We're back with another installment of 'Simpson on Vegas' and this time around, Jeff examines the situation in Downtown Las Vegas.
This is part one of a two part series. Continue after the jump for the article.
The present and future of Downtown Las Vegas isn't looking good and I don't like that, as some of my favorite Las Vegas memories took place in Glitter Gulch. In the early '80s the Golden Nugget was my favorite hotel; I loved walking from one Downtown casino to the next, the Nugget cafe's late-night steak special and driving on Fremont Street at night.
Unfortunately, the evolution of the city makes it increasingly clear that it will be difficult for Downtown to survive as a robust casino market. In this column I'm going to take a look at what's gone wrong Downtown and then in a following column I'll discuss some ideas that might help the market prevent eventual irrelevance.
The last two decades-plus have been hard on Downtown, as the modern megaresort boom that started with the 1989 opening of the Mirage has sucked much of the life out of the Fremont Street-centered market.
The competition with the Strip has been one-sided, as all of the new properties and almost all of the renovation, remodeling and expansion dollars have poured into Strip resorts.
The numbers are grim. Comparing the state Gaming Control Board statistics from fiscal 1990 (July 1, 1989 - June 30, 1990) and 2009 (July 1, 2008 - June 30, 2009) it is clear how Downtown has deteriorated. In FY '90, Downtown had 21 casinos generating $1 million or more in gaming win (the amount won from gamblers); that number dropped to 16 in FY '09. In FY '90, Downtown casinos won $642 million, a number that dropped to $548.2, a number that would obviously be much smaller if it were adjusted for inflation. Room revenue increased by 41 percent, from $107.5 million to $151.6 million; average room rates increased from $37.84 to $51.63. During the same fiscal years the number of Downtown casino employees dropped from 17,835 to 10,384.
Many of the Strip's increases during the same two decades have been meteoric. The number of casinos dropped slightly (from 41 to 38) but gaming win more than doubled, from $2.28 billion to $5.33 billion. Room revenue skyrocketed from $662.3 million to $3.37 billion; average room rates jumped from $56.05 to $124.75. The number of Strip resort employees increased from 68,375 to 98,711.
Strip casinos haven't been the only competition for Downtown. As Las Vegas population grew during the past two decades and people settled farther and farther from the historic center of town, smart casino owners built locals casinos closer to where folks lived. Of course locals casinos existed before 1990, as the Showboat, Sam's Town, Bingo Palace (later Palace Station) attracted a lot of business from Las Vegas residents, but many Las Vegans played and partied Downtown when they lived only a few miles away. But as people moved farther away and developers built dozens of local casinos, locals gravitated toward nearby casinos, a trend that still continues, as proximity continues to be the strongest factor determining which casinos locals will visit. Downtown's ability to compete with suburban casinos was hampered by crime concerns (because of Downtown's higher crime rate and its homeless population) and cultural considerations (Downtown is bracketed by neighborhoods with the Las Vegas Valley's largest concentrations of blacks and Hispanics, a factor that may play into some residents' bigotry or fear).
While competition from the Strip and locals casinos have hurt Downtown, the market's weak, undercapitalized casino owners have been unable to respond. The market's big players who controlled the market's two big money-making properties, Steve Wynn at the Golden Nugget and Jack Binion at Binion's Horseshoe, are long gone. The Nugget has changed hands three times (from Mirage Resorts to MGM Mirage, then to Tim Poster and Tom Breitling and finally to Landry's Restaurants). Landry's CEO Tilman Fertitta built a new hotel tower and freshened the hotel's restaurants and look, but the changes stand out as the only major improvements made to a Downtown hotel in well over a decade.
The Horseshoe's ride has been sharply downhill, as Jack Binion relinquished the property to his sister Becky Behnen, who promptly ran it into the ground. Harrah's stripped away the World Series of Poker and the Horseshoe brand then left the carcass of the renamed Binion's to West Virginia-based MTR, which left with its tail between its legs after a few years of Las Vegas losses. Slot bar and Four Queens owner Terry Caudill bought Binion's but was not capitalized well enough to withstand the recent recession and had to close the property's hotel.
