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twitterHarrah’s plans new ‘street’ of bars, eateries near Strip
Steve Marcus
Harrah’s Entertainment decided more than two years ago not to implode any of its resorts on the east side of the Strip.
Sunday, July 12, 2009 | 2 a.m.
An artist's rendering, looking east from Caesars Palace, shows the planned corridor between O'Sheas and the Flamingo.
Sun Coverage
More than two years ago, executives at Harrah’s Entertainment made a momentous decision: They wouldn’t tear down any of their Las Vegas casinos to build new ones.
They didn’t announce their intentions at the time. The economy was still humming, and with tourism booming and new resort construction expected by consumers and demanded by investors, the decision was something of a dirty secret.
Their plan was nothing less than a rejection of the implosion-punctuated business model that has defined Las Vegas for decades. In place of a new casino resort, Harrah’s came up with an idea that was more Bourbon Street than Las Vegas Boulevard.
Internally dubbed “Project Link,” the plan calls for a collection of about 20 restaurants and bars to be built along a winding corridor between the company’s O’Sheas and Flamingo casinos, on the east side of the Strip.
With a mix of “eclectic” and “mostly casual” restaurants and bars opening to the street, it’s an attempt to create the kind of entertainment district that has developed organically in cities such as Los Angeles, Memphis and New Orleans yet is lacking on the Strip, with its enclosed, casino-centric zones.
The company declined to discuss the project’s cost.
To fine-tune the idea, Greg Miller, Harrah’s senior vice president of resort development, spent months studying pedestrian environments across the country, analyzing Strip traffic patterns and surveying customers.
“Another casino didn’t make a lot of sense,” said Miller, who developed theme parks for Universal Studios before joining Harrah’s five years ago. “It’s tough to make that math work.”
•••
The Project Link strategy is perhaps fitting for a company that’s known more for the marketing prowess of its techno-geeks than its resort building. It also appears prescient in this era of fiscal conservatism, with investors soured on the Strip’s building boom.
Construction costs are high in Las Vegas, home of some of the world’s largest and most complex structures. Harrah’s executives, who assembled thousands of designs for future Las Vegas resorts before settling on Project Link, recognized that those costs could support only a high-end casino resort, which can command higher profit margins from marked-up amenities than a mid-market or low-budget hotel. Opening a new Harrah’s resort would have potentially cannibalized business from Caesars Palace, the company’s flagship.
With a finite number of wealthy Las Vegas visitors, and competition from luxury resorts open or under construction, returns on high-end resorts aren’t what they once were. Tearing down money-making properties to build resorts that would likely generate a poor return didn’t make economic sense — then, now and for the foreseeable future, Harrah’s executives concluded.
•••
Project Link would allow the company’s money-making casinos on each side to continue operating as it builds the pedestrian corridor of multi-story, tenant-occupied buildings stretching back at least a block to the monorail line behind the properties.
At the end of the 1,000-foot pedestrian walkway, Harrah’s wants to build a giant Ferris wheel similar to the London Eye and the Singapore Flyer. The wheel would tower about 600 feet, offering sweeping views, plush interiors and a slow ride.
Analysts said the concept makes sense — especially for a heavily indebted company that does not have experience building major resorts and caters primarily to middle-income Americans.
“The idea of building big resorts is dead — for now,” said Dennis Forst, a stock analyst with KeyBanc Capital Markets.
“Investors want to know how they’re going to pay down debt and shore up their balance sheet. They don’t want to hear about spending a billion dollars on a new venture,” he said, given the financial troubles of Strip resorts now under construction.
Jeff Voyles, an associate professor of casino management at UNLV and a partner with Globalysis, a gaming consulting company, said Las Vegas has long needed a Strip-fronting dining district like the one Harrah’s is proposing, but gaming companies have been reluctant to invest in untried concepts.
“This is a copycat industry. It took the Forum Shops for others to build malls and Sheldon Adelson for others to build major convention space,” Voyles said. “The whole concept of Vegas, for a long time, was to drive people into the casino.
“There’s a tremendous amount of foot traffic in front of the Harrah’s properties. This is just like getting people to stay longer at your blackjack game — if you can get people to stay a little longer in your bars, you get them to buy a couple more drinks.”
