The business of partying
What works and what doesn’t in Las Vegas’ club scene
28 November 2011
This is how one business in town recently celebrated its birthday: A handful of sexy cowgirls in stars-and-stripes bikinis gyrating atop a bar, the vibration and bass of the country-rock music so strong that 100 bras, dangling from the ceiling, are quivering.
The performers invite men to approach the bar for shots of liquor. The dancers push the customers’ heads backwards and, leaning over them from above, pour booze into their gaping mouths.
This is a birthday party, Coyote Ugly-style. The nightclub, inspired by the 2000 movie based on the New York City saloon, is turning 10. And in an industry as competitive as nightclubs, turning 10 is reason for celebration.
Down the street, the party is ending for another Strip mainstay. Workers at MGM Grand’s Studio 54 received word earlier this month that the 14-year-old nightclub will close Jan. 8. Modeled after Manhattan’s infamous discotheque of the same name, Studio 54 is Las Vegas’ first and longest-running megaclub.
Its closure isn’t a failure, experts say; every nightclub has an expiration date because fickle clubgoers demand fresh, new experiences. A club’s lasting power is a testament to its location, branding, adaptability in a tough economy and flair.
Indeed, the nightclub business model is far different from other industries — think cereals and automobiles — that rely on branding and consistency to build generations of customer loyalty.
“Any club that makes it a good five years is definitely a success,” said nightlife guru Jack Colton, who runs an independent website dedicated to Las Vegas clubbing. “Five years is great. Longer is amazing.”
Studio 54 benefited from a prime location. The property’s 5,000 hotel rooms provided a constant stream of customers. But the venue’s true achievement was rooted in its branding. Before over-the-top production became the norm in clubs, Studio 54 introduced Las Vegas clubgoers to a sensory overload experience — 22,000 square feet of aerial acrobats, half-naked go-go dancers and lighting worthy of a rock concert.
Operators had stumbled onto the secret of success for Las Vegas clubs: Don’t be ordinary. It’s a mantra top venues have mastered and struggling ones have yet to grasp.
The Strip is home to some of the country’s most expensive and profitable clubs, venues that offer an economic bright spot in an otherwise gloomy market. Most of the city’s nightclubs rake in tens of millions of dollars a year, thanks mostly to liquor sales, which can have profit margins as high as 95 percent. Though spending on gambling, food and hotel rooms in Las Vegas continues to slide, casino beverage earnings are on the rise, in large part due to thirsty clubgoers. And the better the mix of music, celebrity and ambience a club has, the more people will sidle up to its bar and clamor for bottle service.
“Vegas was built on the unusual,” said Robert Casillas, a local nightlife and hospitality consultant and president of the Monsoon Group. “People come here to see things they wouldn’t see in their hometowns. They want a castle. They want a pyramid. They want to see tacky-Elvis-in-a-pink-Cadillac, crazy stuff.”
Casillas criticized several clubs that recently opened or are set to debut for being cookie-cutter copies of one another. Decorated with muted earth tones and designer stone, the nightclubs look more like hotel lounges than nighttime hot spots, Casillas said, a distinction that will doom them.
Clubs that succeed do so because they provide something their competitors don’t. Ten-year-old Ghostbar is set atop the Palms and offers a spectacular view of the Strip. Six-year-old Pure at Caesars Palace boasts an impressive celebrity guest list and was one of the first clubs to feature an outdoor patio. Coyote Ugly caters to an older, more casual crowd looking for jukebox music and cowgirl waitresses who like to interact.
“Their clientele aren’t the ones you’re going to see in the other nightclubs,” Colton said. “They want cheap drinks, no lines and a looser dress-code requirement.”
Las Vegas clubs found their footing during the city’s boom years. Until a few years ago, flagship nightclubs weren’t the norm for Strip resorts. Competition was relatively scarce, entry was highly selective and profits were vast. At its peak in 2009, Tao at the Venetian grossed more than $100 million.
Today, with almost every resort featuring at least one megaclub and often more, the most successful of venues are lucky to pull in $50 million a year. Operators paper the Strip with free entry passes. Doormen look past the occasional athletic shoe or baseball cap, as opposed to strictly enforcing dress codes. Paying $200 to get past the velvet rope is virtually unheard of.
This year, three new venues opened: Marquee at the Cosmopolitan, Chateau at Paris and Nikki Beach and Club Nikki at the Tropicana; , Nikki Beach is closed and Club Nikki is being rebranded. More openings are slated for New Year’s Eve.
To compete among the glut, club operators have gotten creative. The nightclubs that remain on top have diversified. First, they added weekend pool clubs to their lineups. Now, they’re expanding into the day club scene.
Every Saturday afternoon, Ghostbar transforms into a mini-rave with costumed customers, confetti cannons and beer bongs. Club music shakes the walls as top DJs spin records. The club averages 1,000 guests per party, a staggering number, considering it is still light outside.
