Las Vegas Sun

October 24, 2014

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BIZ BUZZ:

Jeff Simpson explains why he doesn’t think Signature towers buyers will win in court

Last week I met six of the folks who are suing MGM Mirage because they believe they were misled about their purchase of condo-hotel units at the Signature towers at MGM Grand.

They thought the condo sales staff had drastically overstated how much revenue they’d collect from their share of income when their units were rented.

The contracts the unit buyers signed explicitly noted that the sellers did not make any promises about possible rental income.

But the people I talked to, part of the group of more than 40 who are suing (out of more than 1,600 unit buyers), said they figured the contract language must have meant something else.

They said they had signed the contracts immediately after salesmen had finished telling them about comparable hotel rooms in Las Vegas that had occupancy rates well above 90 percent and commanded rates of $300 or more a night.

The buyers were led to believe, they said, that their share of the rental income they split with MGM Grand would be enough to cover all or most of the cost of their mortgage payments on the units, which sold for $500,000 or more.

It didn’t work out that way, and the unhappy buyers say that their units are rarely being rented and, when they are, it’s for far less than they were assured comparable hotel rooms go for.

I have a lot of sympathy for these frustrated buyers, but I think it is unlikely they’ll win their lawsuit, given the explicit language in the sales contracts and our Nevada courts’ tendency to back business owners over consumers.

I don’t know whether resorts’ sales staffs are hyping the prospects of rental income for the condo-hotel units. And if they are, I don’t know whether the resorts are aware of it.

My advice: Resorts should make every effort to make sure their sales staffs market the hotel-condo units as a condominium purchase, not as a possible source of income.

And buyers should consider their purchases as a place to live or occasionally stay or as an investment, considering any possible rental income to be gravy.

•••

While I’m discussing sales staffs associated with Strip resorts, there’s another version I’d like to see displaced entirely.

I’ve long thought that the time-share hucksters who set up camp in many of our Strip casinos were a relic of an older Las Vegas, before opulent resorts began displacing the funky, boisterous Stripfronts.

Those sales people, offering gullible tourists a couple of show tickets in exchange for agreeing to be subjected to at least a few hours of high-pressure sales pitches, are a blight on the new Las Vegas.

If I ran a resort, and if I cared about my customers, I wouldn’t allow some time-share sales booth to pollute my casino or lobby floor and take advantage of my customers.

It’s bad for a resort’s brand to be connected with high-pressure sales.

•••

I won’t shed any tears about Friday’s closing of Nevada Palace.

It wasn’t close to being the nicest casino on Boulder Highway, and I’ve only been in the place a couple of times over the past nine years.

But it had its loyal customers, so I salute the Nevada Palace workers who kept their loyal customers coming back.

The closure continues a bad streak for casinos with the word “Nevada” in their names.

Downtown’s Hotel Nevada still sits closed on Main Street and Nevada Landing was closed and demolished last year in Jean.

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