USA Casino redevelopment plans are frill-seeking ventures in the desert By David Yeskel / June 22, 2005 Share 1 -- LAS VEGAS -- In the past 30 years, Las Vegas hotel redevelopment has followed a fairly routine, two-step formula: Step 1, implode an old building. Step 2, build a new one. And when the new building didnt work exactly as planned (casino revenues didnt meet targets), owners wasted no time adding rooms and redesigning entrances, casinos and other public areas to increase foot traffic and, thus, the bottom line. This formula was followed at Luxor (opened in 1993, redone in 1996 at a cost of $300 million) and at the MGM Grand (opened in 1993, revamped in 1998 at a cost of $700 million).Regardless of the scope or the means of improvement -- dynamite or manual might -- the redevelopment direction had always been to pull it down and build it up.But when the trend to provide increasingly deluxe accommodations was launched a few years ago, existing properties took a different course. They built upscale towers adjacent to existing structures. Or, they created a hotel within a hotel.And thus began the Las Vegas luxury lodging boomlet.The nascent category includes Venezia at the Venetian, the Spa Tower at Bellagio, THEhotel at Mandalay Bay and the Skylofts at MGM Grand. But the movement isnt limited to Strip properties. Station Casinos recently unveiled a 240-room tower at its upscale Green Valley Ranch property, featuring a higher proportion of suites than in the previous build. On Flamingo Road, a 40-story tower is almost halfway complete at the trendy-but-undersized Palms.And the build it and they will come mantra continues.The paint is barely dry on Wynn Las Vegas, but Wynn already has an additional luxury tower in the planning stages. Encore at Wynn is slated for a 2008 completion.The Augustus Tower at Caesars Palace is under construction (completion slated for fall), and Palazzo at the Venetian -- a new, 3,000-suite resort -- is anticipating a 2007 opening. According to Rob Goldstein, president of the Venetian, the need to provide increasingly luxurious accommodations arose from a simple case of supply and demand.Although Las Vegas has a lot of rooms, the luxury segment is small, said Goldstein, and we felt Venezia was the chance to build a smaller hotel with luxury services.The roots of the upscale lodging trend go deeper than the recent development, however. In 1993, Caesars Palace introduced chic retail shops and high-end restaurants in an unprecedented concentration at the Forum Shops. A few years later, Steve Wynn broke the ultraluxury barrier with the opening of Bellagio in 1998.Along with the Forum Shops, Bellagios deluxe accommodations, fashionable shops and celebrity chefs appealed to an affluent demographic that heretofore had not visited the Strip in large numbers. Within a year, MGM debuted the Mansion, a collection of 29 luxury villas primarily used to house casino guests, celebrities and visiting dignitaries.Ultimately, the demand for upscale product in Las Vegas wasnt necessarily a reaction to limited supply but another example of Vegas wizardry.The Forum Shops and Bellagio put it out there, and the market appeared. Then came Sheldon Adelsons bombshell, the Venetian.Even before the Italian-themed resort opened its posh doors in 1999, Vegas insiders heaped scorn on the proposed business model: Settle for a smaller slice of revenue from gaming in favor of higher receipts for lodging, food and beverage, retail and meetings and conventions. House guests in extravagant suites with amenities designed to make them comfortable in the room.What was Adelson thinking?The chairman of the board was going against the standard Vegas mind-set of get em out of the room and into the casino.Adelson was thinking exactly as his peers are today. Gone are the days when casino profits covered for money-losing restaurants and giveaway room rates.In modern Las Vegas, every hotel department is a profit center, expected to pull its own weight.Even now, Adelson has raised the bar on himself. The 2003 debut of the Venezia Tower introduced 1,013 large suites, an upgraded level of service and a concierge floor. And the Palazzo project, another all-suite, 3,000-unit resort located just north of the Venetian, has broken ground and is on target for a 2008 opening.When Mandalay Bay opened with an integrated Four Seasons on its top four floors in 1997, the hotel-within-a-hotel concept was launched in Las Vegas.Thus, when Mandalay Resort Group execs decided to brand their own version of ultraluxury, they built THEhotel at Mandalay Bay, with 1,117 plush, two-room suites next to the original tower. Open since December, 2003, THEhotel caters primarily to meetings and conventions midweek, then skews heavily toward leisure on weekends.At Bellagio, already positioned as a top-of-the-line product, the thinking differed slightly. When plans for the Spa Tower were created, MGM Mirage management already had devised a way to put it on an equal footing with the existing 3,000-room luxury tower. As the Spa Tower neared completion, all units in the original tower were redone (hard and soft goods) to be an exact match of their new neighbors. And thus, an equality of luxury was achieved -- at comparable room rates.Back at the MGM Grand, the Skylofts (opened in January) is yet another bold twist on the hotel-within-a-hotel concept. Fifty one-, two-, and three-bedroom lofts were constructed on the hotels top two floors.Designed to evoke chic residential lofts in New York, Tokyo and London, each two-level Skyloft is open, airy and super-modern in form and function. The units are overseen by a butler staff.Skyloft service begins with pre-arrival concierge services, airport limo pickup and in-loft check-in. All of this, of course, begs the inevitable question: Whats next?This is, after all, Las Vegas.To contact the reporter who wrote this article, send e-mail to firstname.lastname@example.org.