Las Vegas Sun

May 13, 2008

Station Casinos banking on biggest being best

Plan for huge complex in play despite economy

By Liz Benston

Wed, Apr 23, 2008 (2 a.m.)

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Tiffany Brown

Station Casinos owners Lorenzo Fertitta, left, and brother Frank explain their vision Tuesday for Viva, which, at $10 billion, would become the most expensive casino complex ever built.

Station Casinos owners envision a complex with three casinos, at least three hotels and as many as 10,000 rooms on 110 acres at Tropicana Avenue and Interstate 15.

Courtesy Photo

Station Casinos owners envision a complex with three casinos, at least three hotels and as many as 10,000 rooms on 110 acres at Tropicana Avenue and Interstate 15.

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  • Frank Fertitta talks about planning for the Viva resort.
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  • Frank Fertitta talks about how the market will influence the timing of Viva.
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Beyond the Sun

At a time when businesses across the country are cutting back in the face of economic turmoil, the brothers at the helm of Station Casinos are accelerating plans for an enormous Las Vegas resort larger than CityCenter.

Frank and Lorenzo Fertitta, who took their company private last year with help from private equity giant Colony Capital, said in an interview Tuesday that they are going forward with plans to redevelop the site of the Wild Wild West motel and casino on Tropicana Avenue and Interstate 15.

The Fertittas said they have a detailed plan for the first phase of their Viva resort that includes three casinos and at least three hotels with as many as 5,200 rooms. The entire project, built on 110 acres over many years, would cost more than $10 billion and be larger than MGM Mirage’s $8 billion CityCenter, now under way on the Strip and expected to open in 2009 on 66 acres between Monte Carlo and Bellagio. Ultimately, the Viva complex could have 10,000 rooms.

Station Casinos’ timing would seem amiss, given the weakening national and local economies. But the Fertittas have defied skeptics here and on Wall Street by buying or building a 14-casino empire in 13 years.

Because the company is no longer publicly traded, the Fertittas do not have to answer to jittery shareholders worried about declining demand or falling share prices. But they still have to line up lenders, which they have not yet done. They said they hope the capital market will rebound before they are ready to start construction, sometime in the next two years.

Originally conceived as a single casino hotel built on a few dozen acres, plans for Viva grew exponentially as Station quietly bought or obtained rights to develop the 110-acre site, currently home to squat, nondescript warehouses and retail stores.

“It started to build upon itself, like putting together pieces of a puzzle,” Lorenzo Fertitta said.

In its expanded form, Viva will establish the Fertittas as “Strip players” and cement their legacy as casino entrepreneurs beyond their success in the neighborhood casino business — a track record long admired by their counterparts on the Strip.

“In a lot of ways, it will change the face of the company,” Lorenzo Fertitta said.

The complex will cater to tourists while also trying to lure locals, as all Strip casinos do.

The goal will be to try to strike a balance in which both tourists and locals feel comfortable, Frank Fertitta said. Other properties have attempted the same balance, with varying degrees of success. When built, Viva will top Red Rock Resort as the most expensive off-strip casino complex in history. Some Wall Street analysts said Red Rock’s $1 billion price tag was too rich for a mostly neighborhood crowd of gamblers. But the Fertittas have been happy with their long-term investment in Red Rock.

Viva, likewise, is a long-term bet on Las Vegas that they believe will help the market grow, as have previous resorts.

Viva seems certain to draw criticism from skeptics who say Las Vegas is building beyond its market. The same was said at the announcement of CityCenter and later projects, including Boyd Gaming Corp.’s $5 billion Echelon complex.

But the Fertittas, who have seen business cycles come and go, say Las Vegas will ultimately withstand the test of time.

“It’s very hard to predict cycles in the short run and know what is going to happen in the next six months or the next year,” Frank Fertitta said. “Where we’ve always placed our bets is over a five- to 10-year time horizon. When you have a solid strategy and look at the supply-demand dynamics in the Las Vegas Valley, the fact is, the population is going to continue to grow over the next 10 years and there are limited places to build locals casinos,” he said. “Ours is really a strategic plan over the long run (rather) than trying to time the market in the short run.”

