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Best of Liz Benston

Gaming Guru

Liz Benston

Ferris Wheel Puts a Spin on New Frontier

23 January 2006

Steve Wynn's not talking, but you have to wonder what the design-focused casino boss thinks about the redevelopment plans of his across-the-boulevard neighbor.

Just across the Strip from Wynn's $2.7 billion Wynn Las Vegas -- and its mountain conveniently located to block views of the well-worn New Frontier -- property owner Phil Ruffin plans to erect a giant Ferris wheel.

Plans for two upcoming Strip resorts moved one step closer to reality Thursday when the Clark County Planning Commission approved use permits for a major resort makeover at the New Frontier and a new resort, Encore, adjacent to Wynn Las Vegas.

While developers have previously discussed plans for the resorts, the latest New Frontier plans filed with the county include a new feature -- a 485-foot-high Ferris wheel that will tower over the Strip near the corner of the Desert Inn Super Arterial and Las Vegas Boulevard.

The "observation wheel" -- a concept similar to the famed London Eye on the Thames River -- would presumably compete with a similar giant Ferris wheel proposed for the site of the Westward Ho. The company pitching the wheel attraction at the Westward Ho, Voyager Entertainment, had shopped the feature to various hotels sites along the Strip for several years.

The redesigned New Frontier, which includes a resort of roughly 2,800 rooms, also has a modern look that's dramatically different from Ruffin's initial plans for the property. In 2001 Ruffin received county approval for a San Francisco-themed resort complete with replicas of iconic attractions including Golden Gate Bridge, Coit Tower and Alcatraz Island.

Although heavily themed resorts like Luxor, Paris and the Venetian were, until recently, favored by developers and their architects, designers of new resorts seem to favor modern designs with subdued themes.

Both the New Frontier and Encore resorts face a final vote by the Clark County Commission on Feb. 22.

Ruffin said the plan approval is only a first step in what is expected to become a nearly yearlong process of redesigning the resort.

The New Frontier would likely not be closed until sometime in 2007, based on the progress designers have made so far, Ruffin added. A new property could open by 2009 or 2010 based on current estimates, he said.

"We want to get it right," he said. "You've only got one shot."

Like many companies riding the latest building boom in Las Vegas, the New Frontier faces rising construction costs that have become largely unpredictable as builders face shortages of raw materials. The usual changes that are made to major resorts during the design process make it difficult for builders to pin down costs, further delaying those projects for resort operators.

Ruffin, still committed to financing the resort on his own without investment partners, said some estimates have priced a new resort at close to $2 billion. Ruffin said he is considering scaling down the resort to lower the cost of the project.

Wynn told the Sun last month he plans to start construction on Encore as soon as this spring after nailing down a price from his builder.

The new developments, part of an unprecedented building boom on the Strip, have raised concerns on Wall Street about whether Las Vegas can continue to attract enough big spenders who can fill rooms that are going for hundreds of dollars a night.

Next door to the New Frontier site, Boyd Gaming Corp. has begun planning its $4 billion Echelon Place, an urban-like complex featuring a resort hotel and three boutique hotels in addition to other amenities. Down the Strip, MGM Mirage is building CityCenter, a $5 billion-plus metropolis with several hotels and condominium towers. Each of those developments envision opening more than 5,000 rooms by 2010.

"There has to be more demand from that group of people or you have to upsell by getting the mass market interested in paying higher prices," said Joe Fath, a portfolio manager with T. Rowe Price Associates. "People who are going to MGM Grand need to step up to a Bellagio going forward. That's a question that has yet to be answered."

Carlton Geer, director of the Global Gaming Group at brokerage firm C.B. Richard Ellis in Las Vegas, said new projects such as Encore and the New Frontier will continue to help Las Vegas attract more tourists.

"I think if we had crummy projects that didn't have the right amount of capital investment, we'd have something to worry about," Geer said. "But these are all quality projects.

"The worst thing Las Vegas can do is allow these properties to age and deteriorate," he said of the Strip's older casinos, such as the New Frontier and Westward Ho.

The occupancy rate on the Strip was 90 percent in 1998 -- the same year Bellagio opened in October. Strip occupancy rose to 93 percent in 2000 after the Strip added more than 10,000 rooms with the openings of Mandalay Bay, Venetian and Paris, according to the Las Vegas Convention and Visitors Authority.

Las Vegas has mostly recovered from the Sept. 11 attacks and economic problems that hurt tourism in the years following 2000, though Strip occupancy in 2004 was shy of the record at 92 percent. Full-year numbers for 2005 aren't yet available.

If the economy slows by 2010 as some of these new resorts are opening, that could put added pressure on room rates in Las Vegas, Fath said.

"Vegas is coming off a strong run, and people are questioning whether that can continue," Fath said. "There are some fears about supply, but it won't be as bad as people think right now. We believe in the strength of Las Vegas -- and we take a longer-term perspective."

The New Frontier plans include many features typical of modern resorts, including a performing arts theater, health club, nightclub, poker room, wedding chapels and space for conventions and meetings. The casino would be more than 90,000 square feet, retail space would be more than 540,000 square feet and the pool area would be more than 250,000 square feet.

The plans include keeping Gilley's, a popular country-western bar that has been a big draw at the New Frontier over the years.

The resort would feature one 62-story hotel tower containing 2,057 rooms at 500 square feet and 699 suites at 750 square feet. The plans also call for more than a dozen "lanai" suites.

The new plans would position the resort's casino right up against the Strip, with a garage facing Stardust Road to the north and the hotel's porte cochere and valet at the west side of the resort, facing Industrial Road.

The New Frontier Ferris wheel would feature 32 cabins that can each hold 25 people, according to recent plans filed with the county. Each "capsule" would have large glass windows attached to the outer rim of the wheel, allowing unobstructed views of the Strip. Passengers would be able to walk around inside the temperature-controlled cabins, which also have seats and are kept level by a motorized motion-control system.

Encore will have about 2,050 rooms and large areas for a pool, retail area and a spa.

The plans show a 631-foot, 1,745-room hotel tower and 45,000 square feet of casino space. Also featured are a 100,000 square-foot pool deck, 40,000 square feet of retail space, 100,000 square feet of meeting and convention space and a 36,000 square-foot spa and salon.

Wynn told the Sun last month the property could open by mid-2008.