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\tBy HOWARD STUTZ
\n\tLAS VEGAS REVIEW-JOURNAL
\n\tWe shouldn\u2019t be surprised if things get worse for SLS Las Vegas before they get better.<\/p>\n
\tA $35.3 million net loss in the first quarter might be just the beginning.<\/p>\n
\tThe SLS will mark its first full year of operation in August, and it\u2019s clear the hotel-casino is having trouble finding its niche in the resurgent Strip market.<\/p>\n
\tThe 1,600-room north Strip property, built from the bones of the Rat Pack-era Sahara, is an island, surrounded by empty land and closed developments that offer more promise than customer activity.<\/p>\n
\tSLS Las Vegas\u2019 walk-in business is virtually nonexistent, an aspect that won\u2019t change for years.<\/p>\n
\tA 33-acre festival grounds across the Strip is unused much of the year. Just to the south, an empty lot has been touted by developers as a sports arena site. Most believe the venue is a pipe dream.<\/p>\n
\tThe neighboring Riviera closed May 4 and the site will be transformed into a convention center. Construction may take two to three years and the Las Vegas Convention and Visitors Authority hasn\u2019t set a date for the Riviera\u2019s demolition.<\/p>\n
\tAcross the Strip, Malaysia-based Genting Berhad held a ceremonial groundbreaking for the $4 billion Resorts World Las Vegas on May 5. But construction hasn\u2019t started on the site the company has owned for more than two years.<\/p>\n
\tThe biggest impediment to SLS foot traffic is the shuttered Fontainebleau, which has sat unfinished since 2009. Billionaire Carl Icahn bought the property out of bankruptcy and has done nothing other than sell off furnishings, specially made escalators and a construction crane.<\/p>\n
\tThe hulking eyesore is like a line of demarcation keeping pedestrians from the SLS. Maybe the convention authority\u2019s demolition crew can toss a few sticks of dynamite over the fence when the Riviera is imploded, saving Icahn the trouble.<\/p>\n
\tMeanwhile, the SLS Las Vegas is bleeding money.<\/p>\n
\tSan Francisco-based Stockbridge Capital Partners, which owns 90 percent of SLS Las Vegas, put $5.3 million into the property in April for general operations. In a securities filing, the private equity group said it would \u2014 if needed \u2014 contribute as much as $40 million into the resort through the end of the year.<\/p>\n
\tSLS Las Vegas President Scott Kreeger remains optimistic.<\/p>\n
\tHe was brought into the property in October as a \u201cturnaround\u201d specialist. Kreeger spent the bulk of his gaming career with Station Casinos and was Red Rock Resort\u2019s first general manager.<\/p>\n
\tMost recently, he was chief operating officer of the now-closed Revel in Atlantic City. So he has experience with struggling hotel-casinos.<\/p>\n
\t\u201cProperty ramp-ups usually take about a year,\u201d Kreeger said.<\/p>\n
\tBut SLS Las Vegas may take much longer.<\/p>\n
\t\u201cMaybe 18 to 24 months,\u201d he said. \u201cThere are a lot of things about this property that are great. It just needs some adjustments.\u201d<\/p>\n
\tKreeger has set out to bolster the hotel room rates and occupancy numbers, adjust the entertainment offerings and drive business to the casino.<\/p>\n
\tSLS Las Vegas opened with some of the Strip\u2019s trendiest restaurants \u2014 Cleo, Katsuya, Ku Noodle, Bazaar Meat and Umami Burger. The food offerings brought in $15.7 million in revenue from January to March. Casino revenue during the same quarter was $9.1 million.<\/p>\n
\tKreeger knows construction of Resorts World and the convention center will bring business north. But until then, he wants to attract locals along with tourists to augment the customer base.<\/p>\n
\tSome believe SLS Las Vegas\u2019 fortunes went south when property visionary Sam Nazarian walked away from the resort in December after acknowledging during his Nevada gaming license hearings he used cocaine and struggled with alcohol abuse.<\/p>\n
\tNazarian\u2019s Los Angeles-based SBE Entertainment owns 10 percent of SLS Las Vegas. Nazarian oversaw the hotel-casino\u2019s design and restaurant and amenity choices. Nazarian expressed a profound belief in the Strip\u2019s north end. He made charitable contributions to the neighborhood and was the property\u2019s face and cheerleader.<\/p>\n
\tGaming regulators gave him a one-year limited license. But he wasn\u2019t allowed to have any say in the property\u2019s operations.<\/p>\n
\tToday, Nazarian\u2019s office is cleaned out. Based on recent events, he has turned his attention to other businesses.<\/p>\n
\tNazarian took a \u201csabbatical\u201d from SBE last year to seek treatment. He returned in April and severed ties with a private equity group that planned to invest $500 million into SBE projects.<\/p>\n
\tIn May, SBE sold its SLS Beverly Hills hotel for $195 million. A month later, the company parted with the SLS Hotel South Beach in Miami for $125 million.<\/p>\n
\tAccording to the Los Angeles Times, Nazarian listed his 10,616-square-foot Bel Air estate for $33.5 million on the same day he acquired it for $25 million. Meanwhile he\u2019s trying to sell his 14,464- square-foot Summerlin home for $17.5 million.<\/p>\n
\tMaybe he needs the money.<\/p>\n
\tAccording to two sources, Nazarian missed a cash call seeking additional funds for the SLS Las Vegas in April. That month, Stockbridge made two \u201ccapital contributions\u201d totaling $5.3 million. The missed payment might be detailed by Stockbridge\/SBE Investment Co. in its second-quarter financial filing for the Securities and Exchange Commission, expected in August.<\/p>\n
\tWe\u2019ll also learn then whether SLS Las Vegas was able to glean business for its restaurants, hotel, and casino from May\u2019s Rock in Rio concert festival that took place over two weekends across the street.<\/p>\n
\tKreeger said the property had increased customer traffic from its monorail station and benefited from \u201cfree advertising\u201d brought about by the resort\u2019s location to festival grounds.<\/p>\n
\tThe proof will be in the numbers.<\/p>\n
No replies were posted for this topic.<\/p>\n","protected":false},"excerpt":{"rendered":"
By HOWARD STUTZ LAS VEGAS REVIEW-JOURNAL We shouldn\u2019t be surprised if things get worse for SLS Las Vegas before they get better. A $35.3 million net loss in the first quarter might be just the beginning. The SLS will mark…<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-8982","post","type-post","status-publish","format-standard","hentry","category-latest-casino-news"],"_links":{"self":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/8982","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/comments?post=8982"}],"version-history":[{"count":0,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/8982\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/media?parent=8982"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/categories?post=8982"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/tags?post=8982"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}