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Blackstone to invest $200 million in Cosmo renovations, increase gaming rev

Discussion in 'Casino Industry & Development' started by donfairplay, Feb 17, 2015.

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  1. donfairplay

    donfairplay Low-Roller

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    The WSJ had a pretty good piece about Blackstone's ideas for turning around Cosmo.

    Article title (search with google): Blackstone Looks to Buck the Odds on Vegas Strip

    Summary:

    - the top 4 floors (with 16 foot ceilings, high roller suites basically) are apparently unfinished and haven't been used. Blackstone plans to finish those and market to high rollers, many from China and southeast Asia.

    - increase VIP casino areas (assumingly for high rollers, or VMB'ers who are on a heater :evillaugh )

    - add restaurants/bars in vacant space on the first 3 floors. The article doesn't specify which spaces.

    - increase gaming revenue. This is the top priority for Blackstone. Casino revenue of $209 million is among the lowest on the strip. It doesn't say how, might they decrease free play? might they increase free play to entice more customers? decrease/increase hotel comps? squeeze more dollars from slot machines?

    Some things Blackstone already likes are the best room rates ($309 at Cosmo, $125 average on the strip), the increase in EBITDA last year ($150 million, up 48% from last year), and apparently the slogan.

    Rather than dump the Cosmopolitan as the financial crisis was brewing, Deutsche Bank hired its own gambling specialists and interior designers to create a world-class hotel-casino. The Cosmopolitan’s television ads became famous for the tagline, “Just the right amount of wrong.”

    That much, at least, won’t change. “We love the slogan,” Mr. Henritze said.
     
  2. thecarve

    thecarve Misanthrope

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    Ha! You beat me to the punch, donfairplay. I was just about to post this.

    Good article. Seems like a reasonable investment to me.
     
  3. BlacklabberMike

    BlacklabberMike VIP Whale

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    If they are serious about increasing gaming revenue, eliminate anyt 6/5 blackjack games, offer stand on 17, DDAS, on all games...
    offer full pay VP like 10/7 Double bonus, Craps odds maybe 50-1 or more, single zero roulette..you get the idea...
    Benny Binion had it right, but todays bean counters don't know shit....
    give a good game , and they will come...
     
  4. RiddickBull

    RiddickBull VIP Whale

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    Don't want sound like a dick, but I don't think giving good game rules will solve Cosmo's gaming problem.

    That place needs significant change to be profitable.
     
  5. smartone

    smartone VIP Whale

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    Yeah! ... and book Betty Grable for the showroom too, enough of this Marquee Nightclub crap!!!

    On a serious note... this should be fun to watch... Cosmo already has a killer location, solid reputation and cash flow. Attempting to get their current clientele or new customers to the tables/machines at a time when gaming's slice of the overall pie is declining will be no easy task. At least they have the dough to make some moves. I wish 'em luck!
     
  6. rezmike

    rezmike Tourist

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    This will be very interesting- I feel like Cosmo is inherently designed to draw in a clientele that does not gamble for the high stakes they're looking to draw. They'll have to find a careful balance in drawing more established high-rollers without alienating the 25-34 age range that's allowed you to charge $300+ room rates. You can't forget to dance with the girl you brought...
     
  7. chitownjohn

    chitownjohn High-Roller

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    That tells me there going after the high end bacc players. No need to change anything else, that's where the money is.

    On a side note somewhat unbelievable they haven't finished the top floors, seems like that would be the first thing to get finished.
     
  8. rgerards

    rgerards Low-Roller

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    Revert the blackjack changes and i'll be bringing my small bankroll :)
     
  9. saeldway

    saeldway Low-Roller

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    They've got a great location, great nightlife, great restaurants, and a great niche. They just need to re-vamp their gaming accounting system if they want to raise gaming rev. That means increasing offers to the right players and decreasing to the wrong players. I've read Nate and others on this board mention that the way they accumulate theo is kind of whacky relative to Wynn and MGM. I don't know why people fail to listen to Steve Wynn at this point on his theory of comping. He says people go BK after giving out a ton expecting play that never comes. The way succeed is to be consistent with gamblers. Wynn may be tougher to get comped rooms, but they have great gaming rev relative to the other places and you hear less about their swings than you do with CET and Sands.
     
  10. 44inarow

    44inarow VIP Whale

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    Agreed on this. As far as blackjack, for example, I don't think they need to completely eliminate 6:5 (obviously I'd love it if they did, but I'm realistic), but it also shouldn't be so difficult to find a 3:2 table at $50 and up. They've gotten better about room comps, but still not great; I remember when they first opened, a few hours at $100/average craps got nothing, whereas a couple years later I got consistent room offers that have since dried up. They need to make it so that people know what to expect.

    Bottom line, I love the property, but can't bring myself to play there over Aria when it's nearly impossible to find a decent blackjack game, especially when Aria has live music at Lift Bar right off the blackjack pit, which I'm a sucker for.
     
  11. double_faces

    double_faces Tourist

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    Got Gold status through resort spending, not so much gambling. Hoping that they have a grace period and extend the "gambling-centered" perks for a bit.
     
