— On a sunny October morning, a stiff breeze blows through a busy construction site on the Las Vegas Strip. Gathering strength, it whips past spools of wire and pallets of lumber, picks up a payload of grit and spins itself into a mini-tornado that rises into the sky.
And then just as quickly, the wind dies, the air clears and the sky is filled, not with dust and dirt, but with the gleaming glass towers of CityCenter, the biggest thing to hit this town since the slot machine. Part destination resort, part urban enclave, the 67-acre complex is a city within a city, an architectural tour de force and an $8.5-billion gamble on the economy, consumer confidence and the appeal of Vegas itself.
The dust devil may have lasted only a minute, but the winds of change that CityCenter represents will blow through Las Vegas for years to come.
SoHo with slot machines
Set to open its multi-billion-dollar doors in December, CityCenter is more than just another casino resort. It’s also the largest privately funded construction project in the U.S., a much-touted honorific that, in hindsight, strikes some as more burden than blessing. Conceived before the recession — and almost bankrupted by it — CityCenter is making its debut in a very different world.
The idea was born in 2004 when executives at MGM Mirage, CityCenter’s developer, began exploring ways to utilize what was then a 55-acre parcel (later expanded to 67 acres) between its Monte Carlo and Bellagio resorts. The task was headed up by then-president and current CEO James Murren.
“I didn’t want another resort or a mall,” says Murren, who had moved to Las Vegas in 1998 after 14 years of city living in New York. “I wanted SoHo and an urban environment of living, working and playing.” To that end, he pursued what he calls an “aspirational” concept: a mixed-use project that would incorporate urban-planning, iconic architecture and a pedestrian-friendly experience.
It is undeniably all that. Approaching CityCenter from the Strip, the first thing most visitors will see is Crystals, the project’s “retail district,” an angular structure designed by Daniel Libeskind. Around it, six glass towers rise into the sky, a collection of hotels and high-rise condominiums designed by world-renowned architects, including Helmut Jahn, Norman Foster and Rafael Viñoly.
In the middle of it all is Aria, the 4,004-room casino hotel that promises to be CityCenter’s flagship property. Designed by Cesar Pelli, the 61-story skyscraper consists of several curvilinear wings that rise above a 150,000-square-foot casino, 215,000-square-foot pool deck and 1,800-seat theater that will present a new Cirque du Soleil production dedicated to the life and music of Elvis Presley.
Add in the pocket parks and water features, the skybridges and electric tram, and the public artworks by Henry Moore, Maya Lin and others, and CityCenter is unlike anything the Strip has ever seen.
There’s just one problem. While James Murren and MGM Mirage have spent the last few years building CityCenter up, the global economy has gone through the biggest meltdown in recent history. And while many economists say the recession itself has ended, the disappearance of millions of jobs and the evaporation of trillions of dollars in consumer equity will present continuing challenges for anyone counting on a rebound in discretionary spending.
Or, as Anthony Curtis, president of LasVegasAdvisor.com, an online newsletter, puts it: “If the economy wasn’t like it is now, [CityCenter] would be the most amazing thing Vegas has ever seen — and very, very successful. But opening into the jaws of this animal is going to be tough.”
Construction casualties and the capitalist way
That animal has proved especially ferocious along the Las Vegas Strip, where the landscape is littered with the remains of other pre-recessionary dreams. Across from Wynn, the site of the proposed 3,500-room Plaza resort is an empty dirt lot. Next door, the even larger (5,000 rooms) Echelon has been little more than a stunted steel skeleton for more than a year. And over by the Sahara, the 3,800-room Fontainebleu is a half-finished hulk whose fate awaits the decision of a bankruptcy judge.
Like CityCenter, those projects were predicated on two longstanding pillars of Las Vegas development: a 25-year history of near-constant visitor increases (the post-9/11 years being the singular exception) and a steroidal “Field of Dreams” conviction that if you’re going to build it, build it really, really big and people will feel compelled to come. It worked in 1990, the year after the Mirage opened (a 15-percent bump); it worked in 1994 after Luxor, MGM Grand and Treasure Island opened (20 percent), and it worked in 1999 after Bellagio opened (10 percent).
