demonstrated good corporate citizenship in other parts of the world and hopes some of the company’s resources will be used to improve the quality of life in Southern Nevada.
“They seem to be folks who don’t just build something and then walk away," Giunchigliani said. "There’s more of an interconnectivity, and within the Asian culture, there is that connectivity as well. So when they mentioned that their company does bioscience, that’s one of the things that I think our university could focus on and (use to) upgrade that school.”
Giunchigliani also said Genting also has a proven environmental record.
“They have some background in energy efficiency,” she said. “Vegas is the green capital of the world if we do this right. There may be some expertise that they have. I think in the long run, there could be a complement to the community.”