LAS VEGAS -- After the final hand of blackjack was played and the last customers were ushered out of the Sahara on May 16, 2011, operator Sam Nazarian taped a handwritten note to the hotel-casino’s padlocked front doors: “Be back soon!”
Standing there 39 months later, Nazarian gazed toward the remodeled casino and resort now called SLS Las Vegas Hotel Casino — a $415 million, 18-month transformation of the 59-year-old Rat Pack-era property into a modern hotel-casino built for the audience of today.
The SLS Las Vegas will be christened the Strip’s newest resort in a lavish Friday-night VIP reception, with the property unveiled to the public shortly after midnight Saturday.
Nazarian, 39, is CEO of Los Angeles-based SBE Entertainment, LLC, a privately held nightclub, restaurant and hotel company. He led the purchase of the aging Sahara in 2007 and ran the property until it became “no longer economically viable.”
When Nazarian posted his message, he wasn’t exactly sure how or when the Strip resort would make a comeback. Las Vegas was just starting to shake off the Great
Recession. The casino business remained challenged, and credit markets were still slow to lend.
“A lot of people counted out Las Vegas as a city,” Nazarian said recently. “A lot of people counted us out.”
Stockbridge Real Estate Holdings CEO Terry Fancher was more direct during the SLS Las Vegas gaming license hearing Aug. 6 in Carson City. The San Francisco-based investment fund, which owns 90 percent of the 1,620-room hotel-casino, had written off its investment during the real estate collapse.
“It’s a miracle we’re here today,” Fancher said. “We could have lost this project so many times.”
The property’s resurrection was made possible by a combination of $300 million raised by investment firm J.P. Morgan and $115 million raised through EB-5 financing, which gives foreign nationals a method of obtaining a green card in exchange for an investment in the U.S.
The 39-month ride was far rougher than the Sahara’s 60-second “Speed” roller coaster.
“I always knew this moment would happen. I just didn’t know how,” Nazarian said during an opening preview walking tour of the resort.
Before SBE and Stockbridge, the Sahara had four different owners. It was built in 1952 by Milton Prell, who sold the casino to real estate developer Del Webb nine years later. Paul Lowden bought the property in 1982 and sold the resort in 1995 to casino pioneer William Bennett, who died in 2002.
Over the years, the Sahara was best known for its entertainment. Ray Bolger, the scarecrow from “The Wizard of Oz,” was the opening night performer. Entertainment legends such as George Burns, Buddy Hackett, Don Rickles, Ann-Margret, Bobby Darin, Johnny Carson, Louis Prima and Duke Ellington appeared in the showroom.
In 1964, The Beatles stayed at the Sahara when they performed two shows at the Las Vegas Convention Center.
When SLS opens, all that will remain of the Sahara is the building shell, though tributes to the former property are found in images on custom carpet throughout.
The SLS has been reconfigured to include a 56,000-square-foot casino with a sports book operated by William Hill.
The nine restaurants and three nightlife venues include many SBE signature brands, including Umami Burger, the Mediterranean-themed Cleo, Japanese-themed Katsuya, 800 Degrees pizza and The Sayers Club entertainment lounge.
The three former Sahara hotel towers, all built in different decades, have been reconfigured under new names — Lux, World and Story — and are aimed at different markets: the luxury customer, the tour and travel market and the younger crowd looking for a “Vegas weekend.”
Widely known Los Angeles retailer Fred Segal has seven locations inside the property.
SLS Las Vegas hired 3,400 employees.
Nazarian, the creative force behind the resort, credited the team he put together — SLS Las Vegas President Rob Oseland, acclaimed designer Philippe Starck, Gensler Architects, Penta Building Group, and others — with bringing the property back.
“It’s really through the sheer will of our team that we’re making this happen,” Nazarian said.
NOT THE COSMO
SLS Las Vegas is the Strip’s biggest debut since The Cosmopolitan of Las Vegas in 2010, so comparisons are obvious.
Like SLS, the Cosmopolitan has glitzy dining and nightlife venues as well as stylish rooms and suites, all targeting a trendy customer base.