Aside from the Golden Nugget there are few bright spots in the Downtown casino market. Boyd Gaming owns Main Street Station, the California and the Fremont, but the three casinos are obviously far down the company's priority list. No significant renovations or major reinvestments have been made at those Boyd properties in many years. The El Cortez had a successful, low budget renovation but has really just carved out a niche as a very small, decent retro joint. Caudill spent some money renovating the Four Queens when he first bought it, but improvements have slowed as the economy and Binion's squeezed finances.
The rest of the downtown market is in horrible shape. Fitzgeralds is owned by Don Barden, another undercapitalized owner who has allowed the property to languish for the better part of the last decade. Three hotels formerly owned by Downtown casino legend Jackie Gaughan occupy the bottom of downtown's barrel. Now owned by the Tamares Group, an owner obviously more interested in the real estate under the casinos than the hotels themselves, the Plaza, Las Vegas Club and Western have become more and more dilapidated, with the Western also having closed its hotel. Finally, the Lady Luck, owned by real estate developer the CIM Group, has been closed for more than four years as Las Vegas city officials have allowed reopening deadlines to pass as the owner whines about the challenges of redeveloping the property in a tough economic climate.
Tough competition from the Strip and locals casinos and a bunch of undercapitalized and/or disinterested owners have sucked a lot of the life out of Downtown's once proud casino market. Can it regain its primacy? No, but it can be revitalized, and I look forward to sharing some of my ideas for keeping Downtown casinos relevant.
-- Jeff Simpson, July 2010
Comments
Boyd Gaming has in the last year or so renovated the rooms at all three properties Downtown. Room renovations are cheap.
There is definitely potential Downtown, as look at what Siegel has done with the Gold Spike, as well as what the owners of the Golden Gate have done in the last few years as well.
Landry's obviously thinks that there's potential Downtown, as they've spent a decent amount of money to build a new tower, and build an expansion to the casino and convention space.
It really is hard to figure out what the heck is going on with the Plaza and Vegas Club. Bringing in Firefly*, Tinoco's Kitchen and the Omelet House (Which closed after a less than six month run at the Plaza.) shows that they're interested in drawing people in for meals that are definitely not the typical casino dining one would expect Downtown. But the rest of the properties are rundown and seem to be held together with duct tape, bubble gum, and string. The escalators to Firefire* have been out of service for many month (The down one was out of service when I out there in November and both were out of service when I was out there in June.).
The Fitz will probably see new ownership within 2-3 years, as the financial situation with Barden doesn't appear to be getting any better.
I would not be surprised if Binion's is shuttered in the near future. The closing of the hotel side and the coffeeshop was a bit surprising, but when I was out there in June, the vibe I was getting off of many of the employees was not very good, as if they were standing on the gallows waiting for the trap door to open.
The Four Queens is a bit hard to figure out as well. I've been in the casino there during what should be a busy time in the casino and there were dealers standing around. Meanwhile next door at the Golden Nugget, the tables were packed, as were the tables at the Golden Gate. The Four Queens has no "gimmick" in which to draw in the punters.
The El Co has a core group of guests and players that unfortunately getting older and isn't getting as many new players to replace them.
If the Lady Luck ever reopens, I will be among the large number of folks surprised by it.
Will you discuss the Golden Gate in your next article?
Jeff in OKC:
I should have mentioned the Golden Gate in the first half of my column and will definitely mention it in my second, solutions-oriented part.
The Golden Gate has a relatively new co-owner and a new coffee shop. I've always liked its layout, location and retro vibe. Ownership has been undercapitalized for quite a long time; I haven't seen a sign that the new co-owner (who also owns the Las Vegas 51s minor-league baseball team) intends to invest significant money into improving the place. I do love the new coffee shop (blueberry cream cheese pie, especially) and have always liked the snack bar ($3.99 big shrimp). They introduced weird go-go dancers in the table-games pit; the last time I was there the dancer looked like she was in a stupor. I'm not a fan of go-go dancers in the pit (that goes for Planet Hollywood, too). The floor personnel at the GG really sweat the money being bet at the tables, a bad sign but typical everywhere DT except for the Nugget, Main Street and sometimes the Cal.
Steven: A lot of excellent stuff in your comment; thank you. My recent experience at Binion's was similar. I hate to see that place continue to deteriorate; a place that used to revel in no-frills, big-bet (and small-bet) action now subsists on small-stakes play.
