Cosmopolitan CEO plans to steal customers from Strip competitors

By Liz Benston

Sunday, Aug. 22, 2010 | 2 a.m.

John Unwin might have one of the hardest jobs in Las Vegas.

The CEO of the soon-to-open Cosmopolitan must convince skeptical and recession-weary consumers that his ritzy, $3.9 billion resort offers something different from the myriad attractions built during the most expensive and ambitious growth spurt in local history.

Unwin won’t have an existing database of casino customers or a well-established corporate structure to rely on when the 2,995-room resort opens Dec. 15. Hired a year ago by the bank that foreclosed on the under-construction property, Unwin inherited a two-tower skyscraper conceived by a New York condominium developer with no casino experience.

Yet Unwin, who most recently served as general manager of Caesars Palace, is in high spirits about his risky career move to the startup company.

“This is hard work, no question about it,” Unwin said during a brief respite last week in the Cosmopolitan’s job center, a tastefully decorated cluster of office cubicles and lounge space where the resort is busy hiring 5,000 employees.

Seeing opportunity amid challenge

In an industry known for domineering, defensive personalities and scripted jargon, Unwin has a cheerful, informal manner.

He sounds as if he is actually having fun, quite a feat in a town knocked sideways by record unemployment and downsized workplaces.

“I’ve been practicing for this my entire career,” said Unwin, who describes himself as a creative, open-minded thinker rather than a technical, by-the-numbers manager. “We’re building a resort on the 50-yard line on the Strip and bringing retail and restaurants that are new to Vegas. We’re not a product of a merger, acquisition or expansion. We’re building a new culture that’s going to be part of our genetic code ... I’m working my ass off — and loving 94.7 percent of it.”

Unwin will open the last of the growth-era resorts amid an economy struggling to support an influx of high-end properties such as Palazzo, Encore and Aria. Some observers think he is on a fool’s errand.

But where others see challenge, Unwin sees opportunity. He doesn’t optimistically think that most of the Cosmopolitan’s business will come from new Las Vegas visitors. Rather, he expects to steal customers from his Strip neighbors.

Likewise, CityCenter’s Aria, which posted an operating loss of $383.4 million for the first six months of the year, cannibalized Strip business since opening in December. Although casino operators expect business to improve next year, earnings have worsened compared with 2009, with Strip properties losing money, breaking even or earning less than they did a few years ago.

The Cosmopolitan will have many familiar features, such as eclectic boutique stores and restaurants by acclaimed chefs, a posh nightclub, multiple pools, convention space and a showroom.

Comparable in square footage with its sprawling resort neighbors, the Cosmopolitan is shoehorned onto a 9-acre rectangle at Harmon Avenue and Las Vegas Boulevard — a third the acreage of typical Strip resorts. The vertical footprint is nothing new to big cities yet contrasts with Las Vegas’ supersized hotels.

Elevators are a short stroll across the lobby from check-in. All but two restaurants are on the third floor. Retail shops are grouped on the second floor, accessible from an overhead walkway from Planet Hollywood across the street.

The casino capitalizes on pedestrian traffic on Las Vegas Boulevard in a way that many resorts, both old and new, do not. Four stories above the Strip, a pool and recreation area with beach volleyball and a stage for live acts are taking shape on a narrow rooftop that curves around a 50-story tower, affording guests in upper floors an expansive view of the action from their balconies.

Unwin has spent most of his career overseeing smaller, posh hotels such as the Fairmont in San Francisco, the Mondrian in Los Angeles and the Delano in Miami Beach, Fla. In New York, he worked closely with Ian Schrager, who is credited with reinvigorating the boutique hotel concept in the 1990s.

Large rooms — designed to be apartment condos, with lounging areas, mirrored hallways and beds situated next to windows that exploit dramatic views — are another selling point, Unwin said. Even bathrooms have Strip views. Most rooms will have furnished terraces ranging from 110 to 490 square feet and kitchens stocked with drinks and snacks. Premium suites range from 910 to 1,255 square feet, some featuring wine refrigerators and large kitchen counters. Three-story suites near the pool are laid out like urban lofts, with Jacuzzis on decks overlooking the Strip.

