Las Vegas Continues To Expand Its Lodging Offerings
With the Renaissance Las Vegas Hotel having opened last December, Wynn Las Vegas Resort & Country Club scheduled to open this month and Conrad Las Vegas and Palazzo Resort on tap to begin accepting reservations in 2006 and 2007, respectively, new hotel development in this booming Nevada city remains a mix of projects managed by national multi-brand hoteliers and locally based casino/hotel operators. While Renaissance is an upscale brand of Marriott International and Conrad is Hilton Hotels Corp.'s deluxe flag, Wynn is the latest enterprise of local entrepreneur Steve Wynn and Palazzo is part of the Sands Corp., which owns the high-profile Venetian Hotel.
Existing properties, such as Caesars Palace, also are players in the expansion boom. Caesars this summer is scheduled to open Augustus Tower, which will add 949 rooms and suites to the mega-resort for a total of 3,340. Meanwhile, before the 2,700-room Wynn Las Vegas had even opened, speculation was rife that Wynn was planning to build a second self-contained hotel adjoining the first, to be called Encore, which would contain 1,500 suites. A Wynn spokesperson declined to comment.
Most of travel buyers' interest in Las Vegas is as a meetings destination. While the city is known for hosting citywide conventions, hotels generate significant revenue from small to midsize meetings.
According to lodging industry analysts and consultants, increases in demand for Las Vegas hotel rooms, whether for groups, business transient or leisure, so far have kept pace with increases in supply. With the lodging industry rebound still gaining momentum, that scenario is likely to continue. "We've been encouraged by the rate increases hotels have been getting for April and May as they yield-manage last rooms available," Harry Curtis, who tracks lodging and gaming companies for JP Morgan Chase, said last month. "Rate growth in May could increase as much as 12 percent, compared to May 2004, if present trends continue."
Curtis cited "higher group meeting and convention demand for the surge." Another positive factor is that group bookings seem to be holding firm, despite the prospect of increased airfares. "Higher oil prices thus far have not dampened demand," Curtis said. "According to our sources, drive-in traffic from California and occupied seats into McCarran International Airport have not eroded, despite the recent increase in oil to $55 from $35 a year ago."
PricewaterhouseCoopers forecasts that high levels of demand will continue through 2006, driving up revenues. "In fact, Las Vegas is one of eight U.S. cities where our forecast calls for revenue per available room to grow above the national average," said Bjorn Hanson, head of the firm's hospitality and leisure practice. U.S. RevPAR growth in 2004 was a healthy 7.5 percent and is forecast to subside only slightly in 2005 to 7.3 percent, then ease to 6.3 percent in 2006. Miami, New York and Washington, D.C., are among the other strong performers. "These leading markets tend to have a diverse service-based economy as opposed to relying on manufacturing jobs," Hanson said. This is especially true of Las Vegas.
The 578-room Renaissance is located on Paradise Road, adjacent to the Las Vegas Convention Center, reinforcing its connection to the group market. According to general manager Larry Brown, large events suitable to a convention center typically generate a need for smaller spaces for satellite meetings. "We boast more than 32,000 square feet of function space that's highly flexible, comes with built-in wireless connectivity and features more commonly found in conference centers, such as ergonomic chairs," Brown said.
Given Marriott's position on gaming, the Renaissance is the city's largest non-gaming hotel. Like other Renaissance hotels that have recently opened or are in development, the design of the Las Vegas hotel is "built around a concept or theme that tells its own story," said Sid Yu, Marriott senior vice president of brand management. "In this case, that story is the Rat Pack, so the design evokes that warm and clubby feel of Las Vegas' golden age in the '50s and '60s."
In comparison to the Renaissance's 32,000 square feet, the Wynn's 200,000 square feet seems supersized. Included are two ballrooms, 18 meeting rooms and two boardrooms. "In an effort to blend the property's indoor and outdoor space, we've built in views of our pools, gardens and our own lake from many of the meeting rooms," said vice president of sales and marketing Chris Flatt. In addition, planners can book an outdoor covered patio as pre-function or meeting space. Award ceremonies or similar events can be staged in one of the property's two theaters, pending availability. One will house a new show created by Cirque du Soleil founder Franco Dragone, the other an open-ended production of the Broadway musical Avenue Q.
The 272-room Conrad Las Vegas will be only the fourth U.S. outpost for this deluxe Hilton brand, joining Indianapolis, Miami and New York. Unlike the other hotel openings, the Conrad is part of a multi-use project that includes residential development—a first for Las Vegas. Owners of the 196 apartments will have access to hotel services.
"The plan is to develop properties in the key business and leisure destinations, one of which Las Vegas certainly has become," said Conrad CEO Dieter Huckestein. With an eye to the group market, the Conrad will have an array of meeting rooms.
The 3,025-suite Palazzo Resort is under construction adjacent to its sister property, the Venetian. According to Sands Corp. president and COO William Weidner, the Venetian's Congress Center meeting facility will be expanded in order to accommodate additional group business. The expanded Congress Center will offer in excess of 1 million square feet of space.
Similarly, Caesars Palace is expanding its meeting space at the same time construction is under way on the Augustus Tower. "The new tower is just the centerpiece of a much larger renovation," said president Mark Juliano. "We're adding 86,000 square feet of meeting space for a total of 240,000 square feet. Included will be ballrooms, pre-function space and expanded banquet kitchens."
Despite the overall boomtown mentality, not all Las Vegas hotel projects come to fruition as planned. Starwood Hotels & Resorts Worldwide, for example, in 2003 announced it was assuming management of the 2,567-room Aladdin Hotel & Casino, in partnership with Planet Hollywood, and shortly would rebrand the hotel a Sheraton. Then-CEO Barry Sternlicht described Las Vegas as a strategic location for the company, not only as an important group city, but as a popular redemption destination for members of its loyalty program. The hotel still operates as the Aladdin, though a Starwood spokesperson this month said the rebranding still would occur.