Agree completely about the Gold Spike; place used to be a fire trap and an eyesore and it is now much improved.
As for the restaurant additions at the Plaza and Vegas Club, those changes cost next to nothing, certainly not even in the high six figures. When the current owners bought the properties (along with now-departed front men Barrick Gaming) they promised dramatic remaking of the properties, including their first big project: A totally new Fremont Street front for the Las Vegas Club, with entertainment opening out onto the street. They never did it; they are pathetic. One of the most hilarious things at the LVC is its "nightclub" area back by the now-closed sports book. It may be the single lowest cost-to-open nightclub in the city; I urge folks to check it out. The best part is that there is a velvet-rope encircled "VIP" seating area about as big as an apartment kitchen. The place was closed when I last saw it but the idea of someone toking someone to sit there and then paying for bottle service is hilarious. (What do they serve? Popov vodka, Old English 800, MD 20/20 and Champale?)
When we go downtown, we almost always valet at Main Street Station, take the overhead walkway to the California and go from the south door at the Cal to the North door at the Las Vegas Club. This means we usually walk by the "club" that Simpson is referring to. I think the name is "Foxy's", it is geared to a black audience and the vocal group is "Moving On". No, that's their name, not that they are leaving. The place is usually crowded when we walk through.
I love downtown. In fact, the main picture on my Iphone is a nighttime view of the Las Vegas Club. I should probably change my user name to "Champion of Downtown", it's so bad. I think what has happened to the Plaza and Las Vegas Club is a crime, pure and simple. I think these properties have more potential than any others downtown, except the Golden Nugget, yet they are being left to rot. Even worse, I think Tamares is deliberately letting the Plaza degenerate since Mayor Goodman said he wants to tear it down to make a better gateway to Symphony Park. That sentiment is breaking my heart.
I hope popular demand forces Simpson to publish his "Solutions For Downtown" column sooner than planned. I'd like to read it now, in fact. Certainly much sooner than the schedule that his cheap-ass publisher has him on. :-)
I'm more bullish on the future of downtown. Don't get me wrong: Tamaras wrecked The Plaza and Las Vegas Club. What a bunch of morons. I want to cry when I walk through The Plaza. Having said that:
1. People ARE going down there and getting familiar with it. The party atmosphere at night is better than just about anything you'll find on The Strip. As much as I'm no fan of the LVCVA (Billy Vassiliadis' slush fund) , the money for the free entertainment down there is worth it.
The buzz from my readers about downtown is growing by leaps and bounds. Visitors who never bothered to experience it go down there, love it and put it on their "to do" list for every trip.
Side Note: 30% of my readers make over $100k and another 27% make $60-100k. We're not talking about a bunch of bottom feeders who like downtown because they can't afford anything else. I get trip reports that mention staying at Bellagio and enjoying a trip downtown all in the same email.
2. ADR's will eventually rise again. People who still want to come to Las Vegas but don't want to pay $200+ a night to be on The Strip will strongly consider downtown. Downtown ADR's will go up, as will the demographic of downtown visitor that has more cash to spend.
3. Although it is stalled out for now, the gentrification of downtown is coming. Just look at some of the neighborhoods south and east of it where young professionals are buying homes (bungalows in many cases). I drove through this area -- Charleston and Spencer, just off of Fremont and Eastern -- not long ago expecting to find crack alley. Instead, I found this:
http://maps.google.com/?ie=UTF8&ll=36.161274,-115.128962&spn=0.004764,0.011362&t=h&z=17&layer=c&cbll=36.161197,-115.129016&panoid=4xJwG1Xl2InbywGhQr8n7g&cbp=12,51.31,,0,8.91
I'm not saying it is Scotch 80's, but I saw a lot of "yuppie" cars and homes that had been fixed up and were being well maintained. All this just blocks from the worst part of Fremont Street. As this and other areas turn the corner, downtown could very well once again turn into the "spot to go" for those living withing a few miles of it.
3. The Performing Arts Center and other things that make downtown more desirable combined with rising ADR's will allow downtown property owners to re-invest in their properties.
How bullish am I on the future of downtown? I'm currently looking to purchase a home within 2 miles of the core of it. Might be a condo, might be a cool retro home (there are a some hidden gems surprisingly close to downtown in numerous areas).
If the current gaming property owners can simply ride out the current storm, they'll do just fine in the future.
