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Gaming Guru

Arnold M. Knightly
 

Las Vegas Hilton posh, polished and poised

25 September 2007

By Arnold M. Knightly

LAS VEGAS, Nevada -- The Las Vegas Hilton has quietly undergone $100 million of upgrades and renovations since a private equity partnership bought the property in June 2004.

The latest upgrades, scheduled to be unveiled the first week of October, are 221 Resort Club rooms and a new Resort Club lounge in the north tower.

Over the past three years, the Hilton has remodeled 1,523 of its 3,000 rooms and suites, installed Italian marble floors in the lobby, remodeled the casino and the porte cochere, added a new lounge and expanded the sports book. "This is probably phase one of different phases of enhancements for the property," said Rudy Prieto, Las Vegas Hilton general manager and chief executive officer for the off-Strip property. "We will always continue to consider what our options are in terms of redevelopment." The room upgrades include new beds, 37-inch plasma televisions, wireless Internet access and ports for MP3 music players. The hotel, which is owned and operated separately from the Hilton hotel chain by Colony Resorts, plans to continue the hotel room renovations in 2008. Bill Lerner, a gaming analyst for Deutsche Bank, said the remodeling has made the resort's public areas in the entrance brighter and more comfortable. "That's a critical public face to have focused on," Lerner said. "Working on the entrance and the hotel reception and lobby are important things to have focused on. Keeping it fresh is critical, and I think they have done a good job." Lerner said the demographic for the hotel, which is on 59 acres on Paradise Road north of the Las Vegas Convention Center, are midweek conventioneers and value customers. The hotel has been running at 90 percent occupancy during the week and slightly higher on weekends, spokesman Ira Sternberg said. Nearly 40 percent of the occupied rooms during the week are bought by people attending conventions at the hotel's 200,000-square-foot meeting space. Sternberg said the property also benefits from being near the northern anchor of the Las Vegas Monorail, which averages 19,000 passengers per day, connecting the Hilton to the Strip. Prieto said redevelopment projects on the Strip's north end should increase foot traffic to the property in the next few years.

Prieto cited the $2.9 billion Fontainebleau project, the $4.8 billion Echelon project, the possible sale of the Riviera and new ownership of the Sahara as signs that the neighborhood is undergoing a rebirth.

Also, two Turnberry residential projects near the hotel have added 1,096 condominium units to the area with another 318 planned for 2008.

Licensing agreements for use of the Hilton name and the Hilton's reservation system are set to expire in 2008.

Prieto said it was to early to know if the contracts will be renewed but added the property "has an excellent relationship with the Hilton Corporation."

The contract for singer Barry Manilow, a staple e ntertainer at the property since 2005, is also set to expire late next year.

The property was opened as the International in 1969 by billionaire Kirk Kerkorian. It was bought by Colony Resorts LVH Acquisitions in 2004 for $280 million from Caesars Entertainment.

The limited liability company is a joint-venture partnership between Los Angeles-based real estate investment trust Colony Capital and New York-based Whitehall Street Real Estate Funds, a Goldman Sachs affiliate.