The Strip Mega-Property Prototype Embraces Next-Gen And Goes Back to the Future

You know, Grand Sierra Resort is the modern Strip mega-property prototype.  Born the MGM Grand, she was once the flagship of her fleet, the biggest casino floor and one of the biggest hotels in the world.

The MGM was magical and strange with that wild shopping mall downstairs with the movie theater and the grand staircase with the chandelier, and the sedated lion the kids could have their pictures taken with.  The Ziegfield Theater, which had if I remember correctly the largest moving stage in the world for a time, played host to the classic dinner show "Hello, Hollywood, Hello!"  which when it closed had been the longest running dinner show in history and kept an army occupied sewing costumes, plastering on makeup, gaffeing cables, and building elaborate fake airplanes and skyscrapers out of paper mache.  It was all quite a dazzling spectacle, which actually lasted through two owners, but had been closed for a while before the Reno Hilton came in and did a different sort of experience there (with some long overdue elements)

Probably one of the saddest moments in the property's history was when the movie theater closed, much has been said about its recent reopening and I'll join in the happy chorus but instead of talking about movies, I'm going to talk about what this means in the broader context of the GSR, the neighborhood, and the city.

What GSR is attempting to do is expose the room for growth that actually exists in the Reno gaming market.  The market is there.  Families from Sacramento can easily reach Reno by car in all but winter months, Bay Area visitors have air and driving options, and many appreciate the high desert scenery, climate, easy access to Lake Tahoe, and the other regional attractions which make excellent day trips for families.  Many who were long-time Reno customers stopped coming after the out-of-town operators started closing up downtown almost 10 years ago.  Interestingly enough, almost 10 years ago is about the same time Hilton's owner stopped investing in the Reno property and essentially tried to get it running on autopilot til the climate would be right to sell it.

For its part, the GSR is doing what it can to adapt the mega-property business model to the environment, and I predict that they will end up somewhere around the Silver Legacy/Eldorado level of development at the end of the day.  I also think the outlook for them getting new towers built is actually strong.

GSR's vision of the business model working here is actually creating a little vacation village right in the middle of a city, down the street from an airport.  There will be owners, people who pay nightly rates, and people who come in on a package just as in any timeshare development anywhere, and they will leverage whatever attractions they can to keep the kids entertained during the hours the family is apart.  That's one of the key levers Reno has on the market -- the rich assortment of day trips I referred to earlier.

The movie theater, waterpark idea, that existing bungee ride and the golf thing they do are all key to this strategy of keeping the families entertained, more so in Reno than Vegas because Reno doesn't have the whole rest of The Strip -- but if we're looking at a weekender market, that doesn't matter if the one facility has diverse enough attractions.

It is important also to consider the impact that downtown redevelopment has on the GSR and what impact GSR could have on downtown redevelopment.  They will be counting on one another to deliver.  GSR owns its entire neighborhood so can build the experience without enforced consensus.  Downtown has the advantage that it can be composed of many smaller investors and capitalize on its urban amenities and charm.

The RSCVA seems to do an excellent job leveraging the whole region in their event marketing work, which means that instead of being played off one another, the casinos actually operate in an environment of competitive cooperation at least some of the time.  The GSR will be a real litmus test to see how that spirit holds up as more new ownership shifts locally and new business models are tested in Reno.  Let's hope they can pull it off.

image from wikipedia grand_sierra_resort

Comments

[Mike Van H]

Great post!
There's no doubt GSr is doing a good job running the casino/hotel side of things. They are bringing great events (matter of opinion) such as Nick Lahey concert, John Edwards speaking, Rocky Horror picture show, opening the movie theater back up, bringing up restaurants like Dolce from L.A., etc.
On the condo side they are having a bit more difficulty. They are having difficulties selling the concept of a hotel-condo in Reno. The unusual concept seems more Vegas like or NYC-like. It's a big hit in Florida.
Even with their troubles though, they are slowly but surely selling their hotel condos. Everything is contingent on them selling those condos. If they pull it off, the bank will give thm the money for the luxury spa and huge huge 200,000 s.f. indoor waterpark.
So now intense pressure falls on the marketing department to do this, and it's no surprise the marketing department has turned over its entire staff several times.
It angers me when people bash GSR...because they have been very careful not to make promises or unreasonable propositions. They have always said in planning commission and NAB meetings 'be patient with us, this is a 7 year long plan, we want to do this in phases so we dont have to end up foreclosing on the property and have to skip town.'
There's been lots fo rumors od disgruntled employees, but this is because GSR has dramatically raised the standards and expectations of its employees since they took over. They have new rules, new regulations that are probably way more strict than the Hilton's ever was.

[Mike Van H]

sorry for my typos I typed that on a Treo keyboard

[Ken]

Pretty good for a Treo post :) I think the best marketing they can do is to nail the basics with every guest experience.

I've been doing some research on travel review sites and a lot of people are down on the lack of free internet, and the quality of finishes and lack of basic amenities in the standard rooms.

Getting the hotel business solidified and thoroughly modernized will do a lot for their bottom line. Borrowing from the cues in the grand level rooms, standard and deluxe rooms should be repainted and appointed with new linens and minibars and they should give the wi fi away. Then radio promotions in the local as well as regional feeder markets to draw people in, and make sure the condo sales center is right on the way to the elevator to the guest rooms.

From what you say it sounds like they're on the right track trying to get better quality service out of employees, though I think they need to put in a financial incentive structure if they don't already have one.

Still, the lion's share of the bread and butter Strip business in Vegas isn't condo-hotel and Vegas wouldn't be in any position to create that kind of market if it hadn't already demonstrated a firm commitment to hospitality and entertainment, something Reno's people haven't always been perceived as taking too seriously this past decade. Turning that corner with regard to that perception will do a lot to free up some capital.

[Larry]

Having worked on getting the GSR brand up and running before the purchase of the property from Reno Hilton, I can tell you that they are 100% dedicated to the vision of the property.

Don't underestimate their determination and resources to build the entire area out to the fantastic resort they're envisioning.

Reno hasn't seen this level of single minded drive in some time...and I think GSR is going to surprise everyone's expectations in the end.

The Reno market is poised for a change in our level of expectation...and GSR is setting the bar high. We need to run with them and get our market out of the "2nd to Vegas" category. We have MUCH more to offer than Vegas in many ways...and now is our chance to really work together to make it a reality - and not just talk.

[Ken]

I think GSR can pull it off, Reno's a great destination and these guys seem to mean it. Just saying, don't underestimate the hotel business -- that's gonna fill a lot of beds. Condos aren't for everyone but having a good time is.