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Benjamin Spillman

More polish for Golden Nugget

12 October 2007

LAS VEGAS, Nevada -- Last year owners of the Golden Nugget spent $100 million on the hotel's biggest upgrade since 1984 when Steve Wynn owned the property.

There's more where that came from.

Now Landry's Restaurants, a Houston-based company that bought the Golden Nugget in 2005, is finishing a $70 million casino, convention and nightclub addition.

As early as next year the company plans to spend another $150 million adding an approximately 500-room hotel tower with casino to what is already the swankiest spot on Fremont Street.

When the tower opens in 2009, Landry's will have spent more on renovations and additions to the Golden Nugget than they spent in 2005 acquiring the property and a sister hotel-casino in Laughlin for $295 million in cash and debt assumption.

More importantly for downtown Las Vegas, it would be the biggest one-time influx of new hotel rooms in about 20 years, significant because investment by Landry's in a long-stagnant gambling market should produce spillover benefits for other casinos on Fremont Street.

"These Landry's dudes are willing to put their chips in," said Anthony Curtis, publisher of the Las Vegas Advisor.

Curtis said Landry's aggressive investment in the Golden Nugget sets them apart from other Fremont Street casino owners who have complained about the lack of new hotel rooms but have been unwilling or unable to increase their own inventories despite historically high occupancy rates throughout Las Vegas.

"The bigger players are realizing it and they are making the moves," Curtis said. "A lot of properties are willing to stand by and let somebody else do it."

In addition to Golden Nugget properties in Nevada, Landry's owns about 180 restaurants in 30 states under the Rainforest Café, Saltgrass Steak House, Landry's Seafood House, The Crab House, Charley's Crab and The Chart House names. It also owns several hotels in Texas and is publicly traded under the symbol LNY. The company was founded in 1980 and chairman, CEO and president Tilman Fertitta owns about 35 percent of its stock. He is the cousin of Station Casinos top executives Lorenzo Fertitta and Frank Fertitta III.

Although the move into gaming has been considered a success for Landry's, the company has been criticized for Fertitta's large compensation deal. In 2006 Fertitta earned $1.45 million in salary, a $1.6 million bonus and $11.4 million in restricted stock awards, according to the corporate governance analysis firm Proxy Governance, which said Fertitta's pay was "out of line" considering performance that has been, "lackluster over the past three plus years."

Since taking over the Golden Nugget in 2005, Landry's renovated the entire casino, added several restaurants, moved the buffet and rebuilt the pool to include a water slide that goes through a giant shark tank.

The era of upgrades at the Golden Nugget comes at just the right time for customer Dane Deal, 39, and his wife, Kelly.

Deal, of Roxboro, N.C., said he has been a regular Las Vegas visitor for about 10 years. But it's only been in the last few years that he and Kelly moved up to the Golden Nugget from lower-cost hotels during their visits.

"When we first started going to Las Vegas, the Golden Nugget was too expensive," said Deal, who plays $10 craps. "Now it is right in our sweet spot."

They prefer downtown to the Strip because they would rather spend time gambling than sightseeing and have grown tired of the chaos, crowds and kids at the major Las Vegas resorts.

"We go out there as two adults to gamble and drink and lay by the pool," he said.

Deal hopes the renovations don't make the Golden Nugget too Striplike. "The old pool at the Nugget, a rectangle with concrete, suited us just fine," he said.

On Thursday Jeff Cantwell, Landry's senior vice president of development, described in detail the company's Golden Nugget plans.

By Dec. 1, it plans to complete the addition at First and Fremont. It includes about 11,000 square feet of convention space, the only sushi bar on Fremont Street and a nightclub called Gold Diggers.

The nightclub is on the second floor and will overlook Fremont Street. At 4,500 square feet it will be about the same size as Blush in Wynn Las Vegas. It will operate from about 4 p.m. to 4 a.m. and, company officials hope, attract a younger crowd to complement the Golden Nugget's core customers.

Cantwell and Amy Chase, the Golden Nugget's vice president of marketing, said since Landry's took over they have already succeeded in attracting younger customers.

"We are seeing more and more people in their 30s and 40s instead of just 50-plus," Chase said.

Other impending upgrades include the creation of nearly 70 "gold rooms" in the existing 1,900-room hotel. Gold Rooms are essentially regular rooms refurbished from floor to ceiling with upgraded linens, furniture, big screen televisions, bathroom fixtures and Internet connections. The rooms include free Internet and spa access and are designed to appeal to business travelers.

Chase said the goal is to increase the number of business travelers who stay at the Golden Nugget. Currently they are less than 20 percent of the clientele.

The new convention space should increase the number of business guests as do the 600-room blocks the Golden Nugget sets aside for twice-annual events at the World Market Center.