Hilton delays major project in Las Vegas

David Strow

Tuesday, Sept. 25, 2001 | 10:31 a.m.

Occupancy rates rose over the weekend for Las Vegas hotels, but another big project on the Strip was put on hiatus as the city continued to feel the pinch of a nationwide slowdown in tourism.

Hilton Hotels Corp., suffering from the effects of this slowdown at its hotels across the country, announced Monday it has temporarily halted construction of a 33-story timeshare complex on the north end of the Strip. Hilton broke ground on the $111 million project in June, and had hoped to open the first phase of 350 units in late 2002.

But that opening will now be pushed back at least six months, Hilton said, as will that of a second timeshare project in Orlando, Fla.

But the Las Vegas Convention and Visitors Authority is expressing optimism. The LVCVA announced hotel occupancy was between 70 percent and 75 percent citywide this past weekend, "a higher occupancy rate and visitor volume than most cities experience under the best conditions." This occupancy rate is up about 10 percentage points from the first weekend after the terrorist attacks.

McCarran International Airport is now running more than 90 percent of its normal daily flights, the LVCVA said. That amounts to more than 400 daily arrivals.

Hilton, in the meantime, said it will re-evaluate the delayed Las Vegas and Orlando projects after the six-month wait.

"While we believe that it is prudent at this time to postpone these two projects for a short time, we are hopeful that business conditions in the U.S will improve, and that it will make sense to continue development of these projects," Hilton Chief Executive Stephen Bollenbach said in a statement.

Kathy Shepard, spokeswoman for Hilton, strongly denied the move was triggered by a belief that the Las Vegas market was no longer an attractive investment for Hilton.

"Projects well under way are being completed. Those in the beginning stages are being postponed," Shepard said. "It has nothing to do with the Las Vegas market. It has everything to do with how we're managing the company. These were two of the easiest to delay in the short term."

Still, the project is the latest on the Strip to be postponed as the city enters the third week of the tourism downturn prompted by the East Coast terrorist attacks of Sept. 11. Park Place Entertainment Corp. has suspended the development of a $475 million, 900-room hotel tower at Caesars Palace, while Mandalay Resort Group is delaying the addition of a 1.8 million-square-foot, $235 million convention center at Mandalay Bay. The Venetian is also contemplating whether it will continue building a $200 million, 1,000-room hotel tower.

Officials at the Penta Building Group, the project's general manager, said Monday afternoon they had not received word from Hilton to stop construction. About 80 people are currently working at the site; Ken Alber, vice president of Penta, said it would be premature to discuss what will happen to these workers.

"We're still working out there, and we haven't been told to stop," Alber said. "I think there's a good likelihood some work will continue."

Over a period of a decade, Hilton has previously said it hopes to build 1,500 timeshare units at the 10-acre site located just north of Circus Circus. Hilton already operates timeshare developments at Flamingo Las Vegas and the Las Vegas Hilton.

Despite the delay, Hilton is indicating it seems some light at the end of the tunnel; Bollenbach said it is the company's expectation that Hilton's business will return to 1998-99 levels in eight to 12 weeks.

Layoffs, in the meantime, are continuing to take their toll on the Strip's workers. Four more properties -- the Rio, Harrah's Las Vegas, the New Frontier and Tropicana -- said they had been forced to cut their workforces in the face of the slowdown.

Harrah's Entertainment Inc. announced 160 jobs were cut between the Rio and Harrah's Las Vegas, as several restaurants were temporarily closed. Harrah's said occupancy at Harrah's Las Vegas was down to 73.7 percent over the five day period ending Sept. 22, and to 64.7 percent at the Rio.

Gaming revenues at the two properties fell 39 percent in the five days after the attack, but are down by just 7 percent over the five day period ended Saturday.

"We're hoping to bring them (the laid-off workers) back once business improves," Harrah's spokesman Gary Thompson said. "We don't anticipate at this point there will be any additional layoffs if trends continue."

The New Frontier cut its workforce more drastically; property general manager Najam Khan said Monday the north Strip casino has cut its workforce by 20 percent. The property employed roughly 900.

Re-hiring the workers will be considered "based on how things turn around," Khan said.

"If you're doing 95 to 100 percent occupancy, you have to have the service," Khan said. "Obviously, the property will do what is necessary to provide quality service."

The Tropicana is also cutting back on its workforce, though general manager Hector Mon declined to provide numbers, "given the changing nature of the situation." The Tropicana had been cutting back on employee hours in response to the slowdown, and most property employees are now working four-day weeks instead of five.

"In cases where it is not possible to reduce schedules, we have had to resort to layoffs," Mon said. "As soon as business comes back, we will be restoring employee schedules to normal."

The Strip's three largest operators -- MGM MIRAGE, Park Place and Mandalay -- have all announced substantial layoffs at their Strip properties in recent days, as have numerous independent properties. The total number of layoffs isn't known, though it is believed to number in the thousands.