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December 22, 2014

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Plaza gets Strip stuff at downtown prices

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Justin M. Bowen

The Plaza Hotel & Casino recently announced that it would be closing its hotel and portions of its casino to make much-needed repairs and renovations to all guestrooms and hallways.

Click to enlarge photo

The Fontainebleau Resort on the north end of the Las Vegas Strip is shown under construction in April.

Map of Plaza Hotel and Casino

Plaza Hotel and Casino

1 Main Street, Las Vegas

In the business world, one person’s loss is often another’s gain. But in recession-battered Las Vegas, a fortuitous sale is benefiting both parties by helping an investor boost his bottom line while helping another get a leg up on the competition.

The Plaza in downtown Las Vegas, an icon known for vintage lounge acts and bit parts in movies such as “Casino” and “The Mexican,” will get a 21st-century makeover aided by the Fontainebleau, the unfinished Strip resort.

That’s because the Plaza, which begins a yearlong renovation Nov. 1, recently acquired high-end furniture intended for, yet never used by, the Fontainebleau.

It’s a recessionary twist on the usual hand-me-downs sold at auction by Las Vegas casinos that have been imploded or remodeled. Dated or worn furniture and fixtures have ended up in older properties or Third World hotels, where a well-used sink or chair from a Las Vegas resort is considered a step up.

When the Plaza’s 1,037 hotel rooms reopen in September 2011, they will feature top-flight wallpaper, carpet, tile, sofas, chairs, desks, dressers, side tables and bed frames courtesy of the Fontainebleau, the stalled luxury property with an estimated $3.5 billion price tag that was designed to compete against Las Vegas’ swankiest resorts.

The Plaza had already planned to remodel the rooms when its contractor heard the décor was for sale.

“We already had budget and a plan so it was easy for us to take items we needed (to fit) the budget,” said Tony Santo, the Plaza’s new manager and a former Harrah’s Entertainment executive.

The contemporary appointments represent a design leap for the Plaza, which attracts customers who appreciate its bargain prices and homey atmosphere, including worn, motellike rooms. Change was necessary, however, to revitalize the 39-year-old property overlooking historic Fremont Street.

The furnishings are of higher quality than the Plaza expected to buy for the price, Santo said.

As president and CEO of the company that runs the Plaza for landlord Tamares Real Estate, Santo is overseeing a $20 million remodeling project that will include new slot machines, a refurbished facade, remodeled public areas and as-yet-undisclosed attractions. Parts of the property will remain open while rooms are out of service, including the slot floor, showroom and Firefly restaurant.

Santo wouldn’t say how much the Plaza paid for the furnishings.

Like the rest of downtown, the Plaza has been hard hit by the tourism downturn recession.

Downtown casinos lost business to the Strip during the boom, with gambling revenue relatively flat while the Strip and many of Las Vegas’ suburban casinos flourished. The trend worsened in the recession as luxury properties discounted rooms and other attractions.

As part of the remodeling, the Plaza will be renamed the Union Plaza — reverting to its name from when it was built on the site of the historic Union Pacific rail depot.

While the Plaza closes its hotel tower for a year to spruce up, the Fontainebleau, a futuristic property inspired by its namesake hotel in Miami Beach, Fla., may sit empty for years.

The 63-story Fontainebleau became a poster child of the recession when lenders pulled the plug on financing in 2009, forcing the unfinished project to seek bankruptcy protection. It’s thought to be the largest and most expensive unfinished building in the U.S.

Much of its décor had been sitting in storage at the time of the bankruptcy filing in June 2009, a few months before its anticipated opening date.

Investor Carl Icahn acquired the property and related assets at a foreclosure auction in January and has reported a paper profit of about $50 million given the property’s estimated market value of about $200 million.

Icahn’s company in August disclosed that the building will sit idle until the economy improves — a prudent move at a time when tourism is suffering.

There’s a price for doing nothing, as some experts say it will cost the billionaire investor millions of dollars each year for insurance, real estate taxes and other maintenance expenses to ensure the building doesn’t deteriorate and construction can resume. It’s unknown what furnishings will replace those that were sold, although many expected Icahn to sell off Fontainebleau inventory that wasn’t installed in the building, rather than warehousing supplies for years.

The money-losing Plaza may also benefit by embarking on a major renovation at a difficult time — as remodeling efforts typically hurt casino revenue by disrupting the flow of customers and keeping rooms out of service.

Customers can expect to pay more for the remodeled rooms in return for the experience of staying at a higher-quality hotel, Santo said.

That may be a modest goal, as the Control Board reported $51.63 as the average daily room rate for downtown’s major casinos in fiscal year 2009.

Santo is optimistic about the Plaza’s new look.

“The goal is to drive more business to the Plaza,” he said.

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  1. Would be great to see the "New Plaza" revive. However, together with this remodelling process I take it they will also replace the last good (loose) slots and bring in more tight tenny slots with multi lines. I get the feeling that good videopoker in Las Vegas is slowly coming to an end now....

    From Switzerland

  2. This is good news for Downtown Las Vegas. It shows that the owners are serious about revamping the Plaza. The south tower rooms especially will be very desirable once renovated. I stayed there a couple of times around 2003 in south tower rooms ending in 54 (1854 for example), and the room layout was the largest and most lavish that I have ever stayed in.
    I expect Downtown to recover earlier than the Strip because the bang for the buck for the tourist Downtown is so huge.

  3. I have personally seen one of these fully remodeled rooms at the Plaza, and it is fantastic. This is a great step for Fremont Street.

  4. Being in the corporate Travel world, this is fantastic news. especially twice a year when the Las Vegas Market is in town. This will give my clients new rooms at outstanding rates. Hurry Up & open!

  5. I regards to some comments above, I'll never understand those who think Las Vegas should target the consumer who lacks enough disposable income to visit and spend. How and why did the myth of a dirt-cheap Vegas vacation turn into the one and only way we can attract guests? Every proponent of resurrecting the myth of "cheap Vegas" conveniently forgets that the city was not built on winners or those who could not afford to come here and enjoy themselves.

    In those purported "good old days" you could stay for cheap and eat for cheap and drink for free ... as long as you were gambling, and losing, enough to cover the costs of doing business and making a profit. Not everyone who comes here gambles like they used to; more folks are visiting for entertainment, food and shopping than ever. When the costs of doing business starts to outstrip the win drop, then something has to give. The flip side? The quality of the accommodations and the food today is light years beyond what it was in the cheapo-Vegas days.

    Anyone who hasn't been downtown in years (decades?) may be surprised to know that the El Cortez already has a restaurant (The Flame) where a couple can spend $120 on a complete, nice dinner with cocktails. To those who recall the El Cortez's $2.99 Prime Rib special of 30 years ago, this doesn't seem like a bargain. But I've eaten at most of the top restaurants in Vegas, and while The Flame cannot compete with the atmosphere and style of the newer places, the food was equal to, if not better than, many of them and at roughly half the price. You definitely get what you pay for, and the trade-off comes at the expense of a much less fancy room and much less fancy guests, but the food is comparable.

    We can't make everyone happy, so if Downtown wants to provide rooms, food and bars similar to Strip in quality, but with a little less pomp and circumstance and a little more Vegas Authenticity, for 50-60% of the Strip cost, then that sounds smart to me.

  6. I took my late father there on opening week.
    He had a great time. I returned only once to see what happened to it. How did the health department allow such a hole to exist? It should have been a landmark establishment. What went wrong?

  7. I always stay at the Nugget or El Cortez downtown, but now I may be willing to give the Plaza a chance. Good for Tamares - this is a good start on saving their downtown properties.