Las Vegas Sun

September 1, 2014

Desert Inn marks 50th anniversary

In a city where casinos seem to come and go like tumbleweeds blowing in the wind, there's something special when one property actually lives to see its 50th birthday.

The Desert Inn achieved that feat today, making it only the third property on the Strip to reach that anniversary while still in operation. The best known of the older Strip properties is the Flamingo Hilton, opened with mob money in 1946. The 58-year-old New Frontier is the oldest property on the Strip.

Like its nearby neighbor, the New Frontier, the Desert Inn stands at the crossroads of uncertainty -- now in its third year of searching for a buyer, with no guarantees that it will be around for decades to come.

Its role in the history of Las Vegas is difficult to overstate. When it opened on April 24, 1950, it was the largest hotel in Southern Nevada with 300 rooms. Over the intervening years it grew to 700 rooms, but now finds itself in a town where a new 2,000-room resort hotel is considered average-sized.

"Seven hundred rooms, on the Strip anyway, is a baby," said Mark Lefever, chief operating officer of the Desert Inn. "It's a phenomenon of Las Vegas that 700 rooms could be considered small."

Since Wilbur Clark opened the property, some of the most influential businessmen in Las Vegas history -- both legitimate ones and not -- have owned the Desert Inn. Over the past 50 years, its owners have included Moe Dalitz, Howard Hughes and Kirk Kerkorian.

"It's been almost like a founding place, a major transitional place" for some of Las Vegas' most prominent figures, said Bill Thompson, chairman of the department of public administration at UNLV.

Tonight that history will be celebrated, as about 500 guests will attend a black-tie, invitation-only birthday dinner and party in the resort's Crystal Room. Invitees include actors Robert Loggia, Chris O'Donnell, Robert Urich, Vincent Van Patten and Tony Curtis.

At 8:30, the Desert Inn will serve birthday cake and champagne to the public on the casino floor. One hour later, the public will be invited to watch a fireworks show from the rear lawn of the resort.

Attendees will see quite a different place from the Desert Inn that Wilbur Clark opened in 1950 at a cost of $4.5 million. The Bermuda pink and green trim exterior has been replaced with marble, chandeliers and elegance.

At one time, under Dalitz, it was known as a center of mob activity.

"It was a mob place, the center of their activities," Thompson said. "The D.I. was sort of their headquarters."

Then, in 1967, Dalitz and company attempted to evict billionaire Hughes from the resort's top floor to make room for high-rollers. Hughes responded by buying the resort outright for $13.25 million.

What seemed at the time to be a purely eccentric purchase turned out to be the foundation for one of the biggest empires in Strip history. Over the final 10 years of his life, Hughes gobbled up the Sands, the Castaways, the Silver Slipper and the Frontier. Though Hughes' company no longer is in the gaming industry, it remains a force in Las Vegas to this day, most visibly as the developer of Summerlin.

Twenty-one years after Hughes started his Las Vegas empire from the Desert Inn, a third major figure entered the picture -- billionaire Kirk Kerkorian, who acquired the property in 1988. Kerkorian sold the property five years later to ITT Corp., the same year he opened the new MGM Grand hotel-casino several miles south on the Strip.

It wasn't known at the time, but the ITT acquisition would signal the beginning of the rockiest years in the Desert Inn's history. Business began to taper off at the property as huge new casinos began popping up along the Strip.

ITT countered by launching an ambitious $200 million renovation project, converting the Desert Inn into one of Las Vegas' most luxurious resorts. The renovation actually reduced the Desert Inn's room count by more than 100 in an effort to emphasize superior customer service.

"The spirit is to be a luxury resort ... with personalized service unsurpassed by anyone else," Lefever said. "Our marketing efforts are on people that like to come to Las Vegas and get wild and crazy for two out of the four nights they're here. This gives them a place to rest."

But as a business, the Desert Inn has continued to struggle.

"It's never generated the returns it should have," said David Anders, gaming analyst at Merrill Lynch. "It's primarily that there's so many new and larger facilities that were real competitors."

Another difficulty for the D.I. was the Asian financial crisis, which was in full swing when the renovation wrapped up in 1997. With the Asian economy struggling, one of the property's most loyal markets -- Asian high-rollers -- began shrinking. The property began shifting its focus to attracting domestic high-rollers and has enjoyed "positive trends since reopening," Lefever said.

But, Lefever concedes, "the big hindrance has been location."

High-rollers are a crucial part of the Desert Inn strategy, whose 30,000-square-foot casino is dwarfed by the mammoth casinos farther down the Strip. High-end baccarat players are even given the option of playing in a private room, with crystal chandeliers, a separate dining room and a ceiling encrusted with gold leaf.

Though Asia is recovering, Lefever doesn't believe the D.I. will ever return as a big player among Asian "whales," particularly in the wake of such mergers as Caesars World-Park Place Entertainment, Harrah's-Rio and MGM Grand-Mirage Resorts.

"Asian marketing is a very expensive business to get into," Lefever said. "The more places you have, the more you can spread out costs to among more properties. They're able to compete better on the Asian high-end business."

Shortly after completion of the project, Starwood Hotels & Resorts Worldwide Inc. took over ITT. Soon after, Starwood decided it wanted no part of the gaming business and moved to divest itself of its gaming holdings.

Starwood was successful in finding a willing buyer for Caesars World, selling the casino chain to Park Place last year for $3 billion. And, for a time, it appeared it would be successful with Desert Inn as well.

After rumors flew about buyers from casino designer Mark Advent to entertainer Michael Jackson, international resort operator Sun International Ltd. agreed to buy the Desert Inn for $275 million. Many in Las Vegas saw a renaissance coming for the resort under Sun Chairman Sol Kerzner, a visionary figure many likened to Steve Wynn.

But that came to an abrupt end earlier this year, when Sun International moved to go private -- and, in what was seen as an effort to generate cash for that move, dropped plans to buy the Desert Inn.

Today, the Desert Inn is still on the sales block, making it difficult to make any significant renovations in the property. It is still drawing interest -- most notably from Wynn, who recently toured the property.

But no firm offers have emerged yet. The only offer made for the resort since Kerzner's pullout was a $200 million bid announced by Boccardi Capital Systems of Las Vegas, but that bid was immediately rejected by Starwood as inadequate.

In the past, buyers of older Strip properties have, more often than not, razed them to make way for a newer, flashier resort. New Frontier owner Phil Ruffin is considering that course, announcing plans to demolish the property to make way for a San Francisco-themed resort. Just down the road, Sheldon Adelson demolished the Sands to build the Venetian and is now considering its expansion.

But Lefever is convinced the Desert Inn won't fade into history as its neighbors have over the past 50 years. The biggest ace in the hole, he said, are the 32 acres of land next door, which are being marketed with the Desert Inn by Starwood.

"The 32 acres next door are available for someone to build on ... they don't need to level the property and start over," Lefever said. "The name and the history of the Desert Inn will be around for a long time."

One person that could help return it to that former glory, Thompson said, is Wynn.

"It's had a historical reputation as a very good place for high-rollers," Thompson said. "He could really give personal service, capture the high-rollers he's had before.

"Only Steve Wynn has the personal identity (built) over the past 20 years that would draw people in."

History: Table of contents »