•••
The project is contingent on the company obtaining new financing — a near impossibility today considering Harrah’s recession-ravaged balance sheet.
Struggling under more than $20 billion in debt taken on when private equity firms Apollo Management and Texas Pacific Group acquired Harrah’s in January 2008, the company has urged bondholders to swap their notes for new ones worth less money and with extended maturity dates, buying the company more time to survive the recession.
It may be a couple of years before Harrah’s can finance even a relatively inexpensive project — unless the company finds equity partners, said Dennis Farrell, a bond analyst with Wells Fargo Securities.
Even so, the attempt to capture pedestrian traffic that might otherwise walk on by is a wise move in light of this year’s arrival of MGM Mirage’s CityCenter, which is expected to take business from other properties and may create a new focal point for the Strip, he said.
The company has delayed the opening of its Octavius tower at Caesars Palace, with more than 600 rooms, until the economy, and hotel demand, improves.
Harrah’s is still moving ahead with a previously planned expansion at Caesars Palace, including a 110,000 square-foot addition to its convention center, luxury pool-facing villas and an expanded Garden of the Gods pool area that will open this month and next.
Like Project Link, these add-ons are part of the strategy to enhance existing buildings rather than sacrifice profit by tearing them down.
•••
Industry watchers widely speculated that Harrah’s growth and expansion plans would slow under private ownership.
After private equity firms acquired Harrah’s, the company maintained that bottom-line-oriented owners wouldn’t dictate the company’s development plans. Miller said the implosion-free strategy, along with plans for Project Link, were under way before Apollo and TPG entered the picture.
Miller’s development team, which meets weekly to hash out ideas and fine-tune designs, spent years on several designs that ended up on the scrap heap. Among their ideas were a high-tech resort featuring interactive video walls, handheld concierge devices and spaceship-like pods to transport guests between floors, and a megaresort anchored by an indoor-outdoor water park.
The whimsical designs, a departure from the sleek, themeless skyscrapers now taking shape on the Strip, excited Harrah’s executives but would not have made much money, they concluded after an exhaustive cost analysis.
Voyles, the casino management professor, said a future without implosions isn’t a bad thing for Las Vegas.
“In the past it was easier to do that because money was cheap and cash was flowing from other properties,” he said. “But Las Vegas can still create one-of-a-kind attractions without leveling things first.”
Discussion: 31 comments so far…
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There's a strategy, feed em' and liquor em' up so they can ride the Ferris Wheel.
Hey, look out below!.
please.
this will be a starbucks, panda express, burger king food court.
Harrahs cannot afford to pay its debt and is laying off employees. However, they do have room for expansion and new projects that will give Gary Loveman reason to want a bigger bonus.
Great! More fast food!
Harrah's is the corporate cancer that is killing Las Vegas. Hands down this company sucks. Please boycott their properties so they may be made to sell off their properties to independents the likes of Phil Ruffin. Just look how they screwed over those WSOP players last week. This company is no damn good! They could care less about the consumer and the customer experience. They are part of the problem why people aren't coming to Vegas.
This is a great idea. A place where people can relax a bit. Renovation and renewal of existing infrastructure is the way to go.
Project Stink
This article gives too much kudos to the Harrahs executives for coming up with Project Link "after an exhaustive cost analysis". This sounds like a pathetic plea to Harrahs investors and a sad excuse to Vegas visitors like myself for why Harrahs properties are such a dump.
First of all Harrahs does not have the will or resources to significantly improve any of their strip properties. Improvement to one location would totally cannabalize business from their other properties. But that is what happens when you own half of the casinos on the Strip. Very slippery slope for Harrahs executives to raise expectations for customers and investors, because then they would have to improve all their locations.
Please Harrahs stop acting like your doing Vegas right with your "implosion-free strategy".
Two ideas that might help are: finding a way to get rid of the smut peddlers outside your casinos and getting rid of that swap meet between Harrahs and Imperial Palace. And if you guys aren't going to throw some lipstick on your pigs, than let someone else do it, instead of losing more money by throwing some patio furniture in that alley of yours.
P.S. I am from Los Angeles and there ain't nothing "organic" about it.
