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Phil Hevener

Cannery Growing Along with City

28 June 2004

North Las Vegas' booming growth is prompting the Cannery's owners to launch an expansion program just a year and half after the hotel-casino opened.

The $40 million expansion, which includes adding a 14-screen movie theater, more casino space and a parking garage, will be done in phases beginning early next month and continuing through early 2005.

The garage will be built first, co-owner Bill Wortman said.

"We need to make certain we have sufficient parking as we take the other steps that will increase traffic flow," he said.

Wortman said financing for the improvements will be arranged privately.

Although he would not provide more details on the project, Wortman did credit much of the Cannery's success to being in the right place at the right time.

Nothing has altered his view of a year ago that the Cannery is in "the fastest-growing ZIP code" in one of the fastest-growing cities in the country, he said, noting that North Las Vegas issued more than 3,300 building permits during the six-month period that ended March 31.

Still, Wortman acknowledges that the hotel-casino's future did not always seem so assured.

When the Cannery opened in January 2003, it quickly collided with the buzz-saw impact of fast-building tensions related to the Iraqi war. Potential customers were cutting back on discretionary spending.

"Our timing could have been better. Activities at Nellis (Air Force Base) have a big impact in our immediate market area," Wortman said with a rueful smile.

But business at the North Las Vegas casino began to pick up by summer, thanks to a rebounding economy and the spreading realization that Nellis and its personnel seemed to have weathered the worst of the Middle East tensions.

By the end of the year, the Cannery's owners were able to report numbers that suggested a cash flow for 2003 of at least $13 million from their initial $105 million investment. The hotel's 201 rooms were about 82 percent occupied during 2003, with an average daily rate of better than $60. The average occupancy is 92 percent through the first five months of 2004.

The Cannery's ownership group is Millennium Management -- Wortman, Bill Paulos and longtime Las Vegas paving contractor Bob Mendenhall, who provided the land on Craig Road about a half-mile west of Interstate 15 where the casino was built. Wortman and Paulos are owners of the Rampart. Separately, Wortman owns the Nevada Palace on Boulder Highway.

Other industry officials say there is reason to believe the Cannery has also benefited from recent trends in the local hotel industry that has seen across-the-board increases in hotel room prices in a number of market niches.

Wortman said first-year results show most of the Cannery's customer base comes from within about five miles of the casino, but he cites a slot club offering cash back as an example of the incentives that helps draw some customers from as far away as Green Valley.

The Cannery has upgrades planned for its club that will give slot club members increased flexibility with the cash-back feature. The feature will be added as soon as gaming control officials approve the underlying technology.

As for other features, the Cannery offers the usual coffee shop and buffet lineup of eateries, "places we continue to get good comments on."

The additional casino space, he said, will likely be devoted mostly to a bingo room and an enlarged race and sports book.

Like all casinos oriented toward the Las Vegas locals market, the Cannery's slot floor, which has more than 1,200 games, is mostly video. Not just video poker, Wortman explains, but all the "latest video games," all using ticket-in, ticket-out coinless gaming technology.

The 14-screen cineplex will probably be operated by Galaxy Theatres, which has operations in California, Texas and Washington.

Wortman said the long-term expectation of the Cannery owners is that the theme inspired by John Steinbeck's "Cannery Row" novel will be used at other locations.

"It's what we've been planning for. It's a reason we found the theme so appealing as we went through our early planning."

But Wortman is not ready to talk about when or where there may be another Cannery.

"First things first," he said with a laugh. "We expect to keep growing right here."

As the original operators of the Greektown Casino in Detroit, Wortman and Paulos have already displayed their willingness to leap to wherever they may find opportunity.

That won't change, Wortman said.

While Mendenhall is new to the partnership, both Wortman and Paulos have experience with the biggest resort companies. Wortman entered the gaming industry with Caesars World. Wortman grew up as an executive in the Circus Circus Enterprises. He was chief operating officer at Luxor when it opened in 1993.