|By Ashley Powers, Los Angeles
TimesMcClatchy-Tribune Regional News
December 14--REPORTING FROM LAS VEGAS -- Where Harmon Avenue slices through this town's incandescent Strip, two neighboring casino complexes mark the waning days of the Las Vegas boom -- and the hope for a rebound.
The dual-towered Cosmopolitan, which opens Wednesday, is owned by German bankers who foreclosed on its original developer. The property flaunts book-adorned suites (one tome explores Joni Mitchell's "blue period") and a sly sense of humor (near some "eye in the sky" security cameras: a mural of an eye).
The nearly 3,000-room resort will probably be the Strip's last new offering for years. Will it revive recession-weary Las Vegas Boulevard? Next door stands evidence that hints otherwise.
CityCenter, MGM Resorts International's 67-acre "starchitect" showcase, which opened a year ago, also caters to a cocktail party crowd. But executives initially struggled to fill its centerpiece hotel, Aria, and cope with hundreds of unsold condo units. Its Harmon hotel sits unfinished, tarred by litigation and speculation about its possible implosion.
"We probably couldn't have asked for a worse time in modern history to introduce 18 million square feet of luxury product into the marketplace," said Aria President Bill McBeath. CityCenter, he said, ended up with "a customer that was in shock or in hiding or didn't exist anymore in some cases."
The downturn has erased a number of truisms in fiercely proud Las Vegas: that tourists hungered for ever-pricier accoutrements, that gamblers rolled dice regardless of the economy's strength, that Nevada's jobless rate would remain low and its housing market high-flying.
Arguably, though, the maxim hardest for Las Vegas to discard was this: If we build a casino, more tourists will come.
That belief prompted two decades of spendthrift building, from the faux-volcano-fronted Mirage in 1989 to the upscale Echelon, where construction was halted in 2008, leaving remnants suggestive of a giant Erector Set.
"I just don't think in this current economy a new casino is going to give Vegas a bump," said Stephen P.A. Brown, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.
The Cosmopolitan is the fourth casino to launch on the Strip during the economic swoon, and none of the others boosted visitation as past openings had. In late 2009, executives predicted CityCenter's vastness and bourgeois appeal would woo, at the very least, 5% more tourists to Las Vegas. Instead, Brown said, visitor volume this year may inch up by half that.
Many analysts, however, are convinced the Strip's free-fall has halted as the nation begins a slight -- although spotty -- economic upswing. At CityCenter, Aria has jumped from two-thirds to four-fifths full and executives are publicly upbeat about its prospects.
Last week, Las Vegas rejoiced at a slew of statistics implying the Strip was on the mend. In October, the most recent month for data, gambling revenue soared 16% compared with October of last year. Convention attendance and hotel room prices edged higher in October as well.
But 2009 is a particularly dour base of comparison. Tourists blew far less cash on most of the Strip's enticements, partly because of heavy discounting.
In 2008, the average gambler's budget was about $532, according to the Las Vegas Convention and Visitors Authority. In 2009, that tumbled to $482.
Though the Cosmopolitan will generate 5,000 jobs, the state still has a nation-leading jobless rate of 14.2%. The firm PricewaterhouseCoopers pegs 2014 as the year Nevada gaming revenue may rebound to near-peak levels. The state's recovery will likely lag 12 to 18 months behind the rest of the nation, said analyst Mary Lynn Palenik.
Which all explains why William R. Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno, views the Cosmopolitan's opening as a point of demarcation.
"The era of new mega-casinos is over," he said.
Too many investors were burned by the gaming industry's nosedive, he said. For example, the uncompleted multibillion-dollar Fontainebleau hotel was auctioned off last year for about $150 million; it could stand sentinel for years.
At Harmon Avenue and Las Vegas Boulevard, the glass-sheathed CityCenter was so close to insolvency in 2009 that Nevada's senators pleaded with banks to give MGM Resorts a break and save thousands of jobs.
Meanwhile, Deutsche Bank had taken over the Cosmopolitan, failed to find investors and finished the $4-billion twin skyscrapers itself. Once the real estate market flopped, its luxury condos were reborn as hotel rooms. At CityCenter, there was some relief the project wasn't abandoned.
"The single worst thing that could have happened to CityCenter is to have a dead construction project deteriorating next to this beautiful architecture," McBeath said.
Under the direction of Chief Executive John Unwin, the Cosmopolitan has created an offbeat persona. Its employees are known as "CoStars." The parking garage is brightened with graffiti-inspired art, and the lobby with video screens looping animation is suggestive of a Pink Floyd show.
The property, on nearly 9 acres, is also unusual in its verticality: one tower rises 50 stories, the other 52. Most of its celebrity-chef eateries and trendy shops, including a DJ-run sneaker store, hum on different floors than the slot machines.
"We're not a Ritz-Carlton. We might be a little more fun," Unwin said. "I mean, we're in Las Vegas, so we really want to embrace Las Vegas ... and provide luxury with a bit of a wink."
Some analysts fear the Cosmopolitan will slash prices while it gets its footing and further yank down room rates, a key source of profits on the Strip. In 2007, the average daily room rate was $132. So far this year, it's about $95.
Still, the hotel provides Las Vegas with extravagant new bait, something tourism officials will have to do without for a while.
Those officials, bowing to a more austere future, plan to launch a marketing campaign next year to complement the long-running pitch "What happens here, stays here." Aimed at recession-worn consumers, it will focus on the value and breadth of Las Vegas offerings and its escapist allure.
The reason, in part: "We won't have those spectacular openings that drive people here," said Cathy Tull, the visitors authority senior vice president of marketing.
Similarly, advertising will be central to turning the Harmon Avenue intersection into a profitable corner. MGM Resorts executives are ramping up CityCenter marketing.
Next door, Cosmopolitan executives hope to wow tourists with the likes of New Year's Eve performances from Coldplay and Jay-Z. Also, to titillate them. That was exemplified in a recent TV ad featuring pants-less bellmen, a flirtatious grandmother and a menagerie of kittens, white rabbits and deer.
The commercial's tagline feels like a nod to the current era of Las Vegas ostentation: "Just the right amount of wrong."
To see more of the Los Angeles Times, or to subscribe to the newspaper, go to http://www.latimes.com.
Copyright (c) 2010, Los Angeles Times
Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com.