PS I loved the old Gold Spike. Talk about slumming it... every once in a while, it was fun to play $1 blackjack and soak in the grime and smoke. Talk about Old Vegas! Sometimes there is a real charge that comes with gambling in a run-down grind joint.
Now it is way too pristine, boring, and the perfume they scent the air with stinks. If I wanted that, I'd go to Dotty's. They should have just scrubbed it up a little bit and replaced the carpets.
PSS Rest In Peace, Kenny Guinn.
I think the distance to the airport effectively caps any turnaround for downtown. Even if you built world-class resorts downtown (the GN is looking pretty nice), I'm not sure you can get enough higher-end tourists to bypass all the intervening strip properties. If true, the question becomes what is the best that downtown can do?
Mr. Simpson,
You didn't say anything in this piece about Neonopolis. Under its current management, it's a big [neon] pink elephant, but it has lots of potential if it's used for movies; nightclubs; little theater; gaming machines museum; kids' playground; teens' arcade; etc. Take it away from Joshi & give it to somebody who can make it a venue to draw folks in.
Do you intend to mention Neonopolis in part 2?
Kerr Mudgeon:
I will be discussing several topics in the second column that I didn't mention in the first. Among them are the Fremont Street Experience and Neonopolis.
parchedearth:
You are absolutely right about the negative impact of DT's distance from McCarran. I don't think there is any way DT can supplant the Strip, but it might be possible to create or reinvigorate a few market niches to keep DT casinos viable.
AccessVegas.com:
I hope you are right about interest in DT, but the LVCVA's visitation numbers say fewer visitors are going downtown. (Check out pages 43-45):
http://www.lvcva.com/getfile/107/2009%20Las%20Vegas%20Visitor%20Profile.pdf
I should mention that I'm not a total believer in all aspects of these LVCVA surveys (not sure how many folks admit their true budgets, gambling and otherwise; not confident in how random they are) but, that said, for Vegas-focused folks like those on this blog, they make excellent reading. Another great one dealing with downtown vs. the Strip:
http://www.lvcva.com/getfile/488/2009LasvegasVPS_Dtwn%20vs%20Strip.pdf
I do agree with you about some of the great things coming downtown or already there, and I think they can be a positive influence on the casino district.
And, if you're serious about liking the old Gold Spike better than the refurbished one, may I recommend the Western? It even has table games.
Since I have previoiusly admitted I haven't worked up the nerve to go into the Western yet, has anyone got any pictures of the casino floor, or stories of going there?
I love the fact that Mayor Goodman takes a tremendous interest in revitalizing Downtown Las Vegas. My friend owns a bar down there and Mayor Goodman has been very supportive of it. I shudder to think what will happen if our next Mayor doesn't take as big of an interest in it.
Though I do think that Downtown was starting to catch on before the economy crash. They were going to build some of the high rises down there, they have those corrugated steel condos that are nice. First Friday was catching on.
However what's gonna happen next remains to be seen.
Jeff,
With the Stardust gone and Echelon not happening, do you see any chance of the Fremont becoming Boyd's flagship LV property? I know it doesn't have the size or amenities of the Orleans or Sam's Town, but its location and history would seem to make it a more natural candidate. That they don't do more with the Fremont seems a wasted opportunity to me.
Dave:
Boyd has already decided that the Orleans is its flagship Las Vegas property. Most of its Stardust players have been moved to the Orleans. The Orleans has several advantages over other Boyd properties: More hotel rooms, an arena, a good parking garage plus a lot of surface parking, proximity to the Strip and McCarran. Even though the Gold Coast is closer to the Strip, Orleans is bigger, newer and many of its hotel rooms are a lot newer. Among Boyd's three downtown properties, I think Main Street Station is its best property. The Fremont is bigger and a more historic property than MSS and the Cal but the property is pretty stale. Sam's Town and Suncoast are too far removed from the center of town, as are the much-too-small Eldorado and Jokers Wild, which don't have hotel rooms.
I'm not the longest resident here, but one thing I do know is that Las Vegas lives by it's freeways (don't believe me, try living without them as I do) and most freeways go by downtown at some point. Approaching the "spaghetti bowl" from Summerlin, there's usually a nightmare of cars heading for the Strip and the comparatively lesser amount of cars going downtown makes it appealing somewhat just by itself.
