Vegas bets it all on new CityCenter complex
Has a state’s psyche ever rested so completely on a single resort complex?
In recession-ravaged Las Vegas, the flashy opening last week of Aria -- the hotel-casino centerpiece of CityCenter -- was regarded as either a sign of the Strip’s economic rebound or another symptom of its ailments. Most Nevadans are praying for the rebound.
The punditocracy cast the unveiling of Aria -- a 4,004-room, Cesar Pelli-designed hotel with a Maya Lin sculpture above the front desk -- in terms more suitable to heroism.
“Hail CityCenter,” cheered the Las Vegas Review-Journal.
“If it works, all Nevadans surely will sing its praises,” said the Reno Gazette-Journal.
“If we can do anything in Nevada, we can hype things,” said tourist Rod McMullen of Yerington, Nev., as he took in the $8.5-billion project that one alternative weekly mocked as “CitySavior.”
There was far less breathlessness when casino magnate Sheldon Adelson opened Palazzo in 2007, or when Steve Wynn debuted Encore last year. The recession was sapping business even then, but Nevada’s power players were convinced that Las Vegas would soon shrug it off. Not so.
Neither Palazzo nor Encore significantly increased the Strip’s gaming revenue, as nearly all modern resort openings had. But the Mirage, Bellagio, Venetian and other resorts had also been unveiled during better economic times and catered to a market that Las Vegas had yet to fully tap: the well-to-do.
This explains the reception given CityCenter, a 67-acre warren of upscale hotels, condos and shops. With economic turbulence largely halting new construction, CityCenter might be the last major Strip opening for years -- and the last chance, at least for a while, to lure tourists with something new.
“Lots of people want CityCenter to be an economic miracle,” said Mary Riddel, interim director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. “We’ve been so dependent for so long on massive openings and massive spending. We’ve hit a wall.”
Nevada is desperate for a white knight. Gaming revenue in October, the most recent month for which data are available, plunged to its lowest level since 2003. In Clark County, unemployment dipped last month to 12.1%, but only because the labor force shrank.
Because Nevada relies so heavily on gaming and sales taxes, which are waning, Gov. Jim Gibbons’ administration asked state agencies last week to prepare plans to slash their budgets. Again.
“If CityCenter doesn’t change anything, Las Vegas is really in trouble,” said William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.
MGM Mirage, the chief force behind CityCenter, has boosted expectations, with Chief Executive Jim Murren predicting the complex will increase visitation next year by more than 5%. Executives say its modern artwork and glass-sheathed architecture will draw tourists who would otherwise sniff at Sin City.
“So you’re not a Vegas person,” one ad says. “Are you sure?”
When proposed in 2004, CityCenter seemed a logical, if pricey, evolution for the Strip. Where else would you dare build a massive complex essentially mimicking New York, which is already mimicked by the New York-New York Hotel & Casino down the street?
As the project wore on, CityCenter, a partnership with Dubai World, grappled with the consequences of enormous debt and swift construction. Six workers died in accidents. The complex teetered near bankruptcy. With the real estate market in a free fall, MGM Mirage slashed condo prices by 30%. (Murren said that, in hindsight, roughly 2,400 residential units might have been too many.)
As CityCenter’s phased opening begins, early indicators are mixed. The high-end Crystals mall is about half-full. Aria is offering rooms, in terms of opulent hotels, for fire-sale prices: $109 on weeknights.
“Just this place isn’t going to pull us out of everything,” said tourist McMullen, 59, a retired art teacher who said he was impressed with Aria’s sleek, modern look. “It’s not the people from Nevada who make these things float. I don’t see it doing that much until the national economy turns around.”
Last week, though, Murren stood outside Aria, near a 270-foot-long water wall and a dancing fountain called Lumia, and led what felt like a pep rally for Las Vegas. In particular, he pointed out that CityCenter employed 12,000 workers, though MGM Mirage laid off 9,000 during the recession.
“People who live here have a more optimistic view of the future because of CityCenter,” Murren said in an interview.
Observers have been impressed with Aria’s intriguing touches: dark wood, bursts of sunlight, steel sculptures and a pair of Kirin statues blessed by a Buddhist monk.
“Everyone was overly optimistic in projecting growth. Who’s to say they’re not overly pessimistic in projecting gloom?” said David G. Schwartz, director of the Center for Gaming Research at UNLV.
But should the 6,000-room complex do well, analysts said, it will initially be at the expense of other hotels. Brokerage firm CB Richard Ellis forecast that revenue at existing resorts could plummet as much as 6.9% next year. Last week, because of low demand, Binion’s, a hotel-casino downtown, closed its hotel rooms, and the Sahara announced it would temporarily shutter two of its three hotel towers.
“I think a lot of people are rooting for CityCenter to do well,” said Brent Pirosch, the firm’s director of gaming consulting services, “because the better it does at bringing in visitors, the less it takes from other properties.”
Last week, invited guests marked Aria’s opening night with Dom Perignon, lobster, shots chilled in an ice sculpture and an overriding sense of hope. But the same day, UNLV released its economic forecast. For much of 2010, it said, southern Nevada must cope with lackluster tourist spending and significant job losses, even with CityCenter’s debut.