One of the 2 towers that make up the Cosmopolitan Las Vegas

It’s been a very interesting journey for the Cosmopolitan – starting back in 2005 with the announcement that it would be managed by Hyatt Hotels, then after the original foreclosure and take over by Deutsche Bank, it was heavily rumored to be turned into a W Hotel.. Then after Ross Klein left Starwood to join Hilton Hotels – it was an open secret that the Cosmopolitan would end up being one of the first Denizen hotels, and well – we all know where that went.

It’s a huge win for Marriott, a big loss for Hilton – who was originally hoping to come into the marketplace swinging with the Cosmopolitan as a Flagship Denizen property, and Starwood still doesn’t have a presence in Vegas for its W Hotel brand, a location which would be perfect for the W.

This is a huge step for Marriott because it gives them a huge appearance front and center on the Vegas Strip – up until now Marriott had no boutique or architecturally significant properties in Vegas. It’s also going to assure that the property will be managed by an experienced group and will be frequented by many people who are just looking for a place to utilize their Marriott Rewards points.

I’m really curious to see how the Ritz-Carlton tie in will appear, I have a feeling that one of the two towers may be catered toward Ritz-Carlton guests, be a bit more high end, but we’ll see how that ends up playing out as time goes on.

andrew@alconic-inc.com

Supposedly the deal that Trump is looking for would swap the land under the property and the partner to put up the money for renovations and an addition adding about 600 more rooms to the property.

The type of partners Trump Entertainment Resorts is looking for: Planet Hollywood or Hard Rock Hotel

Both are popular brands that have wanted to open a Atlantic City Casino outpost for awhile now (both have restaurants in AC, but not an hotel resort based on the brands)

This could be a good sign that Trump is finally getting serious about Atlantic City and putting his money where is mouth is; you know he’s trying to really make something work if hes willing to share the name of his property (or even possibly replace it) with another brand name.

Bravo to Donald Trump finally toning down his ego.

andrew@alconic-inc.com

My friends over at VegasChatter seem to think this could be the first Barry Sternlicht-ing of Vegas since the days he used to operate CaesarsWorld in the 90s. I’m not so convinced.

Sure, Sternlicht and Starwood have been involved with trying to take over the Riveria for years now.. Just do a Google search for Rig Acquisitions Sternlicht and you’ll see what I mean. But there is something else that Sternlicht sees in the property – it can’t be the building, its small compared to the rest of the Vegas casinos, its not in the ‘heart’ of the Strip – in fact its almost in no-man’s land compared to CityCenter and other ‘it’ casinos; its surrounded by the unfinished shells of Echelon Place & the Fontainebleau and casinos of yesteryear like the Las Vegas Hilton & Circus Circus.

It could very well be that Sternlicht sees the potential in the site come, 10 – 20 years when projects like Echelons Place or The Plaza ever get off the ground (if they ever do that is!)

Or.

Sternlicht could just see a good deal.. after all, the Riveria has been on its last legs for a few years now – before any economic downturn even started, and buying a mortgage for 50 cents on the dollar, well.. that’s just a good investment, and that’s really what Starwood Capital is all about.

andrew@alconic-inc.com

To amend and restate the Certificate of Incorporation of the Company to change the name of the Company from “MGM MIRAGE” to “MGM Resorts International” 

This change, if approved (and it most likely will) will take effect immediately – in fact MGM Mirage already has the new domain name up and running – just redirecting to their current site. (http://www.mgmresortsinternational.com) 

As companies grow and evolve over the years – its sometimes necessary for them to change their name to better reflect the direction they are heading in. Some examples which come to mind are Apple Computer changing to Apple, Inc. in January 2007, or who could forget Radio Shack’s corporate name from 1963 until May 2000 - Tandy Corporation. 

There has been some speculation that the reason MGM is dropping the Mirage name is to distance itself from Steve Wynn, who sold Mirage Resorts to MGM Grand, but that sounds too much like a conspiracy theory when it looks like all MGM is trying to do is better reflect their growing stable of businesses and international footprint. 

When MGM Grand, Inc and Mirage Resorts, Inc first merged, each property contained gambling, and was located within the Continental US. Now, MGM-MIRAGE now has a number of non-gambling properties in the planning stages, and they’ve also started to franchise some of their brands through MGM-MIRAGE Hospitality. Plus their footprint now reaches beyond the shores of America from Dubai, to Vietnam and Macau. 

