In with the new

The new Aladdin casino opens this week

By Dave Berns

August 14, 2000 Web posted at: 4:15 PM EDT (2015 GMT)

LAS VEGAS, Nevada (Las Vegas Review Journal) -- About 18 months ago, then-Mirage Resorts Chairman Steve Wynn eyed the evolving Aladdin project from his flagship property, Bellagio, and he didn't like what he saw.

The entrance sat along Harmon Avenue, not the Strip. The swimming pool was to be built in the shade. The exteriors? Wynn hated them.

He told Chief Financial Officer Dan Lee that he was interested in buying the entire development, steel superstructure and all, knocking it down and starting again.

But Lee talked him out of the deal.

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The 34-acre site was on the wrong side of the Strip, away from the high-visibility west side of Las Vegas Boulevard, with its Interstate 15 exposure, Lee argued. Besides, the numbers man counseled his boss, you don't want to buy somebody else's headaches.

So Wynn turned his attention elsewhere, and work on the Aladdin continued, leading to Thursday's scheduled 7 p.m. public opening of the $1.4 billion megaresort. A fireworks show is scheduled to begin at 10:30 p.m.

More than most recent Strip projects, skeptics have wondered if the Aladdin would be built and opened by its current owners.

There were doubts they could raise the money for the entire complex.

There were doubts they could complete the 2,567 hotel rooms and 135,000 square feet of casino space on time and on budget.

The talk continued when a construction worker died in an April 1999 accident at the site.

Banking upon the uncertainty, Hilton Hotels casino spinoff Park Place Entertainment purchased about one-third of the public bonds used to finance the project, a move that could lead to a nice profit for Park Place if the bonds' value continues to rise. Those bonds could be transformed into an ownership interest in the Aladdin if the project fails.

Park Place bought the bonds when they were trading as low as 27 cents on the dollar. They've been trading at the 60-cents-on-the-dollar range in recent weeks and could go higher once the property opens.

"We live in a world of skeptics, don't we?" reflected Jack Sommer, the head of the family trust that owns 57 percent of the project. "We didn't come into this to prove ourselves."

The irony of the new Aladdin can be found in its location, a sticking point for its financially troubled predecessor of the same name, which was imploded on April 27, 1998. The latest incarnation is banking upon its setting between the MGM Grand and Paris-Bally's and across from Bellagio to drive millions of fanny-packers through its front doors.

"It'll be a nice property. I love the location," said Southcoast Capital gaming industry analyst Danny Davila. "I really don't think you can get a better location these days."

What they'll find when they enter is:

--A 130-store shopping mall, 21 restaurants, 7,000-seat theater and a separate showroom.

--A 35,000-square-foot high-end casino to be operated by London Clubs International.

--Two outdoor pools six stories above the Strip.

--A meeting area with 75,000 square feet of space.

"The Aladdin will be the maximum highest and best use of the property," Sommer said. "It would have been a crime for the trust to use the property to cannibalize on neighboring attractions."

"Just refurbishing the old Aladdin, maybe add some parking garages, it would have been a poor use of the property. From a real-estate perspective, a mixed-use development, including gaming and retail, was necessary."

Aladdin's bosses expect the hotel to generate nightly room rates of about $135, or slightly higher than the $123 nightly rate generated by The Mirage during the second quarter ended June 30.

London Clubs, which raised its ownership stake in the project late last year from 25 percent to 40 percent after contributing an estimated $30 million to meet construction cost overruns, expects to drive high-end European gamblers through the property, a niche London Clubs Chairman Alan Goodenough says longtime Strip operators have missed.

"What we bring to Las Vegas is Britishness," Goodenough said. "It sounds conceited, but we think we'll provide genuine British service. As you know, many places serve hamburgers in London, but it takes Americans to do them justice. We hope to provide British customer service, not an imitation."

At least one Wall Street observer expects the early going to be slow for the Aladdin. The dog days of summer with their 100-plus-degree temperatures are traditionally tough for Las Vegas casino operators, cutting into the revenues of well-established megaresorts.

"I think long-term it will be a good property that will be successful," said Larry Klatskin, a Jefferies & Co. bond analyst. "In the short-term, with the heat, it will probably have disappointing numbers."

That said, Klatskin expects the Aladdin to be fully operating in time for its official grand opening in late October, a time chosen by company officials who appear to agree with Klatskin's assessment of near-term results.

"You're not opening at optimal time," Klatskin observed, "but you're opening in time to get the kinks out."

Meantime, the skeptics persist, wondering whether the Sommer family is in for the long haul. Rumors have swirled for months that the family has been split on whether additional dollars should be contributed to the project.

Similarly, on-again, off-again plans to build a music-themed 1,000-room hotel at the back end of the Aladdin property are currently on hold, as the family trust and London Clubs seek a partner or money to finance the property.

"This guy doesn't have deep pockets," University of Nevada, Las Vegas professor Bill Thompson said of Sommer. "That's the problem. Is he going to have the money to sustain it?"

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