News: Analysis & Commentary: Entrepreneurs
Vegas' Latest Long Shot
The Venetian will charge top rates in a city awash in hotels
It's nearing 7 p.m. on Friday, and Sheldon Adelson is eating frozen yogurt on his private Gulfstream III, heading from Las Vegas to Van Nuys, Calif. The 64-year-old Adelson, the man who made nearly a billion dollars off selling the Comdex computer show, has one more mission for the day: to check out a faux-Italian mural that will grace the ceiling of Las Vegas' newest swank hotel, the Venetian.
This is Adelson's baby, his $1.2 billion tribute to the fabled Adriatic city rising smack in the middle of the Vegas strip. Like the ultra-elegant Bellagio, which Mirage Resorts Inc. Chairman Steve Wynn opened two miles down the strip in October, the Venetian is part of the latest strategic gamble by Vegas hoteliers: elaborate resort-style hotels that are destinations in themselves, not just convenient places for tourists to flop between trips to the shows and casinos.
This high-end strategy has plenty of risk. Adelson plans to charge an average of $167 a night, among Vegas' steepest room rates--at a time when the city is awash in 109,000 rooms that hotel owners often fill by cutting rates. But Adelson has one card up his sleeve: the Sands Expo and Convention Center, which sits next door to the Venetian and Adelson also happens to own. With an estimated 1.2 million conventioneers visiting the center annually, Adelson is counting on them renting nearly two-thirds of the Venetian's 3,036 suites, often in mid-week, when Vegas usually dies. "Can they do it? Sure," says longtime hotel and casino consultant Saul F. Leonard. "Will it be easy? No way."DOGE'S PALACE. Adelson is familiar with long shots--both winning ones and losers. The son of a Boston cab driver, he became a huge force in Las Vegas in the 1980s as Comdex, once a little trade show for computer dealers, mushroomed into the biggest annual trade show in the U.S. Adelson shrewdly arranged to get a piece of the action--from airline tickets to hotel reservations--from the 200,000-plus Comdex attendees each year, before selling out to Japan's Softbank Corp. for $860 million in 1995.
Adelson had setbacks, too, losing millions after buying the run-down Las Vegas Sands for $128 million from Kirk Kerkorian in 1989. His new place will be anything but shabby. Adelson brought in 3,000 tons of imported marble for the floors and built replicas of the Doge's Palace, the Rialto Bridge, and the bell tower of St. Mark's cathedral. No expense was spared on the suites either. Each has three phones and a fax. "I've been a buyer of rooms in Vegas for years," says Adelson. "I'm giving buyers what they're going to want."
He'd better be right. To build the Venetian, Adelson went heavily into hock. He raised $522 million in high-yield debt, and financed everything from the air conditioners to the beds. He also invested some $320 million, including his 45-acre Sands plot. Says Adelson: "Either I'm the stupidest guy around or the biggest crap shooter in town."
When it opens in late April, guests will see a half-completed casino, with only 2,500 rooms ready and a branch of the tony Canyon Ranch health spa not set to open until May. What will be on hand, however, are pickets: To keep costs down, Adelson didn't sign a contract with the Culinary Union, which represents 45,000 food service workers.
It's just one more example of how Adelson wants to set his own rules in Vegas. Says Adelson, "I wasn't swaddled like the others were in green felt. I'm going to do things differently." That's O.K. with Vegas--as long as you come out a winner.By Ronald Grover in Las Vegas