Wynn says DI to close

Thursday, June 22, 2000 | 11:15 a.m.

CARSON CITY -- Casino owner Steve Wynn disclosed today he will close his newly acquired Desert Inn on Sept. 30 and will build two new 3,000-room hotel structures on the site.

Wynn disclosed the closure today before the Nevada Gaming Commission.

"I will not operate it for a long term," he added.

Wynn said he will work to find jobs for the 1,500 employees at other hotels such as the Aladdin, which is getting ready to open, and the resorts Wynn formerly operated as chairman of Mirage Resorts Inc. His decision to close the DI came only two nights ago, he said.

The commission approved his $270 million purchase of the resort from Starwood Hotels & Resort Worldwide Inc.

Stuart Linde, gaming analyst at Lehman Bros., wasn't surprised at the announcement.

"They've been losing money. Why operate something that's losing money? If the property's depreciation is more than its cash flow, it might not be worth (keeping open)."

"The casino's not big enough, and there's not enough rooms. The property's beautiful, but this is Las Vegas. People come to gamble. You need reasons for people to stay there. People often stay at the hotel, gamble somewhere else."

The DI, Wynn said, has lost money every year except for one or two in the past 35 years. It can't compete with the other megaresorts on the Strip because of its small rooms.

Wynn said he will probably change the name of the resort. He intends to keep the golf course open for a year, including hosting a major tournament late this year. But he said the property was too valuable to continue to serve as a golf course.

Earlier this month, Wynn said he intended to keep the Desert Inn open while he built the first of two new hotel structures. But he has altered his plans. He said two nights ago he came to the "morbid conclusion" that the DI had to be closed.

This is the first time, Wynn said, that he has come in possession of a property with a "gloomy future."

He said he could not find a program "that would work" at the present DI. "It is not a place where we can invite guests of the Mirage and Bellagio. We can't deliver a product.

"I don't feel the DI is viable," he told the commission.

But he said the new hotel complex would be better than the Bellagio.

The employees at the DI, he said, are longtime workers and he felt they will be "snapped up" by the other resorts.

Many of the 715 rooms at the DI are 320 square feet, which are small compared with those available on the rest of the Strip.

His first hotel tower will be 59 stories with 3,000 rooms. It will feature large rooms, gardens and courtyards. He promised to bring a "new life" to the DI.

In making his presentation, Wynn emphasized that the noncasino revenue at the new resorts is bigger than the gaming take. For instance, he said, the Bellagio took in $507 million from gaming its first year but $600 million in noncasino revenue.

Both the Treasure Island and Mirage also collect more revenue from nongaming activities than from the casino, he said.

"The noncasino stuff spawns the energy," he said. His new resort will have better restaurants, better shops and more exotic attractions.

The DI, he said, has 218 acres and is strategically located next to the Las Vegas Convention Center and the Sands Expo convention center. He called them "two of the most powerful convention and exhibition centers in the world."

This site, he said has to be exploited. "The DI has to be rebuilt. Today the DI struggles."

When the DI is rebuilt, those former employees will have first shot at the new jobs, he told the commission.