Las Vegas – The Las Vegas Strip adds its first major resort in nearly three years on Thursday when the USD 1.9 billion Palazzo, the second Italian-themed property from Las Vegas Sands Corp., has its grand opening.
Despite economic fears buffeting the United States, casinos are betting that high rollers and vacationers will keep flooding into the gambling center, especially as a weak dollar draws foreign travelers and keeps Americans from leaving the country.
The Palazzo Las Vegas 50-story, with its two-story high waterfall, abuts the Venetian Casino Resort, also owned by the Las Vegas Sands. The company opened the Venetian in 1999 at a cost of USD 1.5 billion. With the Palazzo, it forms the world’s largest hotel and convention complex.
It is the first new casino on the Las Vegas Strip since April 2005, when Steve Wynn opened his eponymous resort just north of the Sands‘ properties.
The Palazzo has been welcoming gamblers since the New Year holiday, but the formal opening takes place Thursday with a concert headlined by Diana Ross and Seal.
The resort continues the Strip’s evolution from casino hotels with glaring themes or kitschy motifs to more restrained, European influenced structures, said David Schwartz, director for gaming research at the University of Nevada, Las Vegas.
„It’s a very luxurious resort. I would say it’s more Italian-influenced than a literal theme like the Venetian,“ he said.
The move to luxury resorts will become more apparent with the expected late 2009 opening of CityCenter, the more than USD 7 billion, mixed-use project being developed by MGM Mirage with award-winning architects like Cesar Pelli.
Also in 2009, Wynn Resorts Ltd is slated to open its USD 2.2 billion Encore hotel-casino adjacent to Wynn Las Vegas and the USD 2.9 billion Miami Modern-style Fontainebleau will open across the street.
A little further north, Boyd Gaming Corp.’s USD 4.8-billion Echelon complex is set to open in 2010, and developer Elad Group plans to complete in 2011 an USD 8-billion hotel-casino modeled on its New York Plaza hotel.
Betting on High Rollers
„Vegas just keeps remaking itself and remaking itself with every iteration,“ said Thomas Tait, president of the Nevada Tourism Alliance.
He said there is no reason to think that higher room prices and expensive meals will faze visitors, particularly as foreign exchange rates make the city a bargain for tourists from Asia and Europe and Americans think twice about traveling overseas.
„We haven’t started to touch the international market,“ he said.
But stock prices for gambling operators have tumbled in recent months — shares in Las Vegas Sands have lost nearly half their value since September.
Analysts attribute much of the slump to a tighter credit market that has put a lid on mergers activity and capped investor enthusiasm for longer-term resort projects.
But weaker U.S. consumer spending power and the shadow of recession have also had an impact.
„We suspect gaming executives will not be particularly optimistic for the current year,“ Goldman Sachs analyst Steven Kent said in a research note on Tuesday, citing recent casino news and broader economic fears.
The Nevada gaming authority said last week that casinos along the Las Vegas Strip won 19 percent less money from gamblers in November compared with a year earlier, although the timing of some weekend days was believed to play a role.