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Best of Liz Benston

Gaming Guru

Liz Benston
 

Looking in on: Gaming

21 November 2007

Station Casinos' purchase of 45 acres in Henderson's Inspirada development is a sign the company is continuing its aggressive acquisition strategy after going private.

The question now is when Inspirada Station will take shape. The company hasn't disclosed timelines for the five sites it has designated around town for big off-Strip casinos.

Company officials say they have no immediate plans for Inspirada and that they will not comment further on their business strategy.

A casino would likely be years off - Inspirada is still in its infancy. Historically, Station has waited years for communities to develop before starting construction, as with Red Rock Resort in Summerlin and Green Valley Ranch in Henderson. Typically the company takes about 18 months to plan a casino and another 18 months to build, which would give it at least a three-year horizon.

The sale is no surprise: Inspirada developer Focus Property Group had intended to sell the gaming site or enter into a joint venture with a locals casino operator, with Station the likely candidate.

The company already owns land a few miles from the site at Cactus Avenue and Las Vegas Boulevard - a region south of the Strip where some developers are concerned about increasing competition as the South Point adds hotel rooms, the Silverton expands its casino and the 400-room M Resort gets off the ground.

The Inspirada site is south of Interstate 215 and the Henderson Executive Airport, near the South Strip market. Still, the Inspirada casino would not compete in the same market with the South Strip properties, which depend on drive-by tourist traffic, because Station could draw from the Anthem and Seven Hills communities as well as the immediate neighborhood.

Focus Property Group Chief Executive Officer John Ritter says the $71 million sale is close to $2 ¯million an acre with associated development costs - more than suburban casino land has cost in years past.

Focus could have made more money in the long run with a casino revenue-sharing arrangement with Station. But it's still a profitable deal and preferable for Station, whose track record will help spur commercial development at Inspirada.

"Our business is buying and selling land for a profit," Ritter said. "We don't really do joint ventures" with casino companies.

• • •

Slot machines are still the biggest revenue driver in a casino resort, yet corporate balance sheets suggest that revenue from alcohol is growing at a faster rate.

Consider that more than 2,000 people walked through the door at Mirage's Jet nightclub during a recent weekend - and that more than half sat at reserved tables where bottle service starts at $400 for a bottle shared by three people.

An average table check can reach about $800, said Kelley Jones, president of nightclub operator Light Group's restaurant division.

So it's no wonder casinos are doing all they can to exploit the bottle service trend. And it goes beyond just wanting to ratchet up nightclub bar tabs.

Spendthrift nightclubbers have boosted checks in nearby restaurants and casino bars by spreading the wealth before and after partying in the club, executives say.

These clubgoers are the new high rollers with their own stable of VIP hosts.

"We can push them into restaurants, spas, hotel rooms," said nightclub operator Genghis Cohen, who will be launching the Luxor's bordello-themed Cathouse restaurant and lounge next year. These are new customers who probably wouldn't have spent money there otherwise, he said.

Hosts get to know these club connoisseurs. But their financial resources, unlike those of their high-rolling counterparts on the casino floor, remain largely secret.

"I don't know where these kids get their money," said Heidi Hinkle, Bellagio's beverage director. "Price is never a problem." These younger nightclubbers "are more willing to put their hands in their pockets."

Looking in on: Gaming is republished from Online.CasinoCity.com.