Past history, of course, is no indication of post-recession performance, and CityCenter is opening in a radically different environment than its predecessors. Last year, Las Vegas posted its first year-to-year drop in visitation since 9/11, a 4.4-percent decline from 2007’s record high of 39.2 million visitors. And while the trend lines may now be improving, the latest statistics show 2009 visitation (through August) is still off 5.8 percent from 2008.
Meanwhile — and despite the high-profile failures noted above — Las Vegas room inventory continues to grow. Last year, the city’s hotels added another 7,600 rooms (to 140,000). The pace has slowed substantially since then, but come December, CityCenter will unveil its first three hotels (Aria, Vdara and a Mandarin Oriental), adding another 5,900 rooms to the pie.
Clearly, that’s a lot to digest in a market that’s been on a year-long crash diet. (It also explains why amazing deals continue to abound: $31 at Excalibur, $49 at Harrah’s and Bally’s, $129 at Vdara when it opens December 1.) And with at least another 5,000 rooms expected to open around the valley next year, the stakes couldn’t be higher.
“It’s the capitalist way,” says Terry Jicinsky, senior vice president of operations for the Las Vegas Convention and Visitors Authority (LVCVA). “People will overinvest in something that’s successful. We may swing the pendulum a little too far, but it will self-correct and come back to the middle.”
Vegas on the come
The bigger issue, perhaps, is that the middle is a moving target, and equilibrium may prove elusive once CityCenter opens. Will it be “additive” and draw lots of new and returning visitors? Will it “cannibalize” bookings at existing properties and keep room prices at bargain-basement levels? Will “the new normal” prompt potential visitors to think more carefully before hopping in the car or heading to the airport for that quick trip to Vegas?
Odds are the answer is “all of the above,” which is not to say that everybody’s going to stay home, that Las Vegas will become a ghost town or that CityCenter will fail. While many Wall Street analysts point to shaky fundamentals at the big casino companies, Las Vegas boosters remain convinced they can manage through the crisis. (Witness the recent resurgence of the penny slot, which offers a deceptively low entry cost to the player, yet provides a surprisingly good return to the house.)
In fact, Las Vegas is uniquely poised to adapt to changing times, whether it’s by adjusting menu offerings, lowering room rates or tweaking the mix of baccarat and blackjack tables on the casino floor. Everyone with a stake in Las Vegas’ future agrees that early 2010 will be challenging, but they also believe the picture brightens steadily as time goes on.
As evidence, they point to incremental improvements that have either been overlooked or are only starting to appear. “There’s less room growth coming to Las Vegas than the consensus on Wall Street realizes,” says analyst Bill Lerner of Union Gaming Group as delays have “weeded the supply.” (Both The Harmon Hotel, a 400-room CityCenter property, and the Cosmpolitan, an adjacent 3,000-room property, won’t open until late 2010.)
Lerner and others also predict a rebound in visitation of up to 5 percent next year as people check out CityCenter, take advantage of the ongoing bargains and begin to feel better about their own financial situation. International visitation is also increasing, says Jicinsky, and now accounts for about 15 percent of the total. (Last week, British Airways started daily, non-stop service from Heathrow; next May, XL Airways will start twice-weekly charter service from Paris.)
All of which bodes well for both CityCenter and Las Vegas and, perhaps, for travel in general. “We’re a good microcosm of the broader business community,” says Murren. “The next six months are going to be muted, but business travel and consumer activity are going to improve, particularly by April or May of next year.”
In the meantime, over on the CityCenter campus, the drilling and sawing and hammering continue as thousands of construction workers race against next month’s rolling openings. (Vdara opens December 1; Crystals, December 3; Mandarin Oriental, December 4, and Aria, December 16.) No one really knows how all of the above will play out, but standing in the middle of this city-in-the-making, it’s easy to see why Murren believes CityCenter will be a “must-see destination for a very long time.”
As a longtime observer of the local scene, Curtis of LasVegasAdvisor.com would agree, with one consumer-oriented addendum: “[CityCenter] will eventually be something that’s truly spectacular. Las Vegas will come back and all these new rooms will get filled. For now, though, it’s a bargain hunter’s paradise.”