Venetian looks to delay plans for hotel tower

David Strow

Wednesday, Feb. 6, 2002 | 11:09 a.m.

The Venetian is asking the county for a delay of up to two years on its plans to build a 1,000-room hotel tower.

The Clark County Planning Commission will consider tonight a request by the Venetian that would give the $1.5 billion resort an additional two years to begin construction of the tower. The application cited "financial concerns caused by the recent economy."

The Venetian planned to build the $175 million to $200 million expansion on top of its parking garage. But this project, called "Phase 1A" by Venetian officials, was temporarily shelved in late September, following a dramatic post-Sept. 11 slowdown in Las Vegas' tourism economy.

This project was to have been followed at some point by "Phase 2," an entirely new casino resort of at least 3,000 rooms. Venetian owner Sheldon Adelson has previously estimated this new resort would cost somewhere between $800 million and $900 million.

On a conference call with analysts Tuesday, Bill Weidner, president of Venetian parent company Las Vegas Sands Inc., made it clear the company will be cautious before putting the project back on track.

Las Vegas Sands reported cash flow of $42.2 million for the quarter ending Dec. 31, down 14 percent. Though business trends are improving, Weidner said the Venetian needed to show a more consistent recovery before trying to finance an expansion.

"We feel it is prudent for us to preserve as much cash as possible," Weidner said. "Until such time as we address the capital structure overall, and make sure we have plenty of liquidity, we're not going to aggressively go forward with any expansion plans at this time."

The project was to have been paid for with cash flow from the Venetian, $65 million in new financing and the deferral of principal payments on Las Vegas Sands' debt for two years.

"Fixing" the capital structure could mean refinancing the Venetian's debt or obtaining more equity financing, Weidner said.

"We put together somewhat of a jerry-rigged structure to complete 1A," Weidner said. "We would not do that again."

One of the Venetian's high-profile expansions of 2001, the addition of the Guggenheim and Hermitage museums, has gotten off to a disappointing start, Venetian president Rob Goldstein admitted on the call. Part of the problem, he said, is that attention for the museums was lost to some extent in the news flood following Sept. 11.

A lack of awareness of the new museums appears to be the biggest problem, Goldstein said, though visitation is picking up.

"Las Vegas has a history of things ramping up," Goldstein said. "Clearly we're disappointed they haven't opened to a huge start. I think it's a question of doing a better job of advertising and marketing. We deserve an audience, and we'll find one."