“I can’t even describe the success we’ve had,” said Jon Gray, vice president of the N9NE Group, which operates the club.
As staffers finish cleaning up from the daytime revelry, clubgoers start lining up for nighttime fun. It’s a markedly different crowd. Day-glow tutus give way to skintight dresses. Sky-high heels replace rhinestone boots.
“It’s not greedy, it’s savvy,” Colton said of clubs’ foray into the daylight. “The market is there.”
And the clubs that embrace the trend — and extend its boundaries — are most likely to last. Beyond location, more important than the captive audience offered by a resort, the No. 1 factor for a Las Vegas club’s success is adaptability.
“It’s important to have innovative marketing strategies and to always be thinking about what you can do creatively to make a better party,” said Jodi Myers, president of the Light Group, which operates a dozen Las Vegas clubs. “A club will flop if you’re not flexible.”
XS at Encore is only three years old, and at $100 million was the most expensive nightclub ever built, but already it has undergone several facelifts. Most notably, the operation revamped its music roster. The venue opened with a resident house DJ, a solid musician but by no means a big name. Then competitors started bringing in world-class DJs to spin at their haunts, and customers began to stray. XS fought back, and within weeks it had booked even bigger name DJs and updated its sound and light platforms.
“XS has amazing staying power in this economy because of the aggressive moves by (co-owner and managing partner) Jesse Waits,” Casillas said. “Wynn and Waits, being who they are and having the bankroll, immediately countered the competition and changed the format. They adjusted.”
In fact, Steve Wynn hasn’t been shy about changing out his clubs; Wynn Las Vegas opened in 2005 with Lure, a small yet expensive lounge and nightclub near the main casino floor. Three years later, he spent several million dollars for a makeover that led to a new, two-story nightclub, Blush. Two months ago, it closed.
Customers have come to expect top talent in clubs — headliners they can’t see in their hometowns. And house music has taken over the Strip scene, turning DJs into superstars commanding staggering salaries. A top DJ can pack a club with a simple tweet or Facebook post.
“Clubs are really in a war because to an extent, they’re all the same. They all have lights, a dance floor, scantily-clad girls, bottle service. The difference is who’s spinning,” Casillas said.
XS has kept its name and decor, but many clubs take cosmetic overhauls a step further and rebrand completely. The same operator runs the joint but gives it a new name and look. In a city where newness rules and coolness is fickle, it can be a savvy marketing move.
The Light Group is doing it now with the transformation of Jet to 1 Oak at the Mirage. So is Las Vegas nightlife newcomer SBE Entertainment, with the rebranding of the Bellagio’s Fontana Lounge into Hyde Lounge. Studio 54 also is expected to reopen next year with a new identity.
“In Las Vegas, people have come to expect everything to be over the top and cutting edge,” Myers said. “With the way technology and design evolve along with trends in entertainment, you need to at least do small upgrades every four or five years. So why not do it all and give them a new brand, with new marketing and so on?”
Rebranding typically succeeds, but not always.
One of the more spectacular flops was the Hard Rock Hotel’s move from Body English, a take on a rock star’s living room, to Vanity. Body English was one of the first on-property nightclubs in Las Vegas and was wildly popular both with local and out-of-town customers. But after a six-year run and final 2010 New Years Eve bash, the club closed. A day later, Vanity opened, awash in mirrors and a floor-to-ceiling 20,000-light chandelier. It is still in business today but never found the groove of its predecessor.
The trail of failed Las Vegas clubs is long: Eve at Crystals at CityCenter, Prive at Planet Hollywood, Rum Jungle at Mandalay Bay, the 40/40 Club at the Palazzo and Poetry inside the Forum Shops at Caesars , to name a few. Certainly each had its own set of unique issues, but most shared a few common operational problems — lawsuits, in-fighting among partners and struggling staffs. The caliber of people running a club, from those inking the deals to serving the drinks, can make or break an enterprise. Venues that succeed have the city’s best running them, and there’s only so much talent to go around.
The N9NE Group is hoping for a happy ending, or new beginning, for its nightclub Rain. Operators are in the early stages of redesigning and rebranding the 10-year-old venue at the Palms. It will get a new look, a new name and a “reinvention,” according to Gray.
The club has undergone remodels over the years, with sky boxes, dance floors and water features coming and going. But the nightclub is largely the same as it was when the Real World kids drank and danced there a decade ago.
Gray insists Rain continues to be profitable. But that doesn’t mean it can’t use a makeover, he says.
“People have spent the last 10 years partying there,” Gray said. “It’s time for a change and for a new experience for them.”
CORRECTION: This story has been clarified. Nikki Beach, a poolside day club, is closed; the Tropicana has severed its ties with the Nikki brand out of Miami, Fl. Club Nikki remains open and on Dec. 30 will be rebranded as RPM Nightclub. | (December 27, 2011)
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