The Las Vegas Hilton has fallen on hard times

Jul 5, 2011 3:09 AM

The Las Vegas Hilton has fallen on hard times, not getting the respect it did during those years when it was Elvis’s home away from home.

So the keepers of the rights to use of the Hilton name decided last week the time had come to take action.

The "big Hilton," as the resort with its 30,000-plus rooms and suites has been known to generations of locals and visitors will lose rights to the use of the Las Vegas Hilton name and marquee as of the end of the year, unless …

And this is where the guessing and speculation by sources familiar with Hilton operations begins.

"There’s a lot of deferred maintenance over there," according to one of several former Las Vegas Hilton executives who shared their thoughts on the condition they not be identified.

This source continued, "It’s in the wrong place at the wrong time for a property that requires a lot of tender loving care and maintenance."

A fact that puts it in the same category as a number of other local hotels and casinos that managed their way through the dismal business conditions of the last several years by avoiding costly renovations and maintenance wherever possible.

But some well-positioned Hilton watchers say they will not be surprised if there is an about face and Colony manages to satisfy demands by guardians of the Hilton image for improvements that will keep the Hilton name on the Paradise Road resort, which made a reputation during its best years for the ability of its staff to satisfy the demands of the high-end convention and trade show business.

Hilton Hotels was sold in July 2007 to the Blackstone Group for $26 billion, which continues to benefit from high-end convention-oriented hotels across the country, from San Francisco to New York.

The prospect of not having a high quality Las Vegas connection after the end of the year takes an important element out of the mix for Blackstone and the Hilton brand.

"There are groups that move their business from Hilton to Hilton in cities like New York and Chicago. Now they’re hearing there will not be a Hilton in Las Vegas? That’s why this is something of a lose-lose situation," a source familiar with the Hilton approach to business confided.

These are not the best of times for Colony Resorts to face the necessity of romancing a new corporate partner.

The decline of the Las Vegas Hilton began years ago as former LVH owner Park Place Entertainment (which was bought by Harrah’s, which is now Caesars Entertainment) began steering hotel, convention and casino business toward its properties on the Strip – Caesars Palace and the Ballys-Paris complex.

The Las Vegas Hilton was seen as being a long way from the center of the action and it never managed to overcome that "rejection," which resulted in years of declining revenues. Colony Capital had bought the LVH from Caesars in 2004, eventually turning the property over to its subsidiary Colony Resorts.

Colony has not had a lot of luck in the casino business as illustrated by the sad state of its Atlantic City operations – the original Resorts International, which was sold late last year to Dennis Gomes for about $34 million, and the Atlantic City Hilton (the original Golden Nugget), which is also deep in financial trouble.

In Las Vegas, there appeared to be no end to Colony’s knack for bad timing, as illustrated by its partnering with the Las Vegas division of the Fertitta family in the buyout of Station Casinos, which only recently exited a complicated bankruptcy court re-organization.

Years ago, I found myself standing next to Barron Hilton during a company-sponsored event at the Hilton Hawaiian Village in Honolulu.

Invited guests included a long list of famous faces and top company officials.

I leaned into a slow moment in the conversation and asked, "What’s your favorite hotel?" figuring this special event made his answer obvious.

But without missing a beat he said, "It’s the Las Vegas Hilton."

Various Hilton watchers have looked for signs over the years that the Barron might act on this emotion and re-acquire the hotel where Elvis set all those attendance records during the 1970s.

They’re obviously still waiting.