Wynn eyes nightclubs for his Encore

Nov 13, 2007 6:54 AM

Steve Wynn has become a believer ”¦ a believer in the power of a well-run nightclub.

That’s where a lot of the Strip action is these days. It is with this in mind that he is promising features in his Encore development that the Las Vegas Strip has never seen before.

That’s what the man says and Wynn has seldom been inclined to indulge in understatements when discussing the prospects for success at one of his projects. In this case he has zeroed in on a gaming industry sector that’s been getting a lot of success at other companies.

Clubs and so-called ultra-lounges have become a suddenly thriving sub-section of the gaming and entertainment business that Wynn says did not exist when he sold Mirage Resorts to MGM.

Who could have imagined such a turn of events, is what he seems to say.

Wynn believes the clubs along the Las Vegas Strip are now "pushing six or seven hundred million a year in revenue" and have matured to the point it is impossible for major resort operators to ignore their appeal.

They are also putting pressure on showroom attendance at frontline resorts along the Strip corridor, helping transform the definition of a Las Vegas experience.

The consensus of top resort bosses from several companies who offered their views is that the clubs create a "buzz" that brings in good numbers of customers with high levels of disposable income.

"I can’t question Steve’s numbers," said a high level industry source, "but I have a feeling they are pretty much right on."

MGM Mirage President Jim Murren said there are at least a half-dozen doing more than $20 million a year in revenue. Exact numbers can be difficult to track since some are owned by private groups that do not publicize financial reports.

Wynn says his hotel’s Tryst club has been a superior performer with annual revenues in excess of $35 million.

But as several executives at different companies have noted, successful clubs do more than enable an operation to sell a $40 bottle of vodka for $400, they — to use one middle manager’s phrase — "energize your operation."

Wynn recalls discussing the club situation perhaps a week or so before he agreed to the sale of Mirage Resorts to MGM.

"Who cared about clubs," he asked rhetorically, suggesting he certainly didn’t. "Guys were going off to the strip joints in the evening, but we weren’t paying any attention to them."

With all this in mind, Wynn says the amenities at Encore are being created to project the feeling of a "party that begins in the afternoon" and continues into the evening and late night hours.

Let the partying begin.

What exactly is a
first-class hotel?

It’s a question lawyers for the company that owns the Tropicana resorts in Las Vegas and Atlantic City, do not want members of the New Jersey Casino Control Commission spending a lot of time on as the suitability of the those owners is reviewed this month.

The issue suggests a couple of problems for the Kentucky-based Columbia Sussex strategists who have indulged in a lot of payroll slicing and cost-cutting since acquiring the parent company of the two Tropicana resorts.

One of these problems is the fact state statutes require that Atlantic City resort owners maintain what is referred to as a "first class hotel." The problem, according to a source who finds this issue intriguing, is that state law does not define a "first class hotel" in so many words.

Which means Casino Commission members might find themselves debating the definition unless Sussex is successful at keeping the Commission away from its exploration, perhaps arguing during a special meeting this week that the Commission does not have authority to make such determinations

However the issue is sliced, there are forces who will argue in Atlantic City that Columbia does not maintain a first class operation.

Reveling in AC

Revel Entertainment has released drawings of its concept for a $2 billion Atlantic City resort on about a thousand feet of ocean frontage adjacent to the Showboat and Taj Mahal. The drawings can be seen at the company’s revelentertainment.com website.

Revel CEO Kevin DeSanctis has previously worked with all the best-known creative influences in the casino business from Sol Kerzner to Chris Hemmeter and Steve Wynn and the drawings suggest he has developed a fine feel for making the kind of "architectural statement" he says is important at the project which, at this point, is going to be known as Revel.