An example of the MGM brands being franchised can be found in the Dubai Pearl development, where they are constructing Bellagio Residences and Hotel, MGM Grand Hote and a Skyloft Hotel (based upon the Skylofts at MGM Grand in Las Vegas.) Two brands that MGM-MIRAGE Hospitality has not really provided details on is their mx and emblem brands which were mentioned in a profile done by Hotels Magazine back in 2008, but that magazine has since shut down their website. 

While I’m sure the brand recognition will help fill these hotel-only resort properties, I think it will be interesting to see how people will respond to going into an MGM Grand w/o being able to gamble. 

andrew@alconic-inc.com 

I just came across this short article from the NYPost this afternoon which says that the designers of the Long Branch Beachfront Boutique Hotel Bungalow is creating a second hotel to be called “Cabana”.

One thing the article doesnt mention is where on the Jersey Shore this second hotel will be built, but I can guess that it will be built on the same property of Bungalow within Pier Village III. The only other location I can picture it is Long Beach Island or even in Asbury Park. (That would be huge!)

Two years ago I followed the opening of Bungalow very closely – and it was a very successful hotel fulfilling a niche market right on the beach in Long Branch, hopefully Cabana will further the boutique hotel market on the Jersey Shore

andrew@alconic-inc.com

Not too many details have been released about this transaction – including the cost of the transaction – but both companies claim that Starwood will contribute both capital and deals to Hersha Hospitality Management.

Starwood’s purchase of just less than a controlling interest gives them easy access to a great hotel management company – enabling them to not have to staff up and create the SH Group as a leading management company from scratch, it also provides Hersha, a private company, with some capital as well as great management opportunities that Starwood Capital is privy to due to its own investments.

HHM specializes in select-services brands – as that makes up almost 75% of their portfolio – although in the press release its stated that HHM and Starwood will look for both select and full-service contracts. It’s interesting to note that Barry Sternlicht has said in the past that the opportunities in lodging at this point are more in the mid-scale/select services vs high-end luxury. Most of HHM’s properties are branded by the majors – IHG, Marriott, Hilton and Starwood, but lately they have been managing more independent boutique hotels, especially in New York City.

It’s hard to say exactly what this transaction means for Starwood Capital’s own SH Group, 1 Hotels & Baccarat Hotel brands, but its obvious that this will benefit both Starwood & HHM by providing each party with a service that they need. One change I can see this transaction enabling HHM to do is cast a wider net increasing their geographic service area – currently HMM manages properties encompassed within the triangle which goes from Boston, MA, to Virgina to Pennsylvania.

Today was the first day of the Annual NYU International Hospitality Industry Investment Conference, so this could be the first of a few good deals that are announced, and hopefully more details will be provided.

andrew@alconic-inc.com

I just came across a news article about a Kmart store in Iowa City, Iowa which is testing a new concept – a laundromat which will be on the side of an existing Kmart, it will be called “Kwash”

The chains intention is to draw additional shoppers and their time by offering low cost laundromat services. While their clothes are being washed, they can shop in the KMart store, or vice versa. In addition the laundromat area will have free wi-fi.

Kmart is testing the concept in Iowa City, Iowa because they feel the demographics are right there for this type of service, and its hoped that more people will shop Kmart because of the service. It’s interesting that Kmart is pursuing this because the type of demographic which utilizes laundromats is typically on the lower end of the income spectrum.

Its no secret that Kmart is quickly losing the battle of the discount stores, with WalMart & Target putting more and more money into their stores to make them appealing tot he customer, whereas Kmart is essentially letting their stores rot.

WalMart & Target also are increasingly going toward the higher end customer – WalMart is starting to bring in name brands that typically would not be found in a discount store and Target (often referred to as ‘TarJay’) has been catering toward the higher end clientele during its exponetnal growth over the past few years.

Kmart and Sears Holdings are beating to their own drum, and it will be interesting to see how the chain/company hold up a year or so down the line, – especially since their recent earnings showed over a 25% drop in income. Trying to bring in more and more customers who are only looking for bargains is not going to bring them out of their doldrums.