“It’s like a fantasy high-rise apartment ... in New York or Tokyo,” Unwin said.

The two-tower building had been designed as a condo-hotel but will be mostly hotel rooms owned by the property after condo purchasers backed out of their contracts in the real estate downturn.

The jury is still out on whether tourists — who appreciate Las Vegas for its over-the-top kitsch and whimsical architecture — will take to modern design. Or, for that matter, a building with attractions spread over six floors, said Bill Eadington, director of the Institute for the Study of Gambling & Commercial Gaming at UNR.

“The Vegas audience is different from the New York audience,” he said.

Its prime Strip location may not ensure survival, either, given that Planet Hollywood across the street has struggled financially, Eadington added.

“There may not be that many people to sustain all the five-star facilities in Las Vegas, even longer term,” he said.

Union Gaming Group analyst Bill Lerner said the property has lowered room rates offered through its website for the few months after opening to undercut other luxury hotels — an outcome that is expected to result in even more lost business for competitors. The effect, he said, will probably be worst for MGM Resorts International, which owns half of neighboring CityCenter and three other high-end Strip properties.

The resort’s strategy remains unchanged since it launched room reservations June 30, Unwin countered. “We will be comparably priced within the luxury resort competitive set. Specific days have been moderately adjusted both up and down based on market demands.”

New owner, new look, now hiring

Rather than mothballing the Cosmopolitan as some expected, Deutsche Bank continued construction after taking control in February 2008, signing with the contractor to guarantee completion. The bank bought it for $1 billion in a foreclosure auction in September 2008, the year it was originally scheduled to open at a cost of $1.5 billion.

Deutsche Bank hired consultants and designers who reworked room interiors and public spaces to come up with an opulent look they thought was more suited to Las Vegas and conducive to profit. They moved retail shops upstairs to accommodate a larger, ground-floor casino, for example.

With an unadvertised website containing job postings and an off-Strip employment center known to those who have sought it out, the Cosmopolitan is cycling through more than 500 applicants each day. (The resort will roll out a marketing campaign for job openings next month.) Although that’s not surprising given the local unemployment rate of 14.8 percent, many inquiries, Unwin said, are coming from managers who are gainfully, though unhappily, employed at other major Las Vegas resorts.

There’s a desire for entrepreneurialism that is lacking on the Strip, said Unwin, who claims to reject the predominant “command and control” style of management in Las Vegas.

“We’re a blank slate,” he said. “We’re going to change the marketplace by changing the workplace.”

While many corporate giants rely on thick handbooks to instill customer service standards such as standard greetings, the Cosmopolitan, he said, will encourage an unscripted approach.

“We want you to bring (your personality) to work and let you (serve customers) in your own way,” he said. “Guests know if you’re not being genuine.”

A symbol of that concept hangs on a wall in a display case: handwritten words by new hires asked to sum up their personalities in a word. They run the gamut, from “aloha” to “sexy.”

In a nearby waiting area, job applicants seated in couches that face one another begin a casual conversation. It’s a strategic move to make people feel comfortable before interviews. They will have at least two before they get the nod.

“This is a once-in-a-lifetime opportunity to create a new workplace,” said Chief Strategy Officer Sherry Harris, who led human resources for Paramount Pictures and MGM/United Artists, with the primary task of nurturing employee creativity. She later worked with Unwin during his days at Ian Schrager’s hotel company.

A hotel isn’t all that different from a Hollywood back lot, said Harris, whose former employer churned out such hits as “Top Gun,” “Cheers” and “Family Ties.”

That kind of success may be impossible in today’s economy, but Harris’ living room approach, on this particular morning, is working.

“There are things you can’t control,” Unwin said. “We’re keeping everyone focused on what they can do to make a difference.”