Cosmo being shopped around, but likelihood of deal small

Apr 24, 2012 3:00 AM

The Cosmopolitan is being shopped around, but there appears to be little likelihood of a deal in the near future, according to sources familiar with the nearly 15-month-old resort’s financial problems.

Deutsche Bank would reportedly like to get something in the neighborhood of two billion for the hotel and casino on which about $4 billion was spent to get it to opening day in December, 2010. The bank took over the Cosmo and finished it after the original developer defaulted on financing.

There were numerous efforts to interest other resort operators in the project. They all said thanks but no thanks, for various reasons. Many of the operational issues involve the struggle to cram a lot of amenities into a relatively small space, just over five acres.

Reviewers who have focused on customer-pleasing features rather than operational issues have described the Cosmopolitan as "sleek, smart and stylish…filled with hip bars and music venues" (the words of one writer), but such praise has not been able to attract enough casino business to turn a roughly $4 billion "money pit" into a winner on the Las Vegas Strip.

Deutsche Bank was never seen as a longtime owner. Much of the current speculation is that it will eventually pass into the hands of Caesars Entertainment whose deep-pocketed owners and its operators could easily rationalize the logic of having a major presence close to all four corners of the Las Vegas Strip and Flamingo Road.

Caesars also boasts a proven marketing program (Total Rewards) with a database of well over 40 million names. That’s a powerful tool in the hands of a company filling hotel rooms in a dense area where it already has well over 12,000 rooms within a short walking distance of each other.