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Wynn Seeks Approval for High-End Resort for Desert Inn Site

Casino developer Steve Wynn plans to transform the 51-year-old Desert Inn into a water-dominated, high-end megaresort that one Wall Street observer believes will kick off a new Strip building boom.

The proposal to be considered Thursday evening by the Clark County Planning Commission would extend the hotel-casino to the corner of the Strip and Sands Avenue, which is little more than an undeveloped piece of desert land.

The as-yet unnamed property would offer a variety of quiet spaces where visitors could relax before taking advantage of a range of restaurant, entertainment and gambling options, said a source familiar with the plans.

Although Wynn has refused to speak publicly about the project until an October casino industry conference, his Valvino Lamore LLC development firm has filed design plans with the county.

The former Mirage Resorts chairman failed to return a Wednesday phone call seeking comment.

"He is going to keep details of the project under wraps for as long as he can," said Wynn Resorts spokesman Billy Vassiliadis. "He's trying to keep a competitive advantage because there will be some things unique in Las Vegas, and he wants to keep those from competitors as long as he can.

"He's releasing information about the project to government, but only as much as he has to release."

No timetable or price tag for the project were publicly available Wednesday, although Wynn said in May that he plans to begin construction of the project this fall.

County officials have already approved the demolition of much of the property, and Wynn is expected to seek an October implosion of the 308-room Augusta tower, the Desert Inn's southernmost of three towers, which sits closest to The Venetian.

The new megaresort would target people in their forties and fifties, a demographic with disposable time and money, said a source who requested anonymity.

"He's thinking you've got all of these baby boomers with a lot of money," the source said. "What are they looking for? They want some private space, places to rest and relax, away from crowds. Wynn wants to create a lot of nooks and crannies all over the property, spots where people can drink coffee, enjoy the gardens and the water."

Wynn's plans call for construction of:

—A 2,455-suite, 45-story hotel tower with a 4-acre artificial lake at the Strip-Sands Avenue intersection.

—A 120,000-square-foot casino, 132,000-square-foot convention center and 1,366-space parking garage.

—70,000 square feet of retail shops, two showrooms seating 2,000 and 1,500 customers, a 3-acre swimming pool and spa, 15 restaurants and the retention of the Desert Inn's18-hole golf course.

"This is going to be the start of the next wave," said Andrew Zarnett, a Deutsche Banc Alex. Brown casino industry bond analyst. "Everybody's rooting for Steve, even his competitors. Everybody wants him to succeed and build bigger and better."

Details of the project are reminiscent of those found at Bellagio, which Wynn developed in the late 1990s with its own 8-acre lake, indoor gardens, a $10 million sculpture above the hotel's lobby and high-end shops covered by a glass ceiling.

Zarnett said a reincarnated Desert Inn on its 220-acre site would increase visitation to Las Vegas at a level reminiscent of the surges experienced after the openings of The Mirage in 1989 and Bellagio in 1998.

The bond analyst anticipates the project will cost at least $1.2 billion to build. As chairman of Mirage Resorts, Wynn spent $1.6 billion building Bellagio.

The high-end 3,000-room ode to conspicuous consumption generated cash flow of $260 million during its first full year of operation, for a 16 percent return on investment. The yearly cash flow total was a casino industry record.

Bellagio produced $343 million in cash flow during the 12 months ended June 30 under the ownership of MGM Mirage, for a return of 21 percent and a new industry record.

MGM Grand purchased Mirage Resorts in May 2000 for $6.4 billion, leading to the formation of MGM Mirage and Wynn's immediate departure, prompting his purchase with his wife, Elaine, of the Desert Inn. The couple paid $270 million in cash to Starwood Hotels & Resorts in June 2000.

The Mirage buyout followed months of criticism by Wall Street investors and analysts who charged that Wynn had overspent to build Bellagio and the company's Beau Rivage in Biloxi, Miss., leading to a decline in the company's stock price and the investment community's confidence in his management.

Wynn has denied a May Reuters news service report that partner Aruze Corp., a Japanese gaming equipment manufacturer that last year bought a 50 percent stake in Valvino Lamore for $260 million, may have trouble receiving a Nevada gaming license because of tax troubles in Japan.

Meantime, some casino industry observers wonder how Wynn will be able to raise money at affordable rates to finance the project, especially in light of the current travails of the U.S. financial markets.

"That's the big question, and that's the question everyone should look at, but if he does raise the money it's beautiful for Vegas," Bill Thompson, a University of Nevada, Las Vegas professor who studies the casino industry.

"A project like this is a capital project that would be there for 30 years. If he can get the financing it's beautiful for Vegas. He is the best operator, and we're doing without him right now. The financing's the question."

But Zarnett said that Wynn's history of having built successful projects should enable him to raise the money to construct his new megaresort.

"There's no one who doubts Steve Wynn's ability to build it and his ability to bring in top-flight people to run it," Zarnett said.

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