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Best of Liz Benston

Gaming Guru

Liz Benston

Extreme Makeover

7 November 2005

Customers arriving at the Las Vegas Hilton are now met with scaffolding, drywall and a construction crew in the lobby as the 36-year-old property undergoes a makeover designed to make it look decades younger.

Construction walls at the rear of the casino feature photos of leggy models assuring visitors that the work going on behind the scenes "won't detour your fun." Another sign says, "Caution: Bright future ahead."

The Las Vegas Hilton, still months away from revealing its new self, has a lot to gain from the millions of dollars its new owners are plowing into the off-Strip hotel.

Colony Capital paid $280 million last year to buy the 59-acre Hilton site from Caesars Entertainment.

In a recent interview with In Business Las Vegas, a sister publication of the Las Vegas Sun, Resorts International Chief Operating Officer Roger Wagner called the Las Vegas Hilton "the buy of the century."

"You couldn't replace this building for a billion dollars," Wagner said.

Built by MGM Grand founder and MGM Mirage shareholder Kirk Kerkorian, the Las Vegas Hilton, then called the International, was then the world's largest hotel and home to resident entertainer Elvis Presley. It fell out of the limelight as newer resorts sprouted on the Strip and stagnated in recent years under Caesars Entertainment, which had attempted to sell the property to focus on its better-performing Strip casinos.

Colony snapped up the Hilton at a deflated price and has begun work on a five-year master plan to spiff up the property and use its land more effectively.

Colony in July created a new holding company to operate its six casinos, including the Hilton. Resorts International Holdings also owns Resorts Atlantic City as well as four properties purchased from Caesars Entertainment and Harrah's Entertainment prior to Harrah's buyout of Caesars. Those include the Atlantic City Hilton, Resorts East Chicago, Resorts Tunica and Bally's Tunica.

The casino holding company's headquarters is the Las Vegas Hilton.

The company has already tripled annual cash flow at the property since Caesars owned it and has revived the casino's high roller business, Wagner said. The company is pushing to attract international players, particularly high rollers from Latin America. And it expects to create a frequent gambler program next year that would allow players to rack up points across Resorts' six casinos.

The remodeling effort, expected to cost more than $20 million, will include a new porte-cochere, outdoor landscaping, a remodeled lobby and front desk, a lounge, coffee bar and upgraded casino floor. All of the work is expected to be complete by the end of December.

The finished lobby will feature sparkled marble imported from Italy and Spain, incandescent lighting instead of fluorescent lights and a more upscale front desk with flat-screen TVs.

While the casino will retain its signature crystal chandeliers, new carpeting will be put in along with new wall coverings and column finishings.

Some slot machines also will be moved around to make it easier to walk through the casino and create a more inviting atmosphere for customers entering from the lobby. Employees also will wear new uniforms.

The Hilton's main casino bar will be replaced by Tempo, an ultramodern bar and lounge with 100 seats and a private area for high rollers in the style of a Strip ultralounge.

The property's Perk Place coffee bar and deli will be replaced by Fortuna, a coffee, wine and pastry bar resembling a luxurious Starbucks. The coffee bar will also offer Internet access.

Upstairs, workers have finished upgrading many of the Hilton's more luxurious suites. The property's Lanai and Director suites feature plasma TVs, new marble floors and showers, granite vanity tops and rain shower heads as well as a private terrace.

Of the Hilton's 3,000 or so total rooms, about 300 are suites. Sometime next year, the first series of regular rooms will be remodeled.

Being a private company has its advantages, Wagner said.

"If we want to do something that's disruptive that we think will help us in the long term, we can do that without retribution" from shareholders, he said.

When the company bought the Hilton in June 2004, Colony officials said at the time they expected to spend about $70 million on improvements.

In September the property opened a new poker room, replacing several banks of slot machines in what had once been the site of a shuttered poker room years ago.

Shortly after Colony bought the hotel, the owners upgraded the Superbook, the country's largest sports book, including the installation of small LCD screens for players and more comfortable chairs.

Still to be done is more remodeling near the convention center. The Hilton's steakhouse will be remodeled, as will the Plaza Bar and the Shimmer entertainment cabaret. Shimmer, formerly a nightclub, is now home to comedian David Brenner as well as other entertainment acts.

Last year the Hilton announced a deal with singer Barry Manilow to become a resident headliner at the Hilton Theater into 2006.

"Barry is a huge marquee value for us around the country right now," Wagner said. "This property, being off the Strip, needed something to use as a destination marketing device ... The community is talking about Barry Manilow in the same vein as Celine Dion."

The Hilton is also hoping to better capitalize on its "Star Trek" attraction, which includes a tour and ride operated in partnership with Paramount Pictures.

There are a few years left in the contract with Paramount. The property hasn't decided whether to keep the attraction longer term, Wagner said. The attraction is located near the Space Quest casino, a themed casino floor primarily fed by traffic from the Las Vegas Monorail stop.

Most people coming into the property from the monorail tend to be occasional visitors to Las Vegas rather than regulars, Wagner said. That may change once more people begin to use the service and it extends to the airport.

The company is still working on a master plan for the Hilton's 59-acre site.

About 50 of those acres are vacant or underdeveloped, Wagner said.

"We are looking at all kinds of ways to stick our front door closer to where people are wandering around," he said. "Whether that means we'll build a boutique hotel right next to the convention center by the end of the property and knock something down, I don't know. We haven't made any decisions there. We've got all kinds of opportunities."

The Hilton owners are shying away from condominiums, even though plans for about 100 high-rise condos are sprouting across the Las Vegas Valley.

"There's only so many high-end people," Wagner said. "Some of the ones coming out of the ground are selling to investors who think they can spin these things off. The cost of labor and construction and the cost of goods, especially with the Katrina problem now, is going to put these developers in a position where what they sold them for today will not cover what it will cost to build them three years from now when they have to deliver the product."