Fans of the Rio Las Vegas will be happy to hear the aging 30-year-old property will be getting a much-needed makeover that the new owner says has lost its way.
But if you’re a baseball fan hoping the persistent social media rumors would be true of the Oakland A’s relocating to Las Vegas and getting a domed stadium on the Rio site — you’ve struck out.
New York developer Eric Birnbaum outlined his plans last week to the Nevada Gaming Control Board who made a preliminary finding of suitability for Birnbaum and Dreamscape Vice President Tom Ellis to seek a gaming license.
That’s the plan 13 months after Birnbaum and his Dreamscape Companies closed on a $516 million sale with Caesars Entertainment and then leased it back. The two-year lease called for Caesars to pay $45 million a year in rent. Because of an amendment of the deal that was announced last week, Dreamscape can extend the lease for two years instead of one for $7 million a year. It can also terminate at any point during the extension.
Fans of the Rio Las Vegas will be happy to hear the aging 30-year-old property will be getting a much-needed makeover that the new owner says has lost its way. Goodbye 2020, Hello 2021! When are we seeing you next? #KeepItRio pic.twitter.com/H0vE0oOHlp
— Rio Las Vegas (@RioVegas) January 1, 2021
The Brazilian-themed Rio, which was built by developer Tony Marnell and opened in 1990, was sold in 1998 to Harrah’s Entertainment, the predecessor to Caesars Entertainment. The Rio, which has 2,500 rooms and has hosted the World Series of Poker, reopened Dec. 22 after being closed nine months because of the coronavirus. It has since closed the hotel midweek starting Jan. 3 with the casino open seven days a week.
Dreamscape was prepared to take over the operation of the Rio by the end of 2021, but that has been delayed by the COVID-19 pandemic.
“We’re super excited about this opportunity,” Birnbaum said. “We had no idea that we would be facing COVID, but we’re believers that there’s hopefully a silver lining in everything and remain positive, upbeat and excited about the challenge and opportunity ahead.”
Birnbaum said he’s a real estate guy and not a gaming expert and has surrounded himself with experts. He said the best move made was consulting with Bill McBeath, president and CEO of The Cosmopolitan, and the lesson he has learned is “Vegas is an animal unlike any other where customers have so many different options to choose from. You can’t be all things to everybody. You have to pick your lane and decide who is your customer.”
That customer, however, is not people who want to watch baseball on the site.
“It’s amazing the rumors that get thrown out there — everything from we’re going to tear it down and recruit the Oakland Athletics,” Birnbaum said. “That was never the case. At the end of the day, the real estate at the Rio is some of the best in the real estate world, but it’s a great piece of real estate that has lost its way. With this being our one of one (property) versus one of many for its previous owners, it’s going to get 100 percent of our attention and be reimagined to what it deserves to be.”
Everyone agrees with that.
Nevada Gaming Control board member Phil Katsaros said “extra attention” is what that property has long needed. It has “great bones” but over time the amenities and services it offered disappeared and declined over time.
Marketing executive Nehme Abouzeid, president and founder of LaunchVegas, told Gaming Today that the off-Strip properties were “battered and bruised” even before the pandemic. The Palms Las Vegas’ “attempt to go upscale and court the Strip visitor didn’t go so well, he said.
The Rio, which has counted on convention overflow traffic in midweek, hasn’t had a lot of capital investment in several years and maintenance was deferred, Abouzeid said. There also haven’t been many amenities added in several years to get on people’s radar, he said. At one time, in the late 1990s and early 2000s the Rio was a place for clubbing and to go hear a house band. It has hosted Penn & Teller’s show up until COVID-19 shuttered shows, and the World Series of Poker has meant a lot over the years as well, he said.
“It’s not top of mind with anybody anymore,” Abouzeid said. “It would be hard to throw in a high-end nightclub here or high-end show. Their best option would be to benefit from the resurgence in events (with Allegiant Stadium nearby) and get people to try the product and drive some loyalty for people to come back if they had a good experience.”
Birnbaum said there’s a lot of “low-hanging fruit” to address such as redoing rooms.
“It’s a monster refresh and the bones behind the wall are perfectly fine,” Birnbaum said. “But what you see and what you experience is where things have been dilapidated. It is about putting together an aesthetic that is updated and feels relevant and curating it with experiences like food and beverage brands that appeal to who we think our customer is.
“I think one of the biggest things candidly that we have focused on who customers are, and I think one of the things the Rio from previous ownerships didn’t know was who it’s customer was. It was a little bit all over the place. We think we know who the customer is, and we are going to create a product targeted to that.
“We see it as we’re not the Wynn. We’re not the Cosmo. We’re not the high end, but we’re not the low end. We equate it to approachable luxury. You get good value for what you’re getting, and you get a good experience at a price point you don’t feel you’re taking advantage of.”
Birnbaum said they were expecting to take this year “to get under the hood” and have an upfront view of what is going on. He said they have hypotheses of what’s going wrong, but all they have to go on are numbers on a spreadsheet.
“We didn’t get to actually see the asset while we owned it and see those numbers play out live,” Birnbaum said. “It’s been unfortunate we haven’t been able to do that because of COVID. Thankfully, the Rio reopened on a partial basis in December, and we’re starting to get under the hood real time now.”
Birnbaum said he’s optimistic about the ramping up of business leading up to that timeframe.
“There’s going to be a vaccine, and a lot of pent-up demand that is forthcoming,” Birnbaum said. “Our view is that Vegas is poised to really benefit from that. We want to move quicker than slower.”