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Arnold M. Knightly

New Golden Nugget tower to keep rates

23 November 2009

LAS VEGAS, Nevada -- Don't expect the Golden Nugget to slash room rates just to fill its new 500-room tower with warm bodies at any price, the hotel-casino's top executive said this week.

Tilman Fertitta, Houston-based Landry's Restaurants chairman, chief executive officer and majority shareholder, said the property has not dropped its rates to compete with other properties and doesn't plan to do so.

"We're not going to drop rates just to turn dollars," Fertitta said. "I'd rather not have all the bodies. It's got to be profitable dollars for us to rent a room."

The Golden Nugget's new $150 million hotel tower opened Friday morning, and was largely sold for its first weekend. The 25-story tower includes four penthouse suites, 70 junior corner suites and standard rooms 20 percent larger than standard rooms in the other towers.

In fact, though, rooms at the new tower aren't going for what they were priced at even a month ago when the opening date was announced.

In mid-October, the hotel was pricing rooms at $142 per night for opening weekend.

The hotel now is advertising rooms in the new Rush Tower on its Web site for an average of $89 per night, while travel Web site has rooms listed for an average price of $102 per night.

Fertitta conceded that the economic downturn is making it difficult for the hotel to attract the type of customers the property wants.

"The Wynn and the Bellagio aren't getting the customers they thought," Fertitta said. "If they're not getting the customers they want, I can guarantee you I'm not getting the customer I want. That's just life and a cycle we're in right now. It's something we're all going to work through. Hopefully, it will all work out."

The Golden Nugget's addition is the first new hotel tower to open downtown since former Golden Nugget owner Steve Wynn built the South Tower in 1989.

It brings the Golden Nugget's room count to 2,417, the largest downtown.

Las Vegas Mayor Oscar Goodman, who will attend a grand opening celebration for the tower at 4:30 p.m. Monday, praised Landry's for investing in the downtown market, which struggled for years even before the economic downturn.

Landry's has spent more than $300 million on improvements at the Golden Nugget since buying the property in 2005 for $295 million in cash and debt assumption.

The Rush Tower has its own porte cochere and includes $1 million in landscaping for the entrance on First and Carson streets.

In addition to the tower, the Golden Nugget is adding a new 200-seat Chart House restaurant, three new retail shops and new casino space.

The expansion added nearly 100 new jobs, spokesman Justin McVay said, mostly in the restaurant and shops.

Bill Lerner, a principal at Union Gaming Group, expects the new tower to have little effect on the local gaming market.

"As great as it's going to be for that part of the market, I don't think it grows the market," Lerner said. "I don't think you drive new volume, visitation into downtown because of a new hotel tower."

But Roy Smolarz, a New York City-based finance expert who was an adviser on the Binion's sale in 2008, said other downtown operators are welcoming the new tower because it focuses new attention on downtown.

"It is a different situation than what is coming on line and the concerns about CityCenter flooding (the market) with 4,000-plus rooms," said Smolarz, who focuses on investment banking, real estate, gaming and leisure industries as managing director for the firm Dominick & Dominick. "There is a critical need for additional quality in the Fremont Street corridor. Downtown truly needs state-of-the-art rooms."