But in four years, the Cosmopolitan never turned an annual profit.
In April, German-based Deutsche Bank sold the Cosmopolitan to a subsidiary of the Blackstone Group, a multinational private equity investment firm, for $1.73 billion, far below the $3.9 billion it cost to build.
Credit Suisse gaming analyst Joel Simkins said any comparison would be unfair.
The SLS Las Vegas was “capitalized at a fraction” of the Cosmopolitan’s cost. Also, SLS Las Vegas controls all aspects of the hotel-casino, including the food and beverage and nightlife venues, which are the “highest margin segments” of the property.
“The Cosmopolitan opened at the worst time and tried to fill 3,000 rooms without a database,” Simkins said. “The biggest question for SLS is getting the spillover from its hotel, restaurant and nightlife guests into the casino.”
Union Gaming Group analyst Robert Shore said he doesn’t believe the SLS will mirror the Cosmopolitan.
He said the casino will challenge other nightlife properties for customers and could also expand the number of visitors to the city.
“The growth in the market is being led by a younger, international, relatively affluent crowd who comes for the nightlife,” Shore said. “The SLS will be uniquely programmed to specifically go after this market segment.”
SBE Entertainment is one of the nation’s fastest-growing hospitality companies with revenue totaling $500 million annually, according to one industry publication.
In the past few years, SBE opened SLS hotels in Los Angeles, Beverly Hills and Miami’s South Beach. Deals for new SLS hotels have been signed for the Middle East, New York, the Bahamas, Philadelphia and Seattle.
SBE operates 14 different nightclub brands and 13 restaurant concepts that total 55 outlets with 50 more in development. In Las Vegas, SBE has operated the Hyde Lounge nightclub in Bellagio since 2012.
Through its operations, SBE Entertainment has built a customer database of 5 million patrons, many from Southern California.
“The Southern California market is the biggest feeder market into Las Vegas,” Shore said. “The ultra-success of Hyde is an example of SBE’s prowess in operating and appealing to the nightlife segment.”
SLS Las Vegas is not counting on just the SBE database for customers.
The hotel is part of the Preferred Hotels & Resorts guest loyalty program, which includes 450 independently-owned hotels and resorts.
Also, SLS Las Vegas is affiliated with Curio, a new independent hotel collection through Hilton Worldwide. The deal allows the property to tap the 40 million-member Hilton HHonors customer loyalty program.
“Those type of deals give SLS Las Vegas a huge advantage going forward,” Simkins said.
The property also plays up its proximity to the Las Vegas Convention Center. The remodel made easier access to the SLS monorail platform, and convention guests will be offered special monorail discounts.
FOCUS ON GAMING
As for the casino, which will have nearly 800 slot machines, 74 table games and a high-limit gaming area, Oseland’s involvement comforts Simkins and other analysts.
“He has a strong reputation around town with a lot of gaming knowledge,” Simkins said of the executive who previously worked for Wynn Las Vegas.
Gaming is obviously a major feature in any Strip resort.
Shore said the Cosmopolitan failed because patrons didn’t have to pass through the casino to reach popular nightlife venues.
“The energy of the nightlife scene never seeps onto the gaming floor,” Shore said.
The SLS gaming floor is center stage, surrounded by restaurants and nightclubs to create energy throughout the building. Though smaller in floor area from its Sahara days, the casino feels more open because some older walls were removed.
“The casino is front-and-center of the overall experience,” Oseland said. “I really believe we’re utilizing the space wisely, and we’re providing significant price points and value that will attract the gaming customer.”
Oseland also wants to see locals in the SLS, and the property plans restaurant and gaming promotions specifically designed for that market. Oseland said the slot machines “will be loose,” and the gaming experience akin to a locals casino.
Earlier this month, SLS marketers sent mailers to thousands of Southern Nevada residents, offering special benefits by enrolling in the SBE Entertainment loyalty programs.
Nazarian, who purchased a home in Summerlin last year, said SLS will be easy for locals to reach.
