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Desert Inn at 50: Even After Renovation, It Still Struggles

But as a business, the Desert Inn has continued to struggle.

"It's never generated the returns it should have," said David Anders, gaming analyst at Merrill Lynch. "It's primarily that there's so many new and larger facilities that were real competitors."

Another difficulty for the D.I. was the Asian financial crisis, which was in full swing when the renovation wrapped up in 1997. With the Asian economy struggling, one of the property's most loyal markets -- Asian high-rollers -- began shrinking. The property began shifting its focus to attracting domestic high-rollers and has enjoyed "positive trends since reopening," Mark Lefever, chief operating officer of the Desert Inn, said.

But, Lefever concedes, "the big hindrance has been location."

High-rollers are a crucial part of the Desert Inn strategy, whose 30,000-square-foot casino is dwarfed by the mammoth casinos farther down the Strip. High-end baccarat players are even given the option of playing in a private room, with crystal chandeliers, a separate dining room and a ceiling encrusted with gold leaf.

Though Asia is recovering, Lefever doesn't believe the D.I. will ever return as a big player among Asian "whales," particularly in the wake of such mergers as Caesars World-Park Place Entertainment, Harrah's-Rio and MGM Grand-Mirage Resorts.

"Asian marketing is a very expensive business to get into," Lefever said. "The more places you have, the more you can spread out costs to among more properties. They're able to compete better on the Asian high-end business."

Shortly after completion of the project, Starwood Hotels & Resorts Worldwide Inc. took over ITT. Soon after, Starwood decided it wanted no part of the gaming business and moved to divest itself of its gaming holdings.

Starwood was successful in finding a willing buyer for Caesars World, selling the casino chain to Park Place last year for $3 billion. And, for a time, it appeared it would be successful with Desert Inn as well.

After rumors flew about buyers from casino designer Mark Advent to entertainer Michael Jackson, international resort operator Sun International Ltd. agreed to buy the Desert Inn for $275 million. Many in Las Vegas saw a renaissance coming for the resort under Sun Chairman Sol Kerzner, a visionary figure many likened to Steve Wynn.

But that came to an abrupt end earlier this year, when Sun International moved to go private -- and, in what was seen as an effort to generate cash for that move, dropped plans to buy the Desert Inn.

Today, the Desert Inn is still on the sales block, making it difficult to make any significant renovations in the property. It is still drawing interest -- most notably from Wynn, who recently toured the property.

But no firm offers have emerged yet. The only offer made for the resort since Kerzner's pullout was a $200 million bid announced by Boccardi Capital Systems of Las Vegas, but that bid was immediately rejected by Starwood as inadequate.

In the past, buyers of older Strip properties have, more often than not, razed them to make way for a newer, flashier resort. New Frontier owner Phil Ruffin is considering that course, announcing plans to demolish the property to make way for a San Francisco-themed resort. Just down the road, Sheldon Adelson demolished the Sands to build the Venetian and is now considering its expansion.

But Lefever is convinced the Desert Inn won't fade into history as its neighbors have over the past 50 years. The biggest ace in the hole, he said, are the 32 acres of land next door, which are being marketed with the Desert Inn by Starwood.

"The 32 acres next door are available for someone to build on ... they don't need to level the property and start over," Lefever said. "The name and the history of the Desert Inn will be around for a long time."

One person that could help return it to that former glory, said Bill Thompson, is Wynn. Thompson is chairman of the department of public administration at UNLV.

"It's had a historical reputation as a very good place for high-rollers," Thompson said. "He could really give personal service, capture the high-rollers he's had before.

"Only Steve Wynn has the personal identity (built) over the past 20 years that would draw people in."

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