Station has arguably been one of the hardest hit by the economic downturn among Las Vegas gaming companies because of its disproportionate effect on housing — an industry that to some extent drives locals casino growth. Locals operators say business has been weak because customers, though still patronizing their neighborhood casinos, are spending less money.

But the Fertittas are looking a year to two years ahead. After Aliante Station opens in North Las Vegas this year, Station hopes to break ground on Durango Station, at Durango Drive and the Las Vegas Beltway, early next year.

The company ultimately plans to build on hundreds of undeveloped acres it owns across the Las Vegas Valley, following a similar, if not more aggressive, timetable than it has followed in the past, they said. Station’s vast landholdings give it a strong market position that will only improve as Las Vegas continues to grow, the Fertittas say.

Discussion: 9 comments so far…

  1. By jenna
    4/23/08 at 3:07 a.m.
    Suggest removal

    "When built, Viva will top Red Rock Resort as the most expensive casino complex in history. "

    What about Bellagio, Venetian, Mandalay, Wynn, City Center, Encore, Palazzo, Encore, Borgata, Venetian Macau and many others?

  2. By carpetbagger
    4/23/08 at 9:52 a.m.
    Suggest removal

    re: Jenna -

    "When built, Viva will top Red Rock Resort as the most expensive OFF-STRIP casino complex in history."

    Borgata and Venetian Macau are a bit too off-Strip to be included...

  3. By monkeyneck
    4/23/08 at 2:19 p.m.
    Suggest removal

    It says it's a $10 billion project which is significantly more than any casino resort ever. At least $1 billion more than City Center's expected $8-$9 billion tag.

  4. By jenna
    4/24/08 at 6:09 a.m.
    Suggest removal

    It didn't say "off-strip"when I read it. It was wrong, but then changed.

  5. By LV
    4/24/08 at 9:47 p.m.
    Suggest removal

    Where are all the lovely ladies and street pharmacists going to go when Trop and 15 in revitalized? Does anyone care besides me?

  6. By Lenny_V
    4/25/08 at 1:02 a.m.
    Suggest removal

    I hope the whole thing goes bust, the greed is out of control.

  7. By gmkhawaii
    4/25/08 at 2:01 a.m.
    Suggest removal

    as much as my wife and I LOVE Las Vegas, I hope the continuing construction of multi-billion dollar casino complex's go BUST!!! if you spend a billion(greed)you've got to charge a billion(greed)more to make your money back! everyone knows how the casino hates winners!!(greed) oh its okay if you win a major jackpot off the slots since the manufactor shells out the big prize money, but try to have a winning streak at the tables! they act like you're commiting a felony against them......what a bunch of hippocrites! come into our casino and have a great time! just as long you leave without the money you came in with! haha!! EVERY business has a saturation point, WALMART,MICROSOFT,MCDONALDS ETC...there IS a limit to everything.....just got an email offer from the MIRAGE for $49.00 a night for next week Sun-Thur!! can you believe it! the MIRAGE!!! Once the Flagship/model of all new major casino hotels in Las Vegas. Owners, just keep on building, I cant wait to see the day when MGM, Ceasars, Mandalay Bay and others, ALL offer $49.00 a night rates. that would be justice for the GREEDY corporations that own these casinos.

  8. By RickJames
    4/26/08 at 4:34 p.m.
    Suggest removal

    lovely ladies and street pharmacists will all be pushed west towards the Orleans

  9. By avatar
    4/30/08 at 11:57 p.m.
    Suggest removal

    Interesting times ahead for Las Vegas.
    Fuel prices forcing many to stay close to home.
    US dollar doesn't have a great deal of value.
    Home equity is not growing.
    Credit card debt is overwhelming many households.
    Big name entertainers like Medler and Manilow won't live forever- who will bring in the crowds in the future?
    Macau is open and ready for Asian tourists.
    Airlines are cutting flights and capacity due to fuel costs.
    Teachers want to tax the big casino's.
    Where is the "new water" from central Nevada? Pipe dreams!!
    Atlantic City has banned smoking - could this happen to Vegas hotels?
    10 Billion dollars is a lot of money for a gambling hall and hotel!!
    Viva sounds like Meadow Gold milk, not a high-end hotel. Put a new name on this place before you open the doors- please.

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