Who is "it"??
Started by wpsteel66 on Thursday, 5th September 2013 10:37 am
When I first read this sentence, I thought "it" was referring to Cosmo (“He said it has been a “major influence …”). But when I re-read, maybe "it" is referring to the non-gaming revenue.
“Schwartz said The Cosmopolitan has had an impact on nongaming amenities on the Strip. He said it has been a “major influence” on Caesars Entertainment Corp.’s $550 million The Linq project and MGM Resorts International’s entertainment district between Monte Carlo and New York-New York.
“The rebranding of the (old Bill’s Gambling Hall and Casino) hotel … to the Gansevoort is The Cosmopolitan on a smaller scale,” Schwartz said. “The Gansevoort and SLS Las Vegas are going after the same clientele.””
My first thought was ‘he is pretty bold saying the Cosmo is causing others to make drastic million dollar changes; does he not see all the problems Cosmo has? Definitely blowing smoke and taking credit for something not of their doing.’
Based upon the stories I read, I would say Cosmo has made some inroads with dining and clubs and generating more revenue each quarter in these sectors.
But I doubt that the root cause for MGM and CET to make these changes is solely due to Cosmo and they better make these changes otherwise Cosmo will put them out of business. Also, I think Schwartz is trying to take credit for something that Cosmo did not create, but what Vegas as-a-whole is changing to.
Just my thoughts. What are yours??
This sentence comes from the story titled: High hopes: Analysts keep strong expectations for The Cosmopolitan.
Last response by Misnomer 5th September 3:17pm
jimmybond responded on Thursday, 5th September 2013
Interesting article. I think the 'It' definitely refers to the property in general not non-gaming revenues. I also don't think Schwartz is taking credit for anything, not sure how you reached that interpretation?
I think the Linq and NYNY/MC promenades are definitely a reaction to cosmopolitan in some way. They are not worried about Cosmo putting them out of business, but rather they see the non-gaming revenues and want a piece of that. The Vegas pie is only so big, and if Cosmo is drawing people to its restaurants and clubs those are minutes and dollars not being spent at their properties. The Cosmo may have many problems but food and beverage and club revenue is most definitely not a problem so other resorts want to try and grab a bit of that while also retaining their devoted gamblers who apparently aren't interested in checking out Cosmo given the gaming results (over 20% drop year over year, yikes!)
The Vegas building scene goes in herd-mentality, and the more recent super-luxe wave was probably kickstarted by Wynn''s eponymous hotel more than anything. Cosmopolitan just had the advantage of actually being completed as compared with other shuttered and cancelled high-end projects.
I think the Linq promenade and spectacle of the ferris wheel in particular is almost a shot across the bow of the downtown and Fremont Street scene...one more reason not to leave the Strip if you are a casual tourist.
Chuckmonster responded on Thursday, 5th September 2013
I'll let Dave702 speak for himself.
I'm not convinced that the dining promenade or anything at Cosmo directly inspired linq construction, but it did play a part in selection of tenants (somewhat.) The concept for Linq was in the cards once Harrah's Ent. solidified the block with the Caesars, IP and Barbary Coast acquisition, plus the now-razed apartment tracts out back. Phase I is linq, Phase II will be more attractions / convention / arena behind Quad/Flamingo and Phase III possibly another resort on either side of Flamingo Rd. that could include razing the front of Ballys. With Caesars Ent. rumored to be teetering on the edge of bankruptcy, we won't see future phases any time soon, if ever.
vespajet responded on Thursday, 5th September 2013
The Cosmo effect is even being seen Downtown, as the Downtown Grand is definitely borrowing from that book. The restaurants and bars would be at home at Cosmo, as would their pool complex.
Dave702 responded on Thursday, 5th September 2013
I wrote a paper five years ago about "The Mirage Effect" and the increasing reliance on non-gaming revenue on the Strip starting with the opening of that casino, so I'm not taking or giving the Cosmopolitan credit for anything bigger than what they've done: shown that people will pay big money for what they perceive as a better room product, for clubs, and for dining--which is exactly what SLS and Gansevoort are doing, even in the absence of a compelling gambling "product."
The root cause of MGM and CEC making "those changes" is that gaming revenue has still not reached its pre-recession highs, while dining and nightclubs have (with rooms catching up). See a report I co-wrote back in July that breaks this down: http://gaming.unlv.edu/reports/UNLVColliers%20MidYear2013.pdf and the numbers behind the report here: http://gaming.unlv.edu/reports/NV_departments_historic.pdf (pages 4 and 5)
In other words, they're trying to make themselves more like the Cosmopolitan, gaming woes aside. They see, rightly or wrongly, non-gaming as a growth area and gaming as stagnant at best (outside of the high-end segment, which is low-margin and expensive to court). Just like, in 2003-6, CEC emulated MGM's strategy of assembling a Las Vegas land bank, they are heading in the same direction. It didn't start with Cosmopolitan, but that's the most obvious current model. And keep in mind I neither wrote nor edited the article--I just responded to specific questions about the possible influence of the Cosmopolitan.