I'd say that the future of downtown is in the locals market, and since most all highways save 215 run to it, it's not TOO poorly placed. The only problem is that for the gambler who plays close to home, there's little reason to go downtown. It's unfortunate that Station is swimming in bankruptcy court and Boyd probably feels a responsibility to do SOMETHING with the Echelon space before taking on other Las Vegas projects, because what downtown needs is a quality place with a connection to the casinos around town.
Perhaps the easiest move would be, given the Fertitta family connections, if the Golden Nugget simply joined boarding pass. Barring that, should the industry ever refocus maybe the city should arrange to get a locals chain a good deal on some public land on the condition they build a casino worth going to. My point overall is I see downtown as this place where you can go spend those points you earned at some coast or station out yonder.
That said, I hang around the Nugget and Boyd places and see pretty good traffic. I'm not sure if these places were more packed if I'd enjoy them as much. MSS seems to have picked up from where it was in 2006.
The biggest problem for downtown, to me, is lazy ownership. This started at Binions, spread to the Fitz, and maybe Terry Caudill is trying but he doesn't have the bones to do what needs to be done.
Oh, and of course, the Tamares/PlayLV/whatever properties. Those places have such lazy management that I often forget they exist.
mike_ch:
I know that El Cortez draws a pretty high proportion of locals--I forget just what it is (I can't find my interview notes right now), but I remember being surprised at how high it was.
Dave: The ElCo has been drawing more attention as of late. I seem to remember some site saying that the Cabana Suites opening got more site traffic than Encore.
I think the other thing that can really help downtown is to focus on the Fremont that exists beyond it. Everything past the ElCo is pretty grungy and in serious need of help. I think the area needs to be redeveloped, but instead of the county's idea of a redevelopment zone (which can be zoned for anything, hence why Turnberry Towers is facing Fontainebleau and possibly a sports arena), it needs to be a more restrictively zoned area geared toward improving land values and eventually drawing tourism. Do more to improve the area and gentrify Fremont past the ElCo, and those ugly little motels and the like will sell and be town down in time.
The city should try to get "New Urban" condo projects (think something like The District) in as much of that space as they can, while designating the old neon signs along the road as historic. I would love to see the Eastern end of Fremont become an example of a modern mixed-use town with these crazy vintage roadsigns along the way, lighting the path to the canopy.
Mike_ch: I agree with you about Fremont. I also think the City is working toward that goal, having started at the east end of FSE. I have learned a few things about the area through the years, including; the ElCo ownership has owned the Medical Arts building for years and the big, dark brown brick buiding across Fremont Street south of the ElCo was recently lease/purchased from the City by a group that includes Terry Caudill, of the 4 Queens and Binion's. They plan a mixed use for the building, including retail, restaurant and residential areas, on the 3 levels. I'm speculating that ElCo ownership and some of Jackie's old partners still own some land along Fremont as it goes east. I also think that getting the land owners on the same page is very difficult. It seems like wherever you go, downtown redevelopement is an extremely slow moving process. Almost impossible to notice sometimes.
I'm not a resident, but just a semi-interested observer. I have been visiting (and staying) downtown regularly for years. I have definately noticed gentrification, or at least the beginings of it, downtown. It was not too long ago that the walk from the canopy to El Cortez was downright scary. That simply isn't true anymore. Since I'm not there everyday, small changes, like new storefronts, perhaps stand out a bit more. Perhaps what downtown needs is to rethink what it is, and what it wants to be. Perhaps people should put a little less effort into "bringing more tourists" downtown and instead think about what downtown needs to be a viable urban neighborhood. Standing on Fremont St., I can walk to the govt. buildings, the public transportation center, a library, a minor league baseball, the new Symphony Park, City Hall, the Ruva Institute, Telemundo headquarters, the new Smith Center, the Greyhound terminal, and countless food and entertainment venues. What is not in that mix is market-rate high density housing. Increasing the population density would have a real effect on the foot traffic, livabilty, and business activity in the area - including the casinos. It seems to me that attracting a mid-scale urban population (dare I say "the creative class") is simply not on anyone's radar.
