Vegas Opens a New Castle of Excess : Entertainment: The Excalibur, a super-casino built by Circus Circus Enterprises, may widen the gap between gambling’s haves and have-nots.
Even by the standards of Las Vegas, where gaudy is great and hyperbole abounds, the Excalibur casino hotel stands out.
Set to open Tuesday morning at the outer edge of the storied Las Vegas Strip, the Excalibur has more than 4,000 rooms, the most of any hotel in the world, and a casino with a castle motif that combines traditional Nevada gambling with a touch of Disneyland.
At a cost of nearly $300 million, the Excalibur promises to take Las Vegas to new levels of adult fantasy and eclipse, at least temporarily, the attention on the Mirage, another mega-casino hotel that opened in November with a flourish.
The Excalibur, however, also seems certain to deepen the gulf between the casino haves and have-nots. Many smaller, less glamorous casinos in Las Vegas either break even or lose money, while the industry as a whole is reporting record gambling winnings.
“I think the Excalibur and the Mirage will be successful, but it will be at the expense of the other casinos,” said Jim Kilby, professor of gaming at the University of Nevada at Las Vegas.
The Excalibur is another example of the new genre of behemoth casino hotels that are more entertainment emporiums and tourist attractions than traditional gambling parlors. (Developer Donald J. Trump’s Taj Mahal in Atlantic City, N.J., which opened in April, also belongs in this category.)
“With the Mirage, it’s a new era in the gambling business,” said William S. Fellows, casino industry analyst at Montgomery Securities in San Francisco. “The Excalibur is as much an entertainment center as it is a place to gamble.”
The Excalibur is a major reason behind the furious hotel expansion that has gripped Las Vegas in recent months and made it one of the fastest-growing cities in America. It will probably have 75,000 hotel rooms at the end of 1990, an expansion of nearly 20% in two years. The mushrooming has raised fears of a glut of rooms if the economy falters.
“You don’t have an infinite number of gamblers,” casino industry consultant Walter Tyminski noted.
The Excalibur has greatly elevated the profile of its corporate owner, Circus Circus Enterprises, which owns casinos throughout Nevada, including its flagship on the crowded north end of the Strip.
The company’s casinos, built largely around circus or riverboat themes, are frequented by a budget-conscious RV crowd drawn by low hotel rates and cheap meals. The company says it makes its money on the low-stakes gambling tables and slot machines.
“They make their money off people who spend $100 to $200 a day,” said Lee Isgur, gaming analyst for Paine Webber in New York. “Their customers are Mr. and Mrs. Middle America who think it’s fun to go to a casino.”
Excalibur is named after the sword of King Arthur, the medieval monarch who, according to one legend, proved he was the rightful heir to the English throne by being able to pull the weapon out of a block of stone.
According to another version, Arthur received the sword from a mysterious lady who lived in a castle on a lake. Shortly before his death, Arthur had the sword thrown into the lake and it was never seen again.
Whatever the legend, Excalibur is exploiting medieval nostalgia for all it’s worth in a pre-opening advertising and promotion blitz expected to cost $2.5 million. “The hotel . . . will transport guests back in time to the days of knights, fair maidens, jousting and feasting,” promised a news release.
The castle-like casino building, surrounded by four 28-story hotel towers, has everything from a “Canterbury” wedding chapel on the top floor to a dinner theater in the round on the bottom, where knights will joust on horseback. In between will be restaurants, arcades and strolling entertainers dressed in medieval garb.
Circus Circus Enterprises is largely the creation of a publicity-shy gambling mogul named William G. Bennett, whose distaste for frills has earned his company a reputation as the K mart of the casino industry.
The company typically has made its money by keeping volume up and costs down. “It’s the time-honored K mart concept,” said competitor Stephen A. Wynn, chief executive of Golden Nugget, which owns the Mirage.
Though it cost $290 million, the Excalibur has apparently not abandoned the K mart approach. Rates on the no-frills rooms will be inexpensive by Strip standards, as low as $45 a night.
A one-time retailer, Bennett took over Circus Circus in 1974. He has since molded the firm into a gambling concern that’s as popular on Wall Street as on Main Street.
Circus Circus Enterprises earned $75.1 million in the year ended Jan. 31 on revenue of $522 million. It has had a compounded annual earnings growth rate of nearly 20% the past five years. Its stock jumped almost 20% in one recent three-week period, though it has since cooled some.
Bennett’s stewardship of Circus Circus Enterprises has catapulted him into the ranks of America’s super-rich. Forbes magazine estimated his personal fortune at $445 million last fall--before the latest run-up in the stock price.
Bennett’s ownership in Circus Circus stock alone is worth an estimated $300 million, based on Friday’s closing price of $61.25 a share on the New York Stock Exchange. According to the firm’s latest proxy statement, Bennett is the largest shareholder, with nearly 5 million shares, or 18%.
Now 65 and with no plans to retire, Bennett is a former World War II bomber pilot who until the mid-1960s ran a chain of furniture stores in Phoenix, his hometown. In 1965, he joined Del Webb Corp., then a major player in the gambling industry. Eventually he became manager of their casinos in Las Vegas and Lake Tahoe.
“I remember him in the late 1960s when he was managing the Mint (casino) and I was a liquor salesman in town,” Wynn recalled.
Bennett later operated a business that leased slot machines to casinos. He teamed with partner William N. Pennington in 1974 to buy Circus Circus Enterprises. The Bennett-Pennington partnership lasted until 1988, when Pennington retired as company president. Pennington, 67, remains a director and the second-largest shareholder.
Bennett and other Circus Circus executives are billing the Excalibur as a sure-fire winner destined to become a premier tourist attraction. Its location on the far south end of the Strip should loom large on the Las Vegas skyline for travelers driving in from Los Angeles.
“We hope it will become our No. 1 profit maker,” Bennett said in a recent interview. “It should have a major impact.”
If Bennett’s latest endeavor ultimately flops, it will come as a shock to people outside the firm as well. Investment analysts, consultants and competitors alike believe that the Excalibur, with its singular theme and ambience, will be a hit from the start.
Investors have been particularly impressed with the success of the Mirage, which defied the skeptics and turned a profit from the outset. Equal parts casino and entertainment complex, the Mirage has as its primary attraction a man-made volcano in its front yard.
After two years of losses, Golden Nugget made $17.3 million in the first three months of 1990. According to Wynn, the Mirage is generating about $600,000 a day in operating profits.
Martin Cosgrove, investment analyst for Bateman Eichler, Hill Richards in Los Angeles, said the success of the Mirage “leaves little doubt about turn-away crowds for Excalibur. A summer opening, a family-oriented resort and a buoyant economy bode well.”
At the very least, the Excalibur will end the exile of the Tropicana, which opened in 1957 and was virtually by itself at the south end of the Strip. Officials with the Tropicana’s present owner, Aztar Corp., think that the Excalibur will bring them significant walk-in gambling business for the first time since they bought the hotel in 1979.
“I like it that we will have the world’s largest hotel across the street after 10 years (alone),” said Paul E. Rubeli, Aztar’s chief executive.