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Howard Stutz

Developer hopes M is magnetic

2 February 2009

LAS VEGAS, Nevada -- From the top floor of the M Resort, Anthony Marnell III has a commanding view of the neighborhood.

In preparation for the property's March 1 opening, construction crews worked last week to build out the interiors of Veloce Cibo, M Resort's 16th floor trendy restaurant and contemporary nightclub.

Meanwhile, Marnell, the 35-year-old chief executive officer of the $1 billion hotel-casino, surveyed the surroundings.

The landscape hasn't changed much in the 17 months since ground was broken on the 390-room hotel-casino.

Several planned communities, new neighborhoods and potential businesses near M Resort's 93-acre site at the corner of Las Vegas Boulevard and St. Rose Parkway might have opened in conjunction with the hotel-casino. However, the implosion of Southern Nevada's housing market and the sinking local economy stalled or canceled the projects.

M Resort's potential customer base may have shrunk, but Marnell isn't concerned. The property, he said, was built with the existing market in mind. M Resort is across Interstate 15 from the populous Southern Highlands community. Along St. Rose Parkway are the entrances to Seven Hills, Anthem and Sun City Anthem. The communities all lack one element -- a neighboring locals-oriented resort.

Inspirada was another potential source of customers for M Resort. But the housing crisis has all but halted development at the master-planned community just east of M Resort that was expected to house 13,500 single-family homes.

"The project was never built on Inspirada growing the market," Marnell said. "Our goal is to grow the market and bring people to the south end of the Strip. We wanted to be the first one in and establish ourselves. There are enough people within the radius of our property to be successful."

Marnell said there are 466,000 people living within 10 miles of M Resort. The challenge in 28 days is to offer those residents a casino experience with value in mind so they continue to choose M Resort as the place to spend their limited discretionary dollars. In the past year that gaming revenues in locals market have declined about 5 percent. Nongaming spending is also down.

"The economy was driving our business decisions, it reinforced our business decisions," Marnell said. "It's all about value."

M Resort will open with a 90,000-square-foot casino and nine restaurants. There is also 60,000 square feet of meeting facilities, a 20,000-square-foot spa, and 2.3 acres of pool area with fire and water features.

Marnell learned the gaming trade when his father, casino construction pioneer Tony Marnell, built and operated the Rio. After the elder Marnell sold the off-Strip resort to Harrah's Entertainment in 1999, the younger Marnell started a computer software business. He returned to the gaming industry in 2006 with the purchase of the Saddle West Casino in Pahrump. A year later, he acquired two casinos in Laughlin from MGM Mirage for $200 million.

M Resort has been in planning for almost four years, half of that spent putting together the land. Marnell said the building cost $700 million; the land is valued at $300 million.

He turned to his father for design work, which was not a tough decision. In addition to the Rio, Tony Marnell, through Marnell Corrao design and construction business, built and helped design several Strip resorts, including The Mirage, Caesars Palace and Wynn Las Vegas.

The elder Marnell presented his son with four hotel tower designs, all of which took advantage of the site's elevation, situated about 400 feet higher than the intersection of the Strip and Flamingo Road.

"No one had built a project with the idea of looking north," Tony Marnell said. "I'm really pleased with the look of the tower."

Before acquiring the Saddle West, Anthony Marnell managed an American Indian casino near San Diego. Some of the concepts, such as self-service beverage areas in the casino, are being tried at M Resort. The property's 1,800 workers have been hired and will be in training and run-throughs during February.

M Resort is seeking two markets: locals and value-oriented visitors seeking the Las Vegas experience in a boutique style setting. The hotel-casino is 10 miles from the heart of the Strip. Anthony Marnell said room prices now range from $85 a night up to $200, depending on the day of the week and time period.

Although M Resort's master plan allows for more hotel rooms, a large retail center and other amenities, nothing is set in stone until the economy stabilizes. The site is larger than MGM Mirage's 76-acre CityCenter parcel, where multiple hotels, high-rise residential, retail, dining and entertainment venues are under construction at a cost of $9.1 billion.

At M Resort, a 1.3 million square foot shopping mall is delayed beyond 2012 while a deal with Galaxy Theaters for a 14-screen movie multiplex is still being hammered out.

"The economy altered the master plan in the sense of timing but not necessarily the plan itself," Anthony Marnell said. "We're entitled to have something bigger than CityCenter, but we have no intention of ever doing that."

M Resort is funded through an equity investment by the Marnell family, loans from the Bank of Scotland and a $160 million investment by MGM Mirage.