Derek Stevens walked into Thursday’s UNLV gaming conference panel discussion nearly vibrating with excitement about what lies ahead for Las Vegas in 2020 and beyond.
By the time he’d wrapped up his appearance on the panel, Stevens was even more fired up.
Stevens, the co-owner of D Las Vegas, the Golden Gate Hotel & Casino, and the Downtown Las Vegas Events Center, spent some time discussing his plans for the Circa in downtown Las Vegas, his in-the-works 777-room resort which will have a roofline, multi-level pool, the largest sports book in Las Vegas, and the longest outdoor bar on Fremont Street.
The new resort is scheduled to open in 2020, during a time of substantial development in Las Vegas.
There’s the $800 million extreme sports complex planned for the south end of the Strip; the $1.4 billion expansion of the Las Vegas Convention Center; $1.8 billion for the home of the Raiders, Las Vegas Stadium; $3 billion for The Drew, the reinvention of the long-dormant and incomplete Fontainebleau resort; and $4 billion for Resorts World Las Vegas.
The MSG Sphere, an 18,000-seat entertainment venue, is also set to open in 2021.
“A rising tide lifts everyone, and what I see in the investments being made has given me a bullish feeling on the economy,” Stevens said. “I was bullish on Las Vegas walking in today, and I’m more bullish walking out.”
The standard notion in Las Vegas over the last 35 or so years is that a great casino would, by itself, be a great attraction. That’s changed in recent years with the rapid expansion of casinos across the country. People can gamble virtually anywhere, Stevens said. But Las Vegas itself is an attraction, with world-class convention space, hotel rooms and McCarren International Airport.
“One of the great things about today is that Vegas is going through a whole new renaissance and reincarnation,” Stevens said. “We want to create attractions that inspire someone to want to come to Las Vegas.”
That’s what they’re trying to do with Circa, Stevens said: have “the greatest pool and the greatest sportsbook in the country.”
There’s been a resurgence in downtown Las Vegas recently, with gaming revenue growing. The Downtown Grand has started construction on a 495-room tower scheduled for completion in 2020. Boyd Gaming is building a new tower at the Fremont Hotel & Casino. Stevens mentioned the value of having 13 casinos within walking distance of the D and said he’s happy his investment in downtown has been validated.
“I think the Strip complements downtown nicely,” Stevens said. “There are a lot of hotel rooms that need to be filled. We’re happy that Boyd and Downtown Grand are building new towers. Three projects on Fremont Street is terrific, as are the other non-gaming developments and attractions downtown.”
Gaming numbers have been trending upward in Las Vegas since the Great Recession, and that should continue in 2019, according to Brent Pirosch, director of gaming consulting with CBRE in Las Vegas, who kicked off the conference.
There hasn’t been a lot of growth, however, on the gaming side, Pirosch said. Revenue is going to have to come from other sources such as food and beverage, rooms, nightclubs, retail and convention space.
Pirosch said Las Vegas continues to benefit from the repeat business of Southern Californians, who make up roughly one-third of the visitors. But the growth of first-time visitors over the last couple of years is exciting, as well. Those visitors are looking for new experiences, he said, which the new hotels should help provide.
He expressed some concern, however, about any further projects coming on line after that, at least for the time being, because of the high costs of building resorts and the revenue needed to sustain them. Large casino operators in recent years have relied on room renovations and restaurant improvements because of their high debt loads and need for a quick return on investment.
Pirosch also cited the challenge of building a new resort, saying that a resort of 3,000 rooms now costs $3 billion – or $1 million a room. A venue of that size requires a cash flow in excess of $300 million a year, and as gaming revenue becomes a lower percentage of profit over time, that can make it difficult for projects to be feasible, he said.
Casinos need amenities to attract high-end clients and networks around the world to attract them, Pirosch said. Resorts World is in good position because of their properties in Asia, while The Drew is well-positioned because their construction costs will be half those of a typical resort.
Still, Pirosch sounded an optimistic note about Las Vegas over the next couple of years. These new resorts will be the first new resorts to open in Las Vegas in more than a decade.
“We have some exciting days ahead of us,” Pirosch said. “We have some wonderful projects coming on… the change will be good for us.”
