Phase 2 launch for Venetian hoped for this year

David Strow

Thursday, April 27, 2000 | 10:42 a.m.

Venetian owner Sheldon Adelson on Wednesday repeated his commitment to launching construction of a second hotel tower at the Strip resort by the end of 2000.

Speaking after a news conference announcing the opening of the Venetian's child care center, Adelson said the design phase has begun on the Lido, a second, 3,000-room tower at the resort property.

Those plans received a boost recently when the Venetian crossed into profitability during the first quarter of this year, posting strong increases in revenues, net income and cash flow. The resort posted net income of $16.6 million, and cash flow soared 76 percent to $59.5 million.

Cash flow is a critical measure of performance to bondholders because it measures the ability of a company to service its debt.

"Wall Street has to supply the money, and they're quite encouraged by our performance," Adelson said. "We're pretty close to the point where we can raise funds to do Phase 2."

That project would cost between $800 million and $1 billion. Construction would take 24 months to complete, and would make the Venetian the world's largest hotel with 6,000 rooms.

Part of the reason Adelson is committed to Phase 2 is strong demand for the Venetian's rooms. The Venetian averaged 98 percent occupancy during the first three months of 2000 and average daily room rates hit a Strip record of $181.

But before that strong performance came months of struggles to open up the entire resort to the public, and cost overruns that embroiled the Venetian in battles with construction company Lehrer McGovern Bovis and dozens of subcontractors.

Adelson said that won't be repeated.

"We are not going to take that free-wheeling approach (to opening Phase 2)," Adelson said. "We'll know the exact cost, get a fixed fee (for construction).

"We'll start by the end of the year. We'll do it when we're ready."

Adelson also said he eyed entering the bidding battle for the Desert Inn, up for sale less than 1 mile north of the Venetian on the Strip.

But ultimately, Adelson decided to pass on the Desert Inn.

"I've got my second phase to develop (at the Venetian)," Adelson said. "Why should I sepnd $200, $300 million to buy a second piece of land?"