Jonathan Gray, a Blackstone Group executive, who considers himself a gambling novice, is confident enough to gamble on the Cosmopolitan of Las Vegas. His company ponied up .73 billion for the purchase of the casino, and has high aspirations.
“We’ve bought companies, but this is a sizable real estate investment,” Gray said. “I live in New York, and of all the assets we’ve bought, this is the only one that people come up to me and say, ‘Oh my God, I love the Cosmo.’” In December, Gray was exuberant as he talked about the property, and months later, still maintains the same demeanor.
The company is notorious for investing in businesses or markets that have faced tough times. One issue many have cited over the past few years is an over-saturation of regional gaming markets, giving most people in the country a nearby option for a gamble. “It’s difficult to replicate the entertainment and infrastructure you have here, with the meeting space, restaurants, retail and hotels all in one location,” Gray said.
Gray also said the focus will be on increasing gaming revenue, which only accounted for 20 percent of all revenue last year. The plan is for the company to invest $100 million to complete four floors of unfinished hotel rooms and to enhance other public areas. The hope is for the four floors to be turned into grand suites which then attract high rollers, something the casino sorely needs.
“From a mathematical standpoint, The Cosmopolitan runs the highest average room rates on the Strip today. The gaming revenue per room is below the average of all the hotels on the Strip. That doesn’t seem to make a lot of sense to us,” Gray said.
Blackstone is relying on Bill McBeath, who took over as CEO of the Cosmopolitan in December. McBeath brings decades of experience in gaming operations and served as president of The Mirage, Treasure Island and Bellagio, and most recently CityCenter.
