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HOME > NEWS > Investor News > As megaresort trend fades, companies focus on luxury in 'small' settings

As megaresort trend fades, companies focus on luxury in 'small' settings

2 April 2014

By Howard Stutz

LAS VEGAS -- Las Vegas is getting smaller.

That is, if you call 1,600-room and 1,100-room Strip hotels “boutique” properties.

By the end of the year, Las Vegas will have about a half-dozen hotel-casinos that operators classify as “boutique,” “luxury” or “lifestyle” in their marketing efforts.

It’s actually not a unique concept.

The Hard Rock Hotel and Casino and The Palms Casino Resort, for example, began as smaller hotel-casinos before expansions grew their room bases.

The idea was to break from the Strip’s megaresort business model — 3,000 or more rooms and suites, multiple restaurants and entertainment venues, large retail and convention facilities — for something a little more intimate.

Karie Hall, general manager of the 188-room The Cromwell — Caesars Entertainment Corporation’s entry into the boutique hotel market — said personalized service is a balancing act. Customers of smaller properties want to be known to the staff, but they also want to be unknown so that the level of service isn’t smothering, especially in Las Vegas.

“A smaller property allows you to keep things new and fresh,” Hall said. “You know a customer’s personality, their wants and what they dislike. And you also know the level of service to provide.”

FROM THE BEGINNING

Boutique concepts surfaced in different ways.

The opening of Mandalay Bay Resort & Casino in 1998 brought with it a 424-room nongaming Four Seasons hotel. The rooms were tucked into floors 35 through 39 of Mandalay Bay, but Four Seasons’ guests were given a separate entrance, lobby and amenities.

A nongaming 392-room Mandarin Oriental opened in 2009 as part of MGM Resort International’s 67-acre CityCenter development. The tower, which is separate from the complex’s 4,000-room centerpiece Aria, includes 200 residential condominiums on the upper floors.

THEhotel opened in 2003 as a smaller, nongaming alternative to the attached 3,300-room Mandalay Bay. The 1,100-room property had a separate entrance, larger rooms and the penthouse Mix nightclub and restaurant.

Mandalay Bay and the property’s attractions are just a short walk away down a corridor.

By Labor Day weekend, THEhotel will transition into the Delano Las Vegas, a renovation that will add features reminiscent of the 190-room Delano in Miami’s South Beach.

Matthew Chilton, who was appointed Delano’s general manager in January by MGM Resorts, said lifestyle hotels are not just about the size, but the specialized treatment for the customers.

“It’s a more personalized experience,” said Chilton, former vice president of hotel operations at Mandalay Bay. “We’re not processing you, we’re tapping into you. What are you here for? What are your interests? In a way, we’re all trying to do that in Las Vegas.”

SLS Las Vegas Hotel Casino — a $415 million renovation of the Sahara — opens the same weekend as the Delano and will look to attract a Southern California market and guests that owner SBE Entertainment has cultivated through its SLS-branded hotels in Los Angeles and Miami.

SBE also says it will provide personalized service to its hotel guests.

Meanwhile, The Cromwell, a $185 million renovation of the former Bill’s Gambling Hall, opens May 21. Caesars calls the property “an upscale boutique” hotel-casino that features a 65,000-square-foot rooftop pool deck with an exclusive nightclub and day-club element with a view of the Strip.

“We want to bring the boutique hotel experience from start to finish,” Hall said. “It begins in the porte-cochère and when you walk in through the lobby to the front desk.”

Across the Strip at Caesars Palace, the 181-room Nobu Hotel recently celebrated its one-year anniversary operating within the confines of the 3,900-room Strip resort.

Nobu General Manager Gigi Vega, who spent 10 years in management with Mandarin Oriental hotels in Macau and Manila, said Las Vegas is embracing the concept of boutique hotels.

“The brands have been successful in other locations, but are coming into Las Vegas in a much different style,” Vega said.

Other gaming companies are said to be watching to see how this push into the boutique market works on the Strip.

Union Gaming Group analyst Robert Shore said customers that favor the “hip/boutique hotels” will still travel to New York City, Los Angeles and Miami. In Las Vegas, customers favor brands such as Bellagio, Wynn and The Venetian.

