News - July 17, 2017 - by Ray Hagar
By Ray Hagar
Reno gaming executive Alex Meruelo and Meruelo Group faces a difficult road in turning the SLS property on the Las Vegas Strip -- formerly the Sahara -- into a profitable venture, two of Nevada's top lobbyists said Monday on Nevada Newsmakers.
Brothers Michael and Alfredo Alonso of Reno agreed that Meruelo, owner the the Grand Sierra Resort in Reno, will face stronger competition in Las Vegas and may be at a disadvantage with the Strip location of his new acquisition.
Meruelo's new property is on the northern part of the Strip that also includes two major unfinished projects -- the 25-acre Fontainebleau Las Vegas and the Genting Group's Resorts World Las Vegas. That could be a drawback,, Michael Alonso said.
"That property (SLS), just the location of it, it's difficult because you don't have the walk-up traffic that you have further south on the Strip," Michael Alonso said. "And the projects that were going in that direction ... Genting, Fontainebleau, are still kind of nowhere.
"So you don't have any projects that are going to happen anytime soon that are going to drive traffic down to that old Sahara property. And I think because of those factors, it makes it a really tough property," Michael Alonso said.
However, Meruelo was praised for the job he has done in Reno with the GSR.
"He did do a great job in Reno with the GSR and put a lot of money into it," Michael Alonso said. "It looks good and I think it is operating well. But Vegas is a very different market than Reno and I think that property (SLS) is tough. I wish him the best of luck but I think he's got his work cut out for him."
Meruelo successfully operated the GSR, which is away from Reno's downtown and convention-center gaming hubs. Operating in Las Vegas is a step into the big leagues, Alfredo Alonso said.
"With all due respect to our home town, the competition in Las Vegas is significantly bigger," Alfredo Alonso said. "He (Meruelo) is going to have to compete against the Bellagios and the MGMs of the world and that is a difficult task because they can offer more."
Meruelo purchased the property for an undisclosed amount from Stockbridge Real Estate in May, according to the Las Vegas Review-Journal. The previous Sahara property was given a $415-million upgrade when it opened in 2014 as the SLS Las Vegas. The resort, with more than 1,300 rooms, has struggled since then, partially due to its northern-Strip location, according to various reports.
Meruelo's new property must offer a reason to leave the more bustling areas of the Las Vegas Strip and head come north, Alfredo Alonso said.
"There's got to be a reason why people are going to travel to a little bit of an off-center-strip area for his property," Alfredo Alonso said. "Now can he do that? Obviously, if he can cut costs and still find a way to entice people to come to his property. The idea was that it was going to be a boutique property that would bring people there. Can he do that? He's done that in Reno. But again, the factors are much different."
Having the huge, unfinished Fontainebleau project as a neighbor isn't helpful to Meruelo, Alfredo Alonso said.
"I think that (Fontainebleau) is right now, the albatross around Las Vegas's neck," Alfredo Alonso said. "Is there someone who is willing to come in and spend the money? I don't know what the price is. I don't know what the price should be. The economy is getting better but gaming has changed so much. The idea of simply building a massive facility and people will come, isn't the case anymore. It is a struggle. It is a struggle everyday and you see that with gaming revenues."
The brothers agreed that the Reno gaming market is vastly different from The Las Vegas Strip, which is considered Nevada's main economic engine.
"Locals frequent casinos that tourists frequent in Reno," Michael Alonso said. "You really don't have a bright-line rule of demarcation between locals casinos and tourists-related casinos other than Bonanza, Tamarack and some of those.
"In Las Vegas there is a bright-line rule," Michael Alonso said. "You have Station Casinos, you have Boyd ... You have those specific places that cater to locals and then you have The Strip. And locals don't go to The Strip. So you sort of have to pick one business over another and I think the business model of The Strip, it is going to be tough for him (Meruelo) to compete down there. I wish him the best of luck."