Starwood to Open W Hotel in Vegas
Starwood Hotels & Resorts Worldwide Inc. confirmed Tuesday that it was launching a major expansion of its Las Vegas operations by becoming an equity partner in a $1.7-billion hotel and condominium project next to the Hard Rock hotel-casino.
The owner of the Sheraton, W Hotels, Westin and St. Regis lodging chains said that it planned to open an upscale W hotel at the site, which it is developing with Edge Resorts, a group of private investors. The venture acquired the 21-acre parcel for $108.2 million from two different property owners, said Edge Resorts President Adam Frank.
Starwood said it would manage the hotel and own 25% of the project, which will include 3,000 hotel and condominium units, a 75,000-square-foot casino, meeting space, bars and restaurants. It is slated to open during 2008.
The Times reported in February that Starwood was working with financial partners to open a W hotel at the site. At the time, Starwood would only confirm that it was “actively looking at opportunities” in Las Vegas.
Not long ago, White Plains, N.Y.-based Starwood was leaving Las Vegas, which it viewed as primarily a gaming town.
In 1999, the company sold Caesars Palace for $3 billion. It subsequently unloaded the Desert Inn to casino mogul Steve Wynn for $270 million. He built the Wynn Las Vegas resort there.
But in recent years, Starwood decided that it couldn’t ignore the hottest tourism and convention market in the nation.
“Las Vegas is like no other city in the world and has been on the top of W’s development strategy for years,” said Ross Klein, senior vice president of W Hotels.
Starwood also is part of an investor group that acquired the 2,500-room Aladdin Resort & Casino out of bankruptcy protection for $635 million a year ago. In addition, Starwood has a franchise agreement with Columbia Sussex Corp., which owns the Westin Casuarina Hotel & Spa.
By pairing condos with the hotel, Starwood is jumping into one of the most competitive segments of the Las Vegas real estate market. There are already 8,000 condo units in or near construction and planners estimate that more than 100 condo projects are slated over the next five years.
Competitors include veteran condo builder Related Cos. of New York, Donald Trump and other hotel companies. MGM Mirage is building a three-condominium tower at MGM Grand hotel, not far from the Starwood site, and plans more condo towers at its $4.7-billion Project CityCenter development near the Bellagio.
There isn’t room in the market for all these projects, said Laurence Hallier, a developer who already has his Panorama Towers project under construction west of the Strip. “I bet less than 25% will get built and what does, won’t be on the schedule people say,” he said.
However, Frank said the Starwood-Edge venture has the advantage of Starwood’s W brand for the condos, which will share amenities with the hotel.
“Buyers want a great location, amenities and a trusted brand name,” he said.