“This could attract a new customer,” Shore said. “I think it is a positive for the market as it presents another option for guests that may have not chosen Las Vegas without this type of asset.”

DESIGN EXPERIMENT

Nobu was a unique experiment from Day One.

The hotel, including its lobby area, room elevators and a signature 13,000-square-foot restaurant, are in the middle of Caesars Palace.

Nobu Hospitality, which consists of 26 restaurants worldwide, spent a year remodeling the aged Centurion Tower to give the company its first hotel. Since the opening, Nobu hotels have been announced for the City of Dreams gaming development in Manila; Riyadh, Saudi Arabia; Chicago; and Miami.

“This was truly about translating the Nobu experience from our restaurants to our hotel guests,” Vega said.

Only a few of the Nobu hotel rooms offer guests a view of the Strip. Vega said the experience is inside the room, with its unique designs and features in the living spaces and the bathrooms.

In-room minibars include items such as Wild Poppy blood orange chili juice, chocolate-dipped Pocky pretzels, Japanese beer, and Nobu’s signature brands of chilled sake and Genmai-Cha brown rice green tea.

The specialized 24-hour in-room dining menu includes sushi and a selection of bento boxes for a customary Japanese breakfast.

“Our loyal patrons wanted to experience the in-room dining because it includes items, such as breakfast, that were unique to Nobu,” Vega said.

Vega said the hotel found pluses being inside Caesars. Nobu guests are able to partake in the property’s amenities but also get away from the bustle of a casino-resort. Nobu guests also receive curbside check-in accommodations.

The newest change will come at the end of May when the second floor of the tower is converted into a lounge with a fitness center dedicated to Nobu guests. The lounge will include computer stations and an area for early-arriving customers.

“A boutique hotel is about comfort,” Vega said.

STUDYING NOBU

The Cromwell will be several steps above its former existence as Bill’s and Barbary Coast. Hotel rooms will have minifridges, while the suites will include fully stocked refrigerators that include items tailored to each guest.

Also, the 11 hotel floors will offer complimentary coffee and tea service carts in the morning and afternoon refreshments.

Hall said The Cromwell’s customer base will skew to the age 30-to-45 demographic.

“This is really a new product for Caesars,” Hall said, adding that newly hired Cromwell managers are working with Nobu to understand the boutique hotel business model.

“The demographic likes nightlife and entertainment,” Hall said. “We’re a small-scale hotel, but we have access to The Linq and other Caesars’ attractions.”

The Cromwell’s 40,000-square-foot casino will have 66 table games, 424 slot machines and two bars/lounges — “Bound” in the lobby and “Interlude” in the casino.

The property’s central features include the second-floor restaurant overlooking the Strip that is operated by television chef Giada De Laurentiis and the roof-top pool deck, designed and operated by Victor Drai. The space includes a day club and nightclub facility.

Drai’s popular after-hours club, which has operated in the building for 17 years, remains as part of The Cromwell.

“There will be a much different energy level here,” Hall said. “There will always be something going on.”

CREATING A DIFFERENT VIBE

The rebranding of THEhotel as the Delano is a partnership between MGM Resorts and Morgan’s Hotel Group, which operates the Delano brand. The public spaces — hotel lobby, lobby lounge, a restaurant and a coffee bar — will be given makeovers. The property’s rooms and suites will also be renovated.

Much of the work will begin in April and MGM Resorts is expected to slowly release additional details on the changes.

Chilton said THEhotel has always operated as a boutique property, separate but still connected to Mandalay Bay.

“We’re going to try and detach it a bit,” Chilton said. “The customers will still have access to everything that Mandalay Bay has to offer, but we’re adding a brand that is not in this market. The idea is to give the property its own voice and brand message.”

Adding the Delano name creates a different vibe that modernizes the hotel, but also potentially grows the customer base beyond an established Southern California audience. Delano is a popular luxury segment on the east coast, Chilton said.

Analysts expect other boutique brands to break into the Las Vegas market if the current wave yields positive results.

Changes in the market include ideas found in other travel destinations.

The Palms, for example, recently announced a 24-hour checkout policy for all guests at no extra cost. Guests can choose their departure time when they book rooms directly on the hotel’s website.


Copyright GamingWire. All rights reserved.

 
Howard Stutz
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