Wynn paints verbal portrait of Las Vegas renaissance

Gary Thompson

Friday, May 22, 1998 | 10:27 a.m.

New resorts led by Bellagio will hasten Southern Nevada's transformation into the world's No. 1 entertainment, shopping and dining center, according to the executive widely credited with leading the last Las Vegas tourism renaissance.

Mirage Resorts Inc. Chairman Steve Wynn offered his upbeat vision of the future to an estimated 1,500 Mirage shareholders at the company's annual meeting Thursday.

The extemporaneous hour-and-a-half narrative by one of the industry's most accomplished speakers was often interrupted by applause. It included barbs aimed at gaming's right-wing critics and a few industry competitors, especially rival casino executives Donald Trump and Arthur Goldberg.

But for the most part, Wynn's casual, confident delivery centered around Mirage's rationale for betting so heavily on the company's future in Las Vegas, the Mississippi Gulf Coast and Atlantic City, markets where fears of supply-demand imbalances make casino operators, investors and analysts increasingly edgy about the future.

Similar concerns about overbuilding prevailed when Wynn opened The Mirage on the Las Vegas Strip nine years ago, he noted.

"People doubted we'd be able to generate $1.1 million in revenues needed each day just to foot the bills," he said. "But The Mirage is the single most successful hotel on earth, and has been since its opening day."

Wynn reviewed Mirage's 1993 purchase of the 166-acre Dunes site on the Strip for $70 million, or about $430,000 per acre, and the subsequent deal it cut with executives now part of Circus Circus Enterprises Inc. for construction of the Monte Carlo hotel-casino.

"We donated $16 million of land for half of a 3,000-room hotel," he said, explaining that Monte Carlo's construction was financed with non-recourse loans and additional equity from Circus Circus.

Its investment entitles Mirage to half the joint venture's profits. Now cash flowing about $90 million annually, Monte Carlo is providing Mirage a return of almost 300 percent a year.

"Sometimes it's better to be lucky than smart," Wynn said.

On about 80 of the remaining acres, Mirage is building Bellagio.

"As much as the world of resort observers and the investment community give us the benefit of the doubt," he said of anticipation over the $1.8 billion hotel-casino opening Oct. 15, "no one has any real idea of what's coming.

"If you had only been to the greatest hotel in Paris, London, New York -- to every great hotel in the world -- you'd still have no idea of what's coming. Bellagio will be orders of magnitude greater than anyone anticipates."

It will soon be followed, by the openings of Circus Circus' Mandalay Bay and Four Seasons, Hilton Hotels Corp.'s Paris, MGM's new Marriott and Mansion, the Venetian and the Aladdin.

"The people who write about gaming say this is too much, and that's probably not an unreasonable thing to say," he declared. "Will there be enough visitors, enough airline seats, a good enough road from Los Angeles?"

Yet over the past year, Mirage has spent $135 million to buy the Boardwalk Casino, the Country Star Restaurant and other properties along the Strip, giving it another 42-acre site on which "to create something new," he said.

"With all the news stories about over-capacity and air-service problems, you're wondering, 'Why buy this additional land?" he said.

"We know Las Vegas will be jammed with people. If there's a capacity surplus, the new hotels will cut their prices. Maybe their returns won't be as good, but those rooms will be filled.

"Over the years, we've found that we get a disproportionate share of the market," Wynn said. He attributed that to the company's reputation for providing superior service to customers. "In crowded marketplaces, we do well. It's a triumph of human resources.

"As a result, we don't say there are too many rooms," he said. "We say there's a lot of people out there to snitch.

"I predict that if there's a price war in Las Vegas, there'll be a lot of people on the Strip for us to shoot at. The name of the game is whether you are a net donor of bodies or a net receiver of bodies."

More than great new physical properties and customer service are helping redefine Las Vegas, he said.

"The Forum Shops at Caesars Palace were generating $1,200 in sales per square foot, better than any other shopping center in America," he said. "We opened our retail stores at Mirage in 1989 and did $2,000 a square foot."

He recalled a conversation with Forum Shops developer Sheldon Gordon, who said Las Vegas is becoming "the shopping center of the world."

"From the corner of the Fashion Show Mall on Spring Mountain to the Bellagio on Flamingo is a 3,500-foot long section of the west side of the Strip that will offer every major shopping retailer in the world," Wynn said.

"We're talking about more shopping than Rodeo Drive and Fifth Avenue put together -- and that excludes the 500,000 square feet of high-end retail at The Venetian across from The Mirage.

"This will broaden the appeal of Las Vegas more than we ever imagined."

Wynn said Bellagio expects to host some of the world's most noted designers, including Chanel's Karl Lagenfeld and Giorgio Armani; and highest-end retailers in joint fashion shows for the first time ever.

"Twenty-four to 30 months from now, Las Vegas will be the most important shopping center in the world," he said.

"There was another development I hadn't anticipated," Wynn said. "For years, you could get great values in food here. But if you wanted to experience great gourmet meals by great chefs, you went to New York, San Francisco, Paris or London.

"Then Wolfgang Puck opened his Spago at the Forum Shops, and it became the greatest of all the restaurants he owned. Others in the restaurant industry realized that Las Vegas generates the highest dining revenues in the world."

With the chefs already committed to The Venetian, Paris, Mandalay Bay, Caesars, Bellagio and other resorts, Las Vegas "will be the place where every food critic in the world will come," he said.

Another factor drawing more visitors to Las Vegas will be entertainment, and Mirage will lead the way in its evolution, he said.

"This company already operates the No. 1 and No. 2 largest grossing performing-arts acts on the planet -- Siegfried & Roy at The Mirage and Mystere at Treasure Island.

"And we started discussing the show at the Bellagio before anything else about that project. We scoured the world before realizing we had to come up with something new, something completely original."

The result will be a Cirque de Soleil spectacular with water as a centerpiece.

The increasing predominance of non-gaming attractions will help boost demand, stimulating increased air service to Las Vegas, he predicted.

"Two or three other airlines will pop up, even if we have to do it ourselves," he said. "People will get here because we'll subsidize their travel. We've bought half of a tour wholesaler because we want to make sure our hotels are filled.

"There are always things that give you the 'willies,' that keep you up at night. But I think things will be okay in Las Vegas, and those are the reasons we bought that property on the Strip."

On the Gulf Coast, he said, Mirage's $600 million Beau Rivage "is the single most elegant hotel built in the United States and outside of Las Vegas in more than a century."

"But," said Wynn, "there are some things that concern us deeply. One is the strange seasonal flirtation of America with the Far Right ... people who want to impose their moral values -- whatever those may be -- on others."

Another concern is what he called "anti-competitive collusion" by Donald Trump and Hilton gaming chief Arthur Goldberg, whom he accused of financing lawsuits by others designed to keep Mirage out of Atlantic City.

"This company now owns 58 percent of all the raw land zoned for gaming in New Jersey. That's disheartening to some of our competitors.

"Trump and Goldberg have taken the approach they will do anything to stop us," Wynn said. "But we've beaten them in court every time. The score is 12 to zero, and the last remaining challenge will be dispatched in due time.

"They're frightened," he said. "And if you look at their buildings, they ought to be frightened."

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