With the Cosmopolitan of Las Vegas under new ownership with Blackstone Group LP, the company has set out to turn the under-performing casino completely around. The hotel’s 52-story east tower stands tall, with the top four floors containing wraparound balconies, and 16 feet high ceilings. Although the property has been around for several years, the top floors remain unfinished, and have to host a single guest.
Blackstone, who expects to invest $200 million into the property, intends to turn those floors into grand suites with the hope of attracting much needed high rollers, who have brushed off the casino’s presence thus far. This is no small undertaking for Blackstone, as they have already invested in Nevada industrial real estate, with a portfolio boasting 1,000 single-family homes and the 68-acre Hughes Center office complex in Las Vegas.
Some financial firms have been hit hard recently, as Morgan Stanley pulled out of Revel Atlantic City in 2010 after spending an eye-opening $1.2 billion on the failed project. Goldman Sachs Group Inc. has reported a $345 million investment in four Nevada casinos back in 2008 has seen the equity depreciate to $210 million.
However, the Cosmo is in a rather interesting position. Its EBITDA for 2014 was $150 million, up 48 percent from 2013. In December, Blackstone hired longtime MGM casino executive Bill McBeath to take over the reigns as CEO. “There are high-end clients coming to Las Vegas from China and Southeast Asia, but the Cosmo hasn’t targeted those individuals,” said McBeath. He added, “We are going to change amenities, the gaming space and suite product to bring them here.”
Two years ago, the Cosmopolitan was on the end of some bad publicity after former owner Deutsche Bank reneged on a deal to hire Las Vegas Culinary Union workers to run the food and beverage program. Deutsche Bank felt a union contract would hurt their chances to sell the casino, and backed out, which led to staged protests outside the casino-resort.
Members from the union stood outside the casino, blocking entrances, and shouted profanities at passers-by, which led to hundreds of arrests. Last week, Blackstone and the union held a news conference stating the two sides would begin negotiations over a labor deal which will being in mid-March.
The Cosmopolitan is currently joined by only the Venetian and Palazzo, Hard Rock Hotel, and the Palms as the only Strip properties without a collective bargaining agreement with the union. The union has also been attempting to get contracts with Station Casinos as well.
