Fitzgeralds’ plans for expansion put on hold

Grace Leong

Thursday, Feb. 13, 2003 | 11 a.m.

Fitzgeralds owner and Detroit businessman Don Barden said he'll invest several million dollars over the next few years to refurbish the long-struggling downtown Las Vegas casino but is holding off plans to expand until the economy improves and because of uncertainty over a potential war with Iraq.

Barden, whose $149 million purchase of the Fitzgeralds casinos in Las Vegas, Tunica, Miss., and Black Hawk, Colo., made him the first and only black person in the country to wholly own a major Nevada gaming resort, spoke Wednesday at a celebration marking the first anniversary of his acquisition of Fitzgeralds, which coincides with Black History Month celebrations in Las Vegas.

Barden, who had mentioned the possibility of expanding his casinos a few months after the acquisition in December 2001, said Wednesday that plans to build a third hotel tower that could potentially add another 500-plus rooms to Fitzgeralds Las Vegas are on hold until the economy improves.

The 850-worker downtown Las Vegas casino now has 638 rooms, two towers and 42,000 square feet of casino area.

A potential site for the third tower, if the plan materializes, is where Fitzgeralds' 3,000-square-foot warehouse now stands, at the corner of Fremont and Fourth Streets facing the Fremont Street parking garage, said Gene Sagas, Fitzgeralds' director of facilities.

"The third tower will potentially cost $70 million to build. But business conditions have to improve to justify building another tower," he said.

Mike Darley, Fitzgeralds' vice president and general manager, agreed, saying Barden's expansion plans hinge in part on the success of Mayor Oscar Goodman's revitalization drive for downtown Las Vegas.

"We would like to add another 500-plus rooms to bring it to 1,000 rooms so we can match our neighbors like the Golden Nugget. But the economy has to turn around first," Darley said. "The business environment in Las Vegas mostly depends on the drive-in and fly-in market. So Las Vegas is very challenged in this regard at the moment.

"Las Vegas could face a double whammy because of the threat (posed by) rising gas prices, which could affect our drive-in market ... and the fear of more terrorist attacks (which could affect its fly-in market.)" Barden said. "But we're hoping the issues with Iraq can be resolved quickly without the need to go to war."

Meanwhile, Barden, who got his start in gaming as the owner and operator of the Majestic Star casino in Gary, Ind., said plans are under way to build a 300-room hotel, convention and entertainment center on a 175-acre land next to the riverboat casino.

"We're planning to break ground on that development next fall," he said. "We're also looking to add 200 rooms to the (507-room) Fitzgeralds in Tunica, Miss. But there's just too much uncertainty at this time for us to be making concrete business plans."

While downtown Las Vegas is still seen suffering from the after-effects of the Sept. 11 terrorist attacks, Barden said the downtown casino operations can help themselves by reinvesting in their properties and making more advertising and marketing efforts.

Darley agreed. "Our vision is in alignment with the mayor's. Our contributions to the revitalization efforts include our investments in Fitzgeralds Las Vegas, how to market downtown and how to change public perception of what downtown means."

"For instance, plans to bring a monorail downtown will better transport people from the Strip casinos to downtown areas, which will, in turn, help invigorate our business" and justify further expansion, he said.

The Las Vegas City Council recently entered into a contract with Transit Systems Development Inc. to develop and secure funding for the development of a $450 million downtown link to a four-mile Strip monorail that links the MGM Grand hotel-casino to the Sahara hotel-casino.

Meanwhile, Darley said the company to date has spent $300,000 to $500,000 of a total of $1 million committed when Fitzgeralds was acquired to refurbish the downtown Las Vegas casino.

"We've made significant improvements to Fitzgeralds Las Vegas in the past year. We've practically gutted the 12th floor where the event center is, put in new marble flooring, new carpet, wallpaper and lighting," he said. "Next year, we're infusing an additional $2 million in investments to upgrade the casino."

"We've added new carpet throughout the casino, new carpeting, wallpaper and lighting for our meeting space areas. The buffet area's been remodelled, we have a new pool and spa under construction and we're sprucing up the new dance floor stage," Barden said.

As part of the improvements, Sagas said the company is building a $250,000 40-foot pool, spa and 2,200 square feet of deck space at the corner of Fourth Street and Carson Avenue. The pool and spa are scheduled to open April 1.

Other improvements include adding marble flooring to the hotel lobby, an outdoor seating area on Fremont Street for Jackpot Deli, redesigning Limericks Steakhouse, Molly's Buffet and Shamrock Cafe.

"When Fitzgeralds went into bankruptcy (in 2000,) no one spent money making any improvements to the property. But when we took over, we changed that," Darley said.

"To improve our fortunes, we have to make sure our marketing spin is effective. We also have to be sensitive to labor concerns," Darley said. "The Culinary Union's contract has had an impact on us in that it added a lot of costs to the hotel. We have to be more efficient in scheduling shifts and run our organization more efficiently."

One area where Barden said he hopes to see improvements is in growing efforts to locate black-owned businesses to do business with Fitzgeralds.

"Our business goal is to provide opportunity to minority-owned and black-owned businesses. We want to be proactive in our hiring, staffing and recruiting," he said. "We're in the process of identifying black-owned and women-owned businesses. We have an abundance of black entertainers. What I'd like to see more of are black-owned food and inventory suppliers."