Yea thats right, Keep finding new ways to stop all the players from ever coming to this town ever again. Just spend all your time trying to bring all the people that you can find who like coming to las vegas for 3 days and 2 nights on a budget of under $300.00 And thats even if they have that much. I WILL SAY THIS HARRAHS REALLY KNOWS HOW TO PUT THE RED CARPET OUT TO THE CHEAP CROWD. HELL WHATS NEXT A STATE INCOME TAX TO MAKE UP FOR THE SHORT FALL IN REVENUE! PS. ABOUT THAT 600 FT FERRIS WHEEL THERE'S NO WAY IN HELL THAT THE FAA IS GOING TO ALLOW THAT SO CLOSE TO THE AIRPORT/ AND THATS RIGHT AFTER THE CLARK COUNTY FIRE DEPARTMENT SAYS NO AS WELL. ALSO I CAN JUST SEE ONE OF THOSE TOUR HELICOPTERS FLYING RIGHT INTO IT. HARRAHS IS JUST DOWN RIGHT STUPID.
As a constant customer of Bally's, with my last vist this past July 4th weekend, dating back to when it was the original MGM Grand, I have seen Harrah's drive Ballys and now Paris into the ground starting before the current poor economic downturn in Las Vegas and in the U.S.
The sad thing is, I am in Dallas Texas and I have been trying to purchase Bally's and Paris from Harrah's, even before they went private, because I knew from working with other big corporations what happens to customer service, taking care of company employee's and to employee loyaty to the corporation when corporations have over extended themselves like Harrah has and still is.
Just stop already!!! What, more bars for street hooks and cops to chase each other around in??? We need more bars like we need more strip clubs!!! Gillespie will need more cops I imagine, and who'll pay for that?
When the headline has to put 'street' in quotes, it's not all that organic.
Say what you want, but there will be people that patronize the area nonetheless. Luckily, none of the locals :-)
Pearlsnap, there are so many casinos here that can use an owner that still cares about the people that work for them. Keep trying, I'll support it!!!
Bring back the classy style of the fifties!
I'm surprised by the negative reaction. This sounds like an interesting idea, but maybe in the hands of a better company? The complete lack of any kind of master plan for the LV Strip amazes me. Why no monorail down the middle, or cars underneath, and make the whole strip like this. Yes, you can debate high-rollers vs. mom and pops, but isn't like only 10% of the visitors who spend 90% of the money. I think it is only common sense that the strip needs to evolve into a more pedestrian friendly, sight-seer friendly place (including cleaning up the rabble). Take the sprucing up of the "Welcome to Las Vegas" sign as a positive example.
This concept is a good idea and will fill the void that exists now. You can walk from MGM to the Flamingo and there are virtually no places to just go and have a decent priced meal or frosty beverage without the bait and switch tourist traps. Jimmy Buffet's and the Harley Cafe are perfect examples... If not for the Europeans and Canadians - and their homeland pre-conditioning to pay $7 for a Corona and $14 bucks for a Cheeseburger, these gypsy-carnival traps would be bankrupt alongside the empty casinos.
Simple Rules: 1. Good simple food 2.Reasonably priced 3.Skip the cheesy gimmicks and gaudy themes of American Culture - made in China.
THIS WILL ONLY WORK IF ITS PRICED FOR THE COMMON MAN IF THEY WANT TO BE GREEDY AND CHARGE $10 for a drink then this will fail they will put a roof on it and have outdoor slots and games
"Street" of bars -- what a concept. Good thing downtown Fremont Street experience thought of it first.
Saturday night, my wife & I decided to go downtown to the Fremont Street Experience. We were there to see the neon signs the city has placed up around there.
To my surprise, it was mobbed. Barely enough room to walk through at some spots. But, we did walk from one end back to the other.
First, we had steak dinners at Binion's coffee house. Total bill: $42 dollars with tip. As we were walking, we stopped a couple of times to get drinks at their "street" bars -- $5 each (plus a $1 tip).
Unfortunately, we aren't gambling because of the lack of funds coming in.
But we did walk through Binions, Four Queens, Fremont, and Golden Nugget. They were crowded with people -- and not just blue hairs. We had our last drink of the night at the Golden Nugget H20 pool bar. Again two drinks $15 dollars including tip. It was worth it because of the shark tank.