  12. thefish2010

    thefish2010 Low-Roller

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    I disagree. When they first opened, I went there specifically because they matched the MGM Mirage High Limit double deck rules (S17, DAS, 3:2). Those are gone now - they even hit soft 17 on their double deck in the Talon Club on the second floor, and at many tables on the regular floor they are paying 6:5. It is specifically because of these bad rules that I have stayed away (except for a trip last week - my first there in years - where I played on the high limit shoe game where they stand on soft 17). They have good hosts, and a great property.....but the crappy rules make a big difference to me.

    It's funny that the top 4 floors were unfinished. When they first opened, I did fantastically well there and wound up playing very large ($5K+/hand average, 8 hrs/day). I was in a wraparound suite, but my host told me that next time I came back, with the right deposit ($500K+) I could get into one of their penthouses in the East Tower (the West End penthouses, which I have stayed in, are basically souped-up Aria or Bellagio penthouses that go for around $2K/night....the East Tower penthouses are the exclusive ones). Anyway, he gave me a tour of an East Tower penthouse before I left, and I noticed that it was 4 floors short of the top. I didn't ask why - I assumed the top few floors were executive offices. It never occurred to me that they were actually unfinished.
     
  13. Tellafriend

    Tellafriend High-Roller

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    What?!?! $500k deposit for a penthouse similar to a suite at b or aria?! That is the biggest screwjob in Vegas history. You can get in a villa anywhere for much, much less than a $500k deposit. That host is taking advantage of you by espousing such expectations.
     
    Last edited: Feb 18, 2015
  14. Tbone3336

    Tbone3336 VIP Whale

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    Our host from Aria just left and took on at Cosmo, we booked our first stay there with him for the end of April to give it a shot. We are by no means high-rollers, at most 8-10K bankroll between two of us, and given the previous lack of offers based on our play there, maybe they are trying to expand into the mid tier player a bit. I do look forward to staying there and giving the place a good once over in depth to see if we like it for future trips.
     
  15. UKFanatic

    UKFanatic The Arbiter of Taste Caviar Kid

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    Fish, I am a bit skeptical of either your post or your host. My host at Cosmo has offered me that suite and I have never approached depositing $500k with them. I think your host either misspoke or is misinformed
     
  16. UKFanatic

    UKFanatic The Arbiter of Taste Caviar Kid

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    I can add a bit of insight to the original post because my host and I had a lengthy conversation about this subject just yesterday. She told me everything the article mentions plus the following: Comme Ca is gone. It is their least popular restaurant and will be replaced. She also said they may get rid of the artists' studio on the third floor and replace it with a restaurant. She said there is a lot of wasted unused space behind the studio. She said they want to build some kind of authentic Asian restaurant. No surprise, but apparently China Poblano does not cut it for Asian high rollers, lol. She said they are going to build some kind of sky villas on the top floors.

    And here is the news I think everyone will like: comps should get better. The new people in charge of operations have a gambling background that the previous operators did not. They want to de-emphasize the club (since the hotel doesn't make a lot from it) and start marketing to gamblers. First step, they have changed the theo formula for BJ. apparently, tyhey used to use a very low HA as part of the calculation and that has changed. She also said this week that they installed better rules in the high limit BJ areas (S17 on the DD tables now). I did not ask about 6/5 or the main floor since I don't play there. The real stunner for me was that she said it used to be very difficult to get the owners to approve a credit line over half a million. Now, that is easier. That doesn't affect most of us, but it is still a sign that they are finally catering to gamblers
     
  17. double_faces

    double_faces Tourist

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    Chris Santos is opening up Las Vegas location of "Beauty & Essex" at the Cosmo.. looks like that may replace Comme Ca.
     
  18. Kickin

    Kickin Flea

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    This makes a lot more sense to me. Having no direct knowledge, just my opinion based on reading their quarterlies and knowing the type of thing investors like Blackstone would do. Their gambling share of total revenue is the smallest of all their major competitors but its also grown the fastest over the past year. They also noted in their filings that Marquee's business was down and overall F&B and entertainment were growing slowest. Marquee was good for them early on, but its results lately prove that its a much more fickle business just like it is everywhere else and they need to keep coming in with the new new thing. Hotel revenue growth was strong but that's more closely tied to occupancy of the strip overall. Gambling is the low hanging fruit and its a consistent and potentially loyal stream of cash flow. If you owned Cosmo you'd want to fix that area as well.

    Haha, I guess anything popular in NYC will wind up in Vegas eventually. Beauty & Essex is actually a good idea though especially because of its brunch popularity. I don't think there is much in the way of a "fashionable" boozy brunch option in Vegas. I imagine they will still serve free champagne to chicks in the bathroom. In Vegas that can make things extra crazy.
     
  19. rezmike

    rezmike Tourist

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    Great info UK!
     
  20. breanna61

    breanna61 Super Moderator

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    I love Cosmo; hope my offers continue under the new ownership.
     
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