“We may be on the north end of the Strip, but we’re at the center of Las Vegas,” Nazarian said.
Like the Sahara’s evolution into the SLS Las Vegas, Nazarian has remade himself since he first approached the Bennett family about buying the fading hotel-casino in 2006.
Then a budding film producer, Nazarian left Hollywood to focus on SBE. A native Iranian who fled with his family before the country’s 1979 revolution, he quickly gained a reputation for bringing together leaders in various fields to collaborate on a project.
That shows in SLS Las Vegas.
Starck, who designed the Delano in Miami and Le Meurice in Paris, oversaw all aspects of the Sahara makeover. He compared SLS Las Vegas to a “seductive cocktail” with a range of flavors.
“It’s strong and sparkling with millions of bubbles of life, stories, adventures and surprises,” he said.
James Beard Award-winning Chef Jose Andres is introducing two new restaurants to SLS Las Vegas. He upgraded his Bazaar Steak brand to Bazaar Meat, SLS’s high-end eatery. Andres is also opening Chinese-themed Ku Noodles.
Musician and actor Lenny Kravitz added “designer” to his accomplishments by creating four penthouse suites; one each in the Story and World towers, and two in the Lux tower.
Nazarian brought Stockbridge into the picture eight years ago. The company has $8 billion in real estate holdings.
“Mr. Nazarian is a visionary,” Fancher said. “We wouldn’t be here without him.”
Nazarian won’t have much to do with the SLS casino, however, until he is licensed by state gaming regulators. For now, Fancher and Oseland run it.
The past is important to Nazarian. Near his private office hangs an artist-enhanced photo of the iconic Sahara. Making something old feel new again appeals to him.
“It’s what we do with all our master-plan projects,” Nazarian said. “We make them look like they were originally intended to be from the ground up.”
Much of the SLS layout will remind former Sahara customers of the old resort, though much has changed.
The hotel lobby is still off the Paradise Avenue entrance, though it will have a modernized front desk and will feature the Monkey Bar and The Perq, a coffee and snack location.
Escalators that connected the casino with the second floor buffet space and convention area in the back of the building were moved near the lobby.
Sahara’s famous House of Lords gourmet room is now the high-end gaming area; the pool was rebuilt to include a center bar connected by bridges.
Foxtail, an SBE-branded nightclub next to the pool, has garage door-style walls that open for a day club, while parking garage walls that surround the pool are lined with giant television screens.
“We kept the integrity of the location, but we created new energy,” Nazarian said.
And that entrance where Nazarian made his promise to return no longer features 1980s-era tile and carpet. Instead, the lighted floor runs through a multitude of colors, and the walls and ceiling are mirrored for what Nazarian calls the “ultimate ‘selfie’ moment.”
He hopes customers are so “wowed” by what they see they will have to capture the moment on cameras and smart phones.
BYE BYE BURRITO
The “Speed” roller coaster is long gone, as are the last two reasons most people found to visit the old Sahara: the NASCAR Cafe and its famous six-pound burrito challenge.
The SLS offers a more varied menu.
A Bavarian-style outdoor beer garden was added along the Strip, connecting The Sayers Club and the sports book, which includes a sports bar and Umami Burger.
The Griddle Cafe, a branch of the famous Los Angeles eatery, adjoins the main casino walkway.
Oseland said the layout creates “neighborhoods” throughout the property.
The area that once housed the NASCAR Cafe includes Bazaar Meat and connects to Life, a nightclub created from the former Sahara showroom.
Nazarian said the $7 million Life will compete with other Strip clubs built for three and four times as much.
“We had unique ideas,” Nazarian said. “Some of the best ideas come when you don’t have money.”
The same low-cost-but-high-concept approach is seen in the casino, where the ceiling is now exposed to allow for artistic designs and features.
The center bar features a five-sided, three-dimensional entertainment experience with images created by a South Korean firm.
After eight years on the Strip, Nazarian is ready for the next chapter.
“We’ve learned from the market,” Nazarian said. “We will offer value. Our prices will be approachable.”
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