Although, it may give them good exposure for their Kenmore washer and dryers – but then again, those are the same people who probably won’t be buying them anytime soon either.

andrew@alconic-inc.com

The new resort will be built using almost the same footprint as the Pop Century Phase II was going to use, although obviously its going to be focused on Disney’s Animation Properties.

Aerial Shot of Pop Century Resort and Unfinished Art of Animation Resort

Rear of Main Bldg with Unfinished Building Outlines

Front of Main Unfinished Building

 One major difference between the Pop Century Layout and the Art of Animation Layout will be the room count and type – there will be a total of almost 2,000 rooms, but only 864 of them will be traditional hotel rooms – the other 1,120 rooms will be suites which can hold up to 6 people.

Disney’s Pop Century resort has a greater number of rooms but with the addition of the suites at the Art of Animation, both resorts will be able to hold approximately the same amount of guests – 2,800 total.

This holds promise for the return of the travel industry as Disney finally has enough faith to begin building (finishing) a resort project that was on hold since 2003. Although it is worth mentioning that this is one of the Disney Value Resorts – so it seems as though tourists are becoming more price conscious in their lodging choices when they go on vacation.

andrew@alconic-inc.com

The site can be accessed immediately at www.shcrealty.com, and right now has over 3,000 opportunities in open and closed locations.

This puts Sears on the same level of Wal-Mart in regards to finding an easy way to dispose of their excess property, as well as an easy way to build attention to their leaseable space within their open stores.

WalMart has had a website for their excess real estate for a number of years now – www.walmartrealty.com  – so Sears is not the first to offer this on the internet.

Sears Holding has been under alot of pressure over the past few years to increase revenue and actually make Edward Lamperts purchase of the company seem like a sound decision. This could easily be a huge step in that direction because it enables the company to unearth additional revenue streams that were once harder to find.

Already you can see some of the effects on this by Sears announcement that 12 Edwin Watts Golf Stores are going to be opening in Sears stores around the country. These stores will average about 2,700 square feet and will be staffed by Edwin Watts employees. While I doubt this agreement came about because of the new website, it’s an example of some potential business deals that can come about due to the website.

Other big box retailers like Target, who have large footprints and locations throughout the country would benefit from offering their excess space on the web. It would offer a steady income stream that could potentially attract additional traffic into the stores because of what these inline stores offer.

andrew@alconic-inc.com

Another day, another casino in the sights of the Starwood Capital Group.

What’s going on here?

It’s interesting to watch how Starwood Capital has shown so much interest in Las Vegas casinos over the past month or so – the past few years even if you consider their initial bid for the Riveria on the strip.

Although its all rumors at this point, Bloomberg Business Week has a story about Starwood Capital’s (and Colony Capital’s) interest in purchasing the Rio casino from Harrahs. Harrahs has been looking to divest the property since they purchased the Planet Hollywood and is looking for interested bidders. Harrahs purcahsed the Rio in 1998 for $888 million, and according to the Business Week article – the property is only worth $500 million now.  

So why are all these private equity firms looking to get into the casino business? Its interesting to watch Carl Icahn place a bid on almost every project in Atlantic City & Las Vegas that is having financial difficulty, Starwood Capital’s interest in the Riveria and now apparently the Rio, along with Colony Capital’s current ownership of the Hilton Las Vegas and Atlantic City. Why?

I’d think that it would be too much trouble to go through the gambling licensing procedures for a private equity firm to even consider dabbling in this, but if you look at the history of these three firms – they have gambling in their blood.

Colony Capital has owned the Hilton in Las Vegas since 2004, the Atlantic City Hilton since 2005 and Resorts International since 2000.

Carl Icahn purchased the Sands casino in Atlantic City in the early 2000′s but quickly sold it to Pinnacle Gaming, but now he owns the unfinished Fontainebleau and the Tropicana in Atlantic City

Barry Sternlicht, from the Starwood Capital Group was probably the first out of these three to get into the casino business with his purchase of ITT-Sheraton which included Caesars World in I believe 1998.

Its interesting to see what everyones intention will be – its known that casinos are great for their free cash flow – something a Private Equity firm loves, but its obvious that some people look at the purchase of a casino as just a passing investment – similar to how Carl Icahn has looked at his investment in the Sands in Atlantic City and possibly how he will look at the Fontainebleau once the economy picks up.

andrew@alconic-inc.com