Former Sahara took 18 months to renovate
A guest list of “over 3,000 VIPs, celebs, political figures, media and influencers” attended the grand opening of SLS Las Vegas last week. All 1,600 hotel rooms were reportedly booked at the glitzy new property on the northern end of the Las Vegas Strip. Servers expected to pour 25,000 cocktails and more than 12,000 glasses of champagne, reported the Las Vegas Sun. And fireworks were set to cap the evening’s festivities.
The $415-million SLS Las Vegas was developed by sbe entertainment, a Los Angeles-based hospitality group spearheaded by 39-year-old hotelier Sam Nazarian, opened last week. The property was built around the core of the former Sahara, former hangout of the Rat Pack, Elvis Presley, Marilyn Monroe and even the Beatles. It took 18 months to transform the aging 59-year-old property into the hottest spot in town.
The property was bought by Stockbridge Real Estate Holdings, a San Francisco-based private equity firm operated by Terry Fancher, in 2006. Sam Nazarian, who had made a name for himself by opening several trendy nightclubs, first in Los Angeles and later in Las Vegas, had an idea for a hotel casino project.
“We thought Mr. Nazarian had a very exciting idea,” Fancher told the Las Vegas Review Journal. “‘Let’s take an iconic older property and reinvest in it and bring it back to life.’ We liked the plan.”
But the recession intervened and the project got moved to the back burner. The Sahara was closed in 2011 and the SLS project began in February 2013.
“We could have easily pulled our chips off the table and just walked away (during the recession),” explains Fancher, “but we really didn’t have any chips left so we just kept going.
Fancher also credited a federal law that created “EB-5” financing that allowed foreign nationals to get green cards in exchange for substantial investment in the U.S. Stockbridge invested $300 million and another $115 million came from EB-5.
“You don’t often hear someone praising Congress,” Fancher told a press conference that included Nevada Senator Harry Reid and Congresswoman Dina Titus. “But this was a truly remarkable bill.”
“It’s a miracle we’re here today,” Fancher continued. “We could have lost this project so many times.”
Stockbridge ran the property until it became “no longer economically viable.” When Fancher closed the property in 2011, he left a note hanging on the door: “Be back soon!”
“A lot of people counted out Las Vegas as a city,” Nazarian said recently. “A lot of people counted us out.”
Stockbridge owns 90 percent of the hotel-casino, with Nazarian’s sbe entertainment holding a 10 percent non-voting share.
The grand opening is yet another sign of restored prosperity in the Las Vegas market, which took it on the chin during the recession. The intersection of Las Vegas Boulevard and Sahara Avenue is benefiting from the redevelopment of the historic property; a Walgreen’s is now under construction on the northeast side, and MGM Resorts International is planning a 33-acre, open-air concert venue on the southeast corner. Genting will soon start construction of the $4 billion Resorts World Las Vegas nearby. And Australian billionaire James Packer, CEO of Crown Resorts, just bought the old New Frontier site. He plans to build a new hotel-casino there; it could open as soon as 2016.
“We always planned on being a destination, and the area is now building up around us,” said Nazarian, who called himself the “King of the North Strip.”
Charlotte Summerfield, a supervisor at the World’s Largest Gift Shop across from the SLS, told 8 News Now she’s excited to see a property that will attract people to the north end of the Strip.
“Now it’s coming alive,” she said. “We need to do something with this corner, but let me tell you, with the marquee and what I am seeing on the outside, it’s going to be beautiful.”
Designer Philippe Starck partnered with Nazarian to create the property, the third SLS property in the U.S. (the others are in Beverly Hills and South Beach).
“The difference with Las Vegas is the dimension, the power of Las Vegas, the energy. This you cannot replace,” Starck told USA Today. “Las Vegas is Las Vegas, you like it or you hate it.”
Las Vegas Weekly reported that Life, the property’s new Life nightclub is “like the former Studio 54 at MGM meets Light in Mandalay Bay,” and should enhance the city’s fabled nightlife.
“The best and worst thing about Las Vegas is it is the most competitive nightclub market on the planet?the best nightclub operating groups, the best nightclubs, the biggest budgets, the biggest artists,” said Mio Danilovic, SBE vice president of nightlife, “So when you’re stepping into this market you really have to fight for it. It’s hard to do something different in a market where people have seen it all.”
Some 3,400 people were hired from a total of about 120,000 applicants. Staff were hired “based on their great personalities,” according to the company.
Analysts say the property should not be compared to the Cosmopolitan, which has struggled for solvency since opening in late 2010. For one thing, says Joel Simkins of Credit Suisse, SLS was “capitalized at a fraction” of the Cosmopolitan’s cost, which reached almost $4 billion. The Cosmopolitan was recently sold to the Blackstone Group for $1.7 billion.
In addition, the Cosmopolitan “opened at the worst time and tried to fill 3,000 rooms without a database,” Simkins said. “The biggest question for SLS is getting the spillover from its hotel, restaurant and nightlife guests into the casino.”
The SLS casino is on the small side, just 56,000 square feet. But it follows gaming trends of the past few years with fewer slot machines and more table games. It’s segmented so it even feels smaller than that.
Nevada gaming regulators have recommended that SLS Las Vegas be granted a state gaming license, but asked that Nazarian take no managerial role in the casino operations or share in the property’s gaming revenue until he, too is licensed by the state.
