http://www.wsj.com/articles/blackstone-looks-to-buck-the-odds-on-vegas-strip-1424200562
"Blackstone Looks to Buck the Odds on Vegas Strip"
In December 2014, the New York investment firm of Blackstone Group LP purchased the Cosmopolitan of Las Vegas at a price of $1.73 Billion from Deutsche Bank AG. The luxury hotel-and-casino property on Las Vegas Boulevard has largely under performed since its opening and Blackstone is looking to revamp and transform the property to become more attractive to high rollers from around the world.
The Cosmo, since opening its doors in 2010, has been one of the least profitable casinos on the Strip. Its average daily room rate of just over $300/night is well above the Strip's average of $125. Blackstone executives identify this struggle as a direct result from previous managers of the property failing to target wealthy tourists and customers from China and Southeast Asia.
Blackstone's goals are to first boost gambling revenue, which brought in a lackluster $203 million in 2014, ranking as one of the worst on the Strip. The firm's long-term hope is that the company will be fueled by hospitality, entertainment and retail services. The prospects of a financial turnaround for the property are not far-fetched, as many of the desired qualities for a top-notch Las Vegas casino are already in place. The property still remains one of the most popular locations on the Strip due to its fabulous real estate, quality entertainment and rooms with high-end finishes.
I found this article to be interesting due to my recent time spent travelling to Las Vegas and my experiences staying at hotels and casinos on the Strip. I have always been enticed to stay at the Cosmopolitan, but high nightly rates drove me to choose other options each time I visited the city. Also, I am curious to see how Blackstone plans to increase gambling revenues when the property is surrounded by some of the most famous and successful gambling destinations in the world (Bellagio, Caesar's Palace, MGM Grand).
Lastly, I find it ironic yet fascinating how Blackstone is making such a big gamble in the biggest gambling city in the world. Many hotel-casinos have been struggling as of late and the Cosmo is a huge and risky project to take on (Blackstone Group is now the third owner of the property since 2008). Chris Jones, a senior analyst for Union Gaming, went on to say that if Blackstone is able to turn around the Cosmopolitan "it would be one of the few recent successes by firms in the investment business". Personally, I think Blackstone can pull off the recovery given their experience in the hospitality and entertainment industry and their successes with similar big projects in the past. Only time will tell, but I am going to Las Vegas for a third time in May and I am looking forward to stopping by the Cosmo to see if there have been any noticeable changes or additions to the property since my last visit!
