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November 20, 2018

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Construction begins this week on Suncoast casino

Coast Resorts Inc. begins construction this week on its fourth and most upscale Las Vegas hotel-casino, the $175 million Suncoast in the affluent Summerlin area.

The Mediterranean-themed resort is scheduled to open in autumn 2000 with 216 rooms and suites in a 10-story tower, a 78,000-square-foot casino, at least five restaurants, a 64-lane bowling center and a 16-screen Century Theater movie complex.

Situated on 50 acres at the northwest corner of Alta and Rampart and just 1/4 mile from the new Resort at Summerlin hotel-casino, Suncoast will have a more luxurious appearance than Coast's prior enterprises, reflecting the demographics of its targeted customers living nearby.

But it will follow the same strategy used by Coast's chairman and controlling shareholder, Michael Gaughan, to make the Orleans, Barbary Coast and Gold Coast hotel-casinos among the most successful in the Las Vegas market.

That strategy, targeted primarily at locals, calls for developing customer loyalty by offering quality gaming, entertainment and dining experiences at affordable prices.

Coast derives about 70 percent of its gaming revenue from slot and video poker games, and Suncoast will offer about 2,100 machines featuring new technology designed to make them more customer friendly, said Coast executive David Ross.

The 35-year-old Ross, currently general manager of the Barbary Coast, will assume a similar position at Suncoast, while Michael Gaughan's son, Michael Gaughan Jr., will replace Ross at the Strip property.

Ross said the Suncoast casino will include 48 table games, a 150-seat race and sports book and a state-of-the-art, 600-seat bingo facility. But it will also take a lesson from the Orleans, whose financial results staged a major positive turnaround after the company switched to a headliner policy in the West Tropicana Avenue hotel-casino's 850-seat theater.

Suncoast will feature the first large-scale entertainment venue in the fast-growing Summerlin area -- a 600-seat showroom that will offer name entertainers.

The Orleans showroom sells out regularly, drawing customers from Strip casinos as well as Las Vegas homes, and Ross expects the Suncoast entertainment venue to do the same.

He also expects the Suncoast's initial 216 rooms and suites to match the high 90 percent occupancy rates enjoyed by the other three Coast properties, in part because of business from out-of-towners visiting Summerlin-area residents.

Standard rooms will be 550 square feet in size, larger than the standard Strip hotel room and just a bit smaller than standard suites at the Rio and Venetian. Suites atop Suncoast's 10-story hotel tower will be at least 1,100 square feet. Ross said Coast is projecting a $61 average daily rate for the standard rooms.

In building Suncoast, Ross said, Coast Resorts will include the exterior "shell" of a second tower connecting to the casino that can be finished off with another 216 rooms and suites if demand warrants. The plan is to avoid bringing back construction cranes and other equipment to the residential area once the main structure is completed.

But the rooms and suites aren't expected to provide Suncoast's main customer base.

"Part of Michael Gaughan's strategy is to continue doing what he's done all his career -- cater to locals," Ross said.

"Las Vegans don't say, 'Let's go out and gamble.' They say, 'Let's go out to dinner or to a movie or to see a performer,"' he said.

"We're in the entertainment business. If we can offer great service, great food and great entertainment at reasonable prices in a great environment, our customers will say, 'That's our place.'

"During employee orientation, I tell them that Miller Lite or IGT slots are the same next door as they are here. The difference boils down to service. If we can exceed, not just meet, customer expectations, we'll do fine."

Suncoast and the Resort at Summerlin will be the two closest casinos to the rapidly growing Summerlin-Pecole Ranch residential area and its bevy of golf courses. Ross said Suncoast has already discussed package deals with course operators for its guests.

Suncoast will hire about 1,800 workers, boosting the total employed by Coast Resorts to nearly 7,000, Ross said. But he doesn't anticipate too much trouble finding qualified employees.

"This is the most competitive and tightest labor market I've ever seen," he said. "But we're a progressive company offering competitive wages and benefits.

"And one of our philosophies is to promote from within. If you let people know they can grow with the company, that promotes loyalty."

Coast's growth isn't likely to end with Suncoast. The company owns 29 acres near the Fiesta and Texas Station in North Las Vegas that is part of a casino enterprise zone.

But for now, it's concentrating on Suncoast, which is being financed through a combination of bank debt, refinanced subordinated debt and cash flow. Its total long-term debt stood at $290 million last March 31.

For all 1998, the three Coast Resorts properties posted consolidated revenue of $332.4 million and cash flow of $64 million, for a 19.2 percent cash-flow margin.