LAS VEGAS -- Only three years after the last building boom added 10,000 rooms to the Las Vegas Strip, the gaming industry's biggest companies are preparing to outdo themselves yet again.
On New Year's Eve, the Hacienda, a 1,100-room hotel that was once a lone outpost at the distant south end of the Strip, will be demolished by its new owner, Circus Circus Enterprises, to make room for a 4,000-room hotel complex in 1998.
Three days into 1997 comes the scheduled opening of New York-New York, a 2,000-room resort whose eye-catching design -- consisting of scaled-down models of the Empire State and Chrysler buildings as well as Trump Tower, the Statue of Liberty and Grand Central Station -- has already made it a must-see location on the Strip.
The next two years will bring a $900 million renovation and expansion of Caesars Palace; the completion of Bellagio, a $1.25 billion project by Steve Wynn's Mirage Resorts; and Paris, a 3,000-room hotel planned by Hilton Hotels for a parcel next to its recently acquired Bally's casino.
In all, an estimated $6.8 billion is slated to be spent on the construction, expansion, rehabilitation and demolition of 13 major properties on the five-mile Strip portion of Las Vegas Boulevard through the end of 1998. Several other projects whose financing seems questionable could raise the total by as much as $2 billion.
This represents a massive bet that Vegas' tourism growth will continue indefinitely. The latest building boom will add at least 30,000 rooms to the Las Vegas inventory, a record increase of more than 30 percent. Meanwhile, existing casinos such as the MGM Grand, Harrah's and Circus Circus are getting multimillion-dollar face-lifts.
"The Big Three was a ripple compared to what's going on today," said Anthony Curtis, publisher of the Las Vegas Advisor, a newsletter for Vegas visitors.
Curtis' reference is to the nearly simultaneous openings in 1993 of three mega-resorts: Circus Circus' Luxor, Mirage Resorts' Treasure Island and the MGM Grand. Their combined eclat landed Vegas a Time magazine cover as a hot resort and generated a 20 percent surge in visitors over the next year.
Their success established one-upmanship as the guiding doctrine of Las Vegas casino-building.
"This is a theme-park business," said Scott M. Renner, the gaming analyst for the Wall Street investment firm Salomon Brothers. "As long as they bring on new attractions, this market will continue to recycle itself."
Several other elements distinguish the current wave of construction from its predecessors. For one thing, it is costlier than that of any previous comparable period, even considering inflation.
Moreover, it is devoid of the battle cry of the last construction boom: fashioning Las Vegas to appeal to families with children. Several of the new properties will be, if not family-hostile, then certainly family-neutral, with video arcades firmly segregated 11 from playing floors, no provision for day care and prohibitive room rates.
Vegas will now focus part of its pitch on older, well-heeled travelers. Three properties -- Bellagio, the renovated Sheraton Desert Inn and a 400-room Four Seasons hotel planned for the Circus Circus Hacienda site -- will be seeking five-star designation from the Mobil Travel Guide, a certification of first-class resort-scale service that has never been awarded to a Las Vegas resort.
The conventional wisdom is that little can stem the growth of Vegas tourism short of a water crisis (always a specter in this desert oasis). The fact that developers are ready to ante up billions to serve the future market gives many observers heart.
"These are not seat-of-the-pants operations anymore," said Curtis. "They're publicly traded corporations with huge credit lines and research-and-development departments.
"Who's to say they're making a mistake?"
Observers say several Strip casinos that have not spent enough to keep up with their neighbors could lose out as visitor interest shifts to the new and refurbished properties.
Also struggling to keep up are Vegas' downtown casinos. They were forced to band together two years ago to turn their main drag, Fremont Street, into a high-tech illuminated pedestrian mall in order to compete with the dazzling show on the Strip. So far, they've managed to keep downtown gaming revenues growing at about 5 percent a year.
"In this business, it's build or perish," said J. Terrence Lanni, chairman and chief executive of MGM Grand Inc. "Everybody's level of expectation has risen."
So have land and development costs. At $450 million, New York-New York will be the cheapest major casino to go up on the Strip for the rest of this decade (and with 2,000 rooms, also the smallest). Every other new property slated for completion in 1997 and 1998 will cost more than $500 million.
Pub Date: 12/26/96