Sahara hotel-casino in Las Vegas to close in May

The Sahara was once an exotic desert locale where Frank Sinatra could enjoy a cocktail and bathing beauties were paid to frolic in the Garden of Allah pool. In recent years, the hotel-casino has sunk to touting $1 blackjack and a NASCAR Cafe known for its 6-pound burrito.

Now the 59-year-old-icon of the Las Vegas Strip is shutting its doors, yet another victim of a deep recession that has squelched the city’s tourism for more than three years.

In southern Nevada, casinos are frequently bought, sold, remodeled or imploded to make way for new resorts — but rarely shuttered.

The announcement will darken roughly 1,700 hotel rooms, thinning competition in a town of 150,000 rooms — widely considered too many. But it also deals a psychological blow to Las Vegas, where a lumbering recovery seemed to be underway.


Los Angeles nightclub impresario Sam Nazarian scooped up the Moroccan-themed Sahara in 2007 and vowed to restore the Rat Pack-era jewel, which had grown tired and tatty, into a hotspot for the rich and beautiful.

But on Friday, the mogul who had targeted the Sahara as part of a budding hotel chain called SLS — for “style, luxury and service” — admitted defeat.

His company, SBE Entertainment, announced that the Sahara will close May 16 because running the property was “no longer economically viable.” More than 1,000 employees will lose their jobs.

Within the last year, the Tropicana hotel-casino, another Old Vegas haunt, was freshened up with South Beach decor. Owners poured tens of millions of dollars into the transformation.

But no such savior emerged for the Sahara.

“It sends a signal that not only are the owners not that confident in the near future, nobody else is confident enough to say, ‘Hey, I’ll take it off your hands,’ ” said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas.

Once the Sahara shuts its doors, the Strip’s north end will somewhat resemble the recession-battered cul-de-sacs that dot Las Vegas, which leads the nation in foreclosures and joblessness.

Not far from the Sahara sits the incomplete Fontainebleau hotel, a gleaming blue tower expected to stand unfinished for years, and the steel carcass of Echelon, where construction stalled in 2008. Also nearby are empty swaths of land where planned projects never broke ground.


The area did see the construction of the lavish Wynn and Encore hotel-casinos. But as gaming analyst Dennis Forst of KeyBanc Capital Markets observed, “The Sahara will go dark and sit there as an empty dinosaur of the old Las Vegas Strip.”

Although SBE’s statement said it was mulling options for the resort, “including a complete renovation and repositioning,” it gave no details or time frame for such plans.

“With Las Vegas showing early signs of recovery,” the statement said, “we are confident that we ultimately will find a creative and comprehensive new solution for this historic property.”

SBE representatives declined to comment further.


Some gauges of tourism here, including the number of visitors and hotel room rates, have ticked up in recent months. But visitors have been tightfisted with their wallets.

Gaming revenue in January dipped 2.5% on the Strip compared with the same month last year, according to figures released this week. That’s despite the recent opening of the upscale Cosmopolitan resort and several marquee conventions that helped swell visitor volume by nearly 9% from last year. It was the third consecutive month Strip gaming revenue had dropped.

“I don’t think we can go back to where we were, because we had so many fewer rooms,” said Kathy LaTour, an associate professor of hospitality marketing at UNLV. “So even if we went back to those high-times numbers, it’s unlikely they could fill the new room capacity.”

The Sahara was likely battered by how upper-tier competitors slashed room prices and offered package deals to lure its primary market: discount travelers. In late 2009, the hotel closed two of three hotel towers during the winter season because of listless demand.


“It used to be that people were choosing between value and luxury,” said gaming researcher Schwartz. “But since the recession they don’t have to choose — they can get value and luxury in the same place.”

That was a drastic turnaround from when Nazarian, who also owns L.A.-area watering holes MI-6 and Hyde Lounge, purchased the Sahara in 2007, reportedly for at least $300 million. That year, Las Vegas was flooded with a record 39 million tourists.

While the Sahara’s kin, including the Sands and the Dunes, had been imploded in favor of new resorts, Nazarian spoke of honoring the history of a hotel frequented by Elvis Presley and the Beatles. It also had a cameo in the original “Ocean’s Eleven” movie.

SBE immediately trimmed the landscaping, rolled out carpet and dressed the staff in new uniforms. But, as the recession wore on, its plans here steered away from its own hotel.


Earlier this month, Nazarian announced plans to open a Hyde Lounge in Las Vegas — but at the Bellagio.