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Owners of the Plaza said Monday that the casino was closing its 1,037-room hotel tower and will lay off more than 400 employees within the next two months.
In a statement, Tamares Real Estate said it would renovate the guest rooms and casino inside the 39-year-old property, located on 16.5 acres at the intersection of Main and Fremont streets.
Kenneth Landfield, Tamares U.S. Real Estate's chief operating officer, said in the statement that certain amenities of the Plaza will remain open during the renovation, including slot machines in the casino, the property's Firefly restaurant and food court and the showroom.
Tamares said it would take at least a year to make the upgrades and changes but did not reveal a budget for the project. Company officials would not comment beyond the e-mailed statement, which said Tamares would be "investing a substantial amount of money" in the Plaza.
Last month, gaming regulators licensed veteran gaming executive Anthony Santo to operate the Plaza and Tamares' two other downtown casinos for the company. Santo is a consultant to Tamares.
He told the Gaming Control Board in early August that negotiations had been taking place for a $20 million loan that would be used for the Plaza renovation.
Santo said the plan was to rename the property Union Plaza.
Las Vegas Mayor Oscar Goodman said officials from Tamares told him of their plans last week. Goodman said that the layoffs trouble him but that a renovation might be the perfect tonic for the aging Plaza.
"You can never feel good about a situation where employees are out of a job," Goodman said. "They do have plans to revitalize what is a landmark hotel downtown. Other companies have done that. In the long run, we'll be all right. But there's no way you can feel good about people losing their jobs, especially in the economy today."
Tamares, which owns the Las Vegas Club and Western Hotel, said Plaza employees were notified in accordance with federal law, giving them at least 60 days notice of a business closing.
Some workers are expected to be offered jobs at the Las Vegas Club.
"The Plaza has been experiencing the same kind of operational difficulties as other casino hotels and many other businesses in Las Vegas," Landfield said in the statement.
"Despite the most difficult economic conditions in recent memory, however, we are extremely excited about the future of downtown Las Vegas and are committed to working through this process to the benefit of our employees, our customers and the City of Las Vegas," Landfield said.
Tamares officials reportedly told employees last week of its plans. Plaza general manager Bobby Ray Harris did not return a phone call seeking comment.
Downtown gaming revenues have collapsed over the past two years as the economy has zapped consumer spending. Hotel room rates declined to record lows along the Strip, and downtown no longer became a cheaper alternative.
The last time casinos downtown had a positive month was June 2008, when revenues were $48.3 million, a jump of 10 percent from the previous year. Downtown gaming revenues were $32.1 million in July, a 19.2 percent decline compared with July 2009.
In November, the Golden Nugget opened a 500-room hotel tower expansion, which pressured the rest of the market. According to several travel websites, room rates at the Golden Nugget are anywhere from $49 on weeknights to $159 on weekends.
"The Golden Nugget did a nice job upgrading their rooms, and that put the rest of downtown at a competitive disadvantage," Union Gaming Group principal Grant Govertsen said.
He said the closing of the Plaza's hotel might have a timing element. It might take up to a year for the downtown tourism economy to recover.
"Nothing notable is going to happen right now, so it doesn't really make much sense to wait it any longer," he said.
The Plaza's hotel closing follows the closing last December of 365 rooms at Binion's , which laid off about 100 of the property's 800 employees. In February 2006, owners of the Lady Luck closed its 743-room hotel-casino for a planned renovation, laying off almost 700 workers. The property has been shuttered ever since.
Goodman, downtown's biggest cheerleader, said he has seen some progress.
With the Golden Nugget, Goodman touted the redevelopment of the El Cortez and the Gold Spike casinos. He said progress was being made on the former property once controlled by Union Pacific Railroad, including the $100 million Cleveland Clinic Lou Ruvo Center for Brain Health, which opened this year, and the under-construction $470 million Smith Center for the Performing Arts.
Connecting the casinos along Fremont Street and the Fremont Street Experience with the projects along Grand Central Parkway has long been his goal.
A redevelopment of the Plaza might help make Goodman's dream a reality.
"Maybe with a redone Plaza, we'll be able to work with them to get access from the Fremont Street Experience to the 61 acres," Goodman said. "We have to get the critical mass flowing in that direction."
On Monday, producers of "The Rat Pack is Back" said they had signed a three-year contract to perform the show in the Plaza's Copa Room.
Lucky's Race and Sports Book operates the facility inside the Plaza.
"This action is necessary for us to reorganize and renovate the Plaza over the next year, during which time we will be closing portions of the casino and all hotel rooms," Landfield said. "We anticipate that some employees will be retained to continue various operations."
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