Wednesday, April 23, 2008 | 2 a.m.
- Frank Fertitta talks about planning for the Viva resort.
- Frank Fertitta talks about how the market will influence the timing of Viva.
At a time when businesses across the country are cutting back in the face of economic turmoil, the brothers at the helm of Station Casinos are accelerating plans for an enormous Las Vegas resort larger than CityCenter.
Frank and Lorenzo Fertitta, who took their company private last year with help from private equity giant Colony Capital, said in an interview Tuesday that they are going forward with plans to redevelop the site of the Wild Wild West motel and casino on Tropicana Avenue and Interstate 15.
The Fertittas said they have a detailed plan for the first phase of their Viva resort that includes three casinos and at least three hotels with as many as 5,200 rooms. The entire project, built on 110 acres over many years, would cost more than $10 billion and be larger than MGM Mirage’s $8 billion CityCenter, now under way on the Strip and expected to open in 2009 on 66 acres between Monte Carlo and Bellagio. Ultimately, the Viva complex could have 10,000 rooms.
Station Casinos’ timing would seem amiss, given the weakening national and local economies. But the Fertittas have defied skeptics here and on Wall Street by buying or building a 14-casino empire in 13 years.
Because the company is no longer publicly traded, the Fertittas do not have to answer to jittery shareholders worried about declining demand or falling share prices. But they still have to line up lenders, which they have not yet done. They said they hope the capital market will rebound before they are ready to start construction, sometime in the next two years.
Originally conceived as a single casino hotel built on a few dozen acres, plans for Viva grew exponentially as Station quietly bought or obtained rights to develop the 110-acre site, currently home to squat, nondescript warehouses and retail stores.
“It started to build upon itself, like putting together pieces of a puzzle,” Lorenzo Fertitta said.
In its expanded form, Viva will establish the Fertittas as “Strip players” and cement their legacy as casino entrepreneurs beyond their success in the neighborhood casino business — a track record long admired by their counterparts on the Strip.
“In a lot of ways, it will change the face of the company,” Lorenzo Fertitta said.
The complex will cater to tourists while also trying to lure locals, as all Strip casinos do.
The goal will be to try to strike a balance in which both tourists and locals feel comfortable, Frank Fertitta said. Other properties have attempted the same balance, with varying degrees of success. When built, Viva will top Red Rock Resort as the most expensive off-strip casino complex in history. Some Wall Street analysts said Red Rock’s $1 billion price tag was too rich for a mostly neighborhood crowd of gamblers. But the Fertittas have been happy with their long-term investment in Red Rock.
Viva, likewise, is a long-term bet on Las Vegas that they believe will help the market grow, as have previous resorts.
Viva seems certain to draw criticism from skeptics who say Las Vegas is building beyond its market. The same was said at the announcement of CityCenter and later projects, including Boyd Gaming Corp.’s $5 billion Echelon complex.
But the Fertittas, who have seen business cycles come and go, say Las Vegas will ultimately withstand the test of time.
“It’s very hard to predict cycles in the short run and know what is going to happen in the next six months or the next year,” Frank Fertitta said. “Where we’ve always placed our bets is over a five- to 10-year time horizon. When you have a solid strategy and look at the supply-demand dynamics in the Las Vegas Valley, the fact is, the population is going to continue to grow over the next 10 years and there are limited places to build locals casinos,” he said. “Ours is really a strategic plan over the long run (rather) than trying to time the market in the short run.”
Station has arguably been one of the hardest hit by the economic downturn among Las Vegas gaming companies because of its disproportionate effect on housing — an industry that to some extent drives locals casino growth. Locals operators say business has been weak because customers, though still patronizing their neighborhood casinos, are spending less money.
But the Fertittas are looking a year to two years ahead. After Aliante Station opens in North Las Vegas this year, Station hopes to break ground on Durango Station, at Durango Drive and the Las Vegas Beltway, early next year.
The company ultimately plans to build on hundreds of undeveloped acres it owns across the Las Vegas Valley, following a similar, if not more aggressive, timetable than it has followed in the past, they said. Station’s vast landholdings give it a strong market position that will only improve as Las Vegas continues to grow, the Fertittas say.