Coast expanding Orleans, beefing up Gold Coast and Suncoast as well

David Strow

Wednesday, Jan. 17, 2001 | 11:33 a.m.

Just four months after opening its fourth Las Vegas hotel-casino, Coast Resorts Inc. is moving forward with a $100 million expansion of the Orleans.

The expansion project, already in its early phases, will be complete by the end of 2002. Coast plans to add a 9,000-seat event arena, a 620-room hotel tower, a 2,600-space parking garage and 40,000 square feet of casino space to the property.

While the two-year project moves forward, Coast officials say they also plan to press ahead with $25 million in expansion and renovation activity at their two other Las Vegas locals-oriented properties, the Gold Coast and the Suncoast.

Coast has been considering an expansion of the Orleans since at least April, though Tuesday's announcement comes at a period when analysts and investors are growing more and more pessimistic on the economic outlook for gaming. But Harlan Braaten, president of Coast, said the company is seeing quite the opposite at the Orleans.

"The Orleans has had a tremendous 2000, and has not seen any slowdown," Braaten said. "We're not anticipating that 2001 is going to have anything but positive results. We really view 2001 as being very good for our company.

"The driving force for our expansion at the Orleans is demand driven."

"I think it's a great idea," said Andrew Zarnett, gaming analyst with Deutsche Banc Alex. Brown. "Clearly, Orleans has been the great hotel in their portfolio."

Zarnett noted that the property's cash flow rose from $35 million in 1998 to $52 million by 2000.

"Clearly there's a great demand for that product, and they do have a geographic market that really isn't in the competitive landscape of Station Casinos," Zarnett said. "I think the other thing you have to focus on is the fact that Suncoast got off to a strong and profitable start. That has given (Coast Chairman) Michael Gaughan the confidence to basically go ahead with that expansion (of the Orleans) he's had in mind for many months."

The four-year-old Orleans, located less than two miles west of the Strip on Tropicana Avenue, will have 1,460 rooms when the hotel room addition is completed in mid-2002. Occupancy at the property has averaged 95 percent over the past two years.

"It's certainly going to make us a small player in the hotel room market, (though) we're not a big player in the room market with this property," Braaten said. "It will certainly nearly double our capacity for tourists on the property."

The arena, which Braaten described as similar in size to the Aladdin Theatre for the Performing Arts, will be able to seat 9,000, increasing the Orleans' event capacity sixfold, and allowing it to host far larger events such as boxing matches, concerts, rodeo events and conventions -- though not events of the level hosted by properties on the Strip, Braaten said. The arena will be the final element of the expansion plan, and should open by the end of 2002.

Other elements of the expansion will include the addition of six movie theaters to the Orleans cinema complex. With 18 screens and 4,900 seats, the complex will become the largest in Southern Nevada, Coast says.

Also included in the expansion will be two restaurants and an Irish pub -- including an Italian restaurant operated by renowned restauranteur Gustav Mauler. Mauler currently owns two restaurants, Spiedini and Oxo, in the Regent Las Vegas.

Meanwhile, Coast plans to move forward with $25 million in additional activity at Gold Coast and Suncoast this year, Braaten said.

At the Gold Coast, it is undertaking a $15 million to $20 million renovation and expansion project that will add some new convention space, expand the buffet and completely update the Flamingo Road property's look.

Braaten said the move was triggered by the planned December opening of the Palms, a locals-oriented property set to open across Flamingo Road from the Gold Coast in December. The Palms is majority-owned by the Maloof family, builders of the Fiesta; minority partners include Station and the Greenspun family, owners of the Las Vegas Sun.

"This will be total renovation, from floor to ceiling, of most of our public area," Braaten said. "People will really notice that this property has changed. We want to make sure that property is ready to compete."

And at the Suncoast, which has enjoyed strong results since its September 2000 opening, Coast plans to add an additional 216 rooms this year at a cost of $10 million. The expansion, which will occur in the existing building shell, will double the Suncoast's room inventory.

"The first four months (of operations) have given us enough comfort to go forward (with the room expansion)," Braaten said.