Another random thought - If the train to LA ever gets built (I'm not holding my breath) the city should insist on a downtown stop, linking travelers not only to the hotels/casinos, but the marriage bureau, the Greyhound terminal, and public transportation. This need not be exclusive of a stop on the strip. To me, this seems like a no-brainer.
Nobody builds high density anything in Las Vegas because there's so much land. And thanks to the boomtown years, the city is facing a population shrinkage so deep that people should eventually have no problem finding a place to live with the housing stock that we have now. Not to mention, the casinos and various government functions enjoy having more or less a land duopoly in the area around Fremont and Casino Center.
The walk to ElCo is nicer only because City Hall invested effort and cash into "Fremont East," and once you get on the other side of ElCo, things go bad again. That's why I think the real answer is mid-density mixed use building eastward down Fremont, removing the gritty motels and drug dens and keeping the nostalgic signs along the road.
However, like Fremont East, it's going to require government investment that might not be possible right now. Then again, facing the chance of having to lay off city workers didn't stop Oscar from (IMO foolishly) dropping cash on a new City Hall.
There is high density built Downtown witin the last 5 years. The tower buit betwen Neonopolis and El Cortez on the block north of Fremont is one bankrupt example. There is no lack of trying on the part of the City to get these type of projects moving. Rather, the failure was a dramatic run up in real estate prices all over the valley, which made affordability nonexistent.
So, IMO Sean, the City is working to do most of what you are suggesting. But, as I have said in previous posts, it takes years to achieve results, while the impatient don't realize that sometimes just stopping the bleeding is a major accomplishment in a down economy.
I stayed at the El Cortez recently. If something was done on the block between Neonopolis & the EC it would help the area a lot. And yes, for the first time, ever I did work up the nerve to go into the Western. No big deal, no old school vibe like the crowded old Gold Spike, and I got out pretty quick. The Western wasn't scarey just boring and it was pointless to linger.
Downtown is down, no doubt, but not out. I've been impressed by the promotions lately including the summer of the 1970's. Authenticity will be back in someday. Downtown needs a few decent pools, show rooms and other attractions to stay in for the long haul. Neonopolis is a huge drag and obviously needs to be reinvented. The critical mass is still there. I'd also like to see a few small, specialized casinos.
In any case, downtown will get the bulk of my future gambling losses. The walkability of the area appeals to me more and more as driving on the strip becomes more of a chore.
hi...so far one of the best informative forums regarding downtown...i owned a store in arts district for 5+years and waited for something big to happen but it never did...i still live in downtown and watch as 3 new businesses open..3 still somewhat new businesses close down...i recently went through some resident changes (home renting was foreclosed on) and found myself in need of lodging for few weeks till new place was available...cost factor was big concern and normally i would never consider a hotel on fremont but I took a shot at El Cortez and knowing a little about downtown and what it has seen and lost and gained...i will hands down give El Cortez props for taking the smart shot with those Cabana Suites...that is EXACTLY what downtown needed..cool, affordable, modern , place to stay that will only make one's downtown vegas experience a better one...i was happy to see that finally someone is "getting it" on what downtown should be like..and the Emergency Arts around the corner is again another GREAT AND INNOVATIVE idea and concept that I give props to as well...Cornwaite and Harrington that created the Emergency Arts should be applauded for having the vision for downtown...i am so proud and happy and relieved that these two can not only visualize but create the exact thing downtown has been begging for...
anyways...was always skeptical about Fremont but after calling El Cortez my home for a few wks I honestly can say there is huge hope and great things to come for the downtown area...cant wait to see whats next
I just came back from a Vegas trip. Downtown seemed pretty busy for a wednesday night. Binions not really suffering from closing its hotel. And things there were such a bargain. We were staying on the strip and I love downtown but the girlfriend prefers the strip. However walking anywhere on the strip takes forever and she came around to my point of view.
I think a great step for downtown would be to focus on a younger crowd. Offer people between 21 - 35 an extra 10 percent discount for staying anywhere downtown. This is a demographic looking for bargains but a part of that crowd will stay true to Downtown for life. For me the strip is losing some of its appeal as resorts withdraw into themselves. The City Center is a great example. We couldn't even figure out what was in there or how we should get there! Downtown should focus on its strenghts: old school charm, price and walkability. With that in mind one step seems immediately neccesary: improve parking all around Fremont. The Casino's should just band together and make all parking downtown easy to find and FREE!