So, why would bargain hunters go to a "Strip" "Street" bar when it was so cheap downtown. And, the music in the street was free.
Anything affordable and mid priced on the strip will work these days. This, suprisingly enough, is a good idea.
I just got back from my stay at the M....all I can say is "the best"....I'm a low roller when it comes to gaming and I never paid for a meal..or a drink...the place is beautful and I still have a 30 dollar drink card.......I won enough to keep me playing all week end....all the staff were ....top notch.....Harras who?? never again.... ever... and I will make it my mission in life to make sure know I know goes to any of there properties.....
In order to pay for these improvements Harrahs will now lower the payouts for Blackjack from 6 to 5 down to even money. They will lower payouts on all video poker machines and require all customers to play more hours for less Total Rewards points. All customers will now be required to cycle ten million dollars through their slots for each """free""" buffet. They have RUINED-RUINED gambling in Las Vegas.
Good Idea if Affordable..Frankly I have found the comps at Harrahs Properties are as good as any other company on the Strip..Tight Slots are the rule on the strip not the exception...
I agree the idea may be good for the strip, but as an employee at the flamingo it isn't good for us. Gary Loveman took over he gave himself a 40 million bonus and ours was taken away. He took away our getting any cost of living raise, cut our benifits took away the food at our EDR and now all we get is crap to eat, I would love for him to show up without letting anyone know he is and try to eat what they force us to eat. More and more are bring their own meals now. Let some of the projects go until you can make good on the employees that you already have!
I agree with purplebunny, Gary Loveman has taken everything possible from his employees and therefore the communities they live in so he can give himself a 40 million dollar bonus. And on top of this the upper managment at Harrahs is punishing its employees for the decline in gaming revenue. The unfortunate part of Harrahs incestual culture is that they wont listen to people who are in touch with what is actually taking place in their properties, instead the turn to their trusted circle of yes men for reassurance that they are making sound businesss decisions. The gaming industry stopped caring about Las Vegas long ago....
I live in St. Louis and played at Harrah's here. I'm a 7 Star player, so I get free rooms at harrah's properties. My last few visits to Vegas were awful. I would not stay at another property, even for the free rooms. I don't have any idea what is going on with Harrah's, but all of the hotels except Ceasar's are dumps now. Even in a small market like St. Louis, Harrah's is the worse casino here. Thank God Pinnacle & Ameristar are here. There is nothing that Harrah's could do to make me play there again.
All comments posted could be relevant to every casino. Once Corporate America took over the gaming industry, the bean counters have changed the ambience of the casino. When the mob controled the casinos, the atmosphere was one of 'stick around and enjoy our food and lounge shows.' Now the mantra is 'we want your money and we want it fast so we can make room for the next suckers.'
@dynamo
I was thinking about Fremont Street, too. How arrogant of Harrah's to mention that nobody in Las Vegas has thought of this before. No wonder the company is failing. I would be bullish on this idea if it was anybody else doing it. Harrah's will make it flounder.
It's not a particularly inspired idea, but I think it will make money for them. There is a several million people that head towards Fremont Street to see the overhead canopy. A lot of people like O'Shea's frat party atmosphere.
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If you create something like that on the strip, they should be able to steal some of Fremont Street's business. Especially if they create some kind of video display to rival the one above Fremont.
-----------------
Harrah's, Flamingo, Imperial Palace each pull in more than $72 million a year in gaming revenue. They have over 9000 rooms on that block (more than Fremont Street). It will do them some good to consolidate that market.
The Ferris Wheel is an appropriate centerpiece for Harrah's whose total operation has become nothing more than a glitzy carnival midway to lure the unsuspecting Vegas tourist into a trap to be fleeced of his cash. From some of the poorest gaming, not only in Las Vegas but the world e.g. 6 to 5 blackjack, absurd "party pit" games and every conceivable high house percentage "carney game" that comes down the road, it is no wonder that Vegas is getting a reputation as a town that "can't be beat", literrally. This entire town, not only Harrah's, had better get back to Benny Binion's basics,
--"good food cheap, good whiskey cheap and a good gamble" before the people just stop coming. Bill Harrah is probably rolling over in his grave.
Idea could be good, location sucks. Do they really think people are going to walk all the way to the back of the Flamingo Parking Garage for this?