Las Vegas has two new resort and casinos... What the grand openings of Fontainebleau and Durango mean for Southern Nevada's economy, that's this week on Nevada Week.
♪♪♪ Support for Nevada Week is provided by Senator William H. Hernstadt.
- Welcome to Nevada Week.
I'm Amber Renee Dixon.
What do the openings of Fontainebleau and Durango Resort & Casino indicate about the economy?
We explore that ahead, but, first, we take a trip to Fontainebleau Las Vegas.
Developers acquired land for the $3.7 billion resort all the way back in 2000.
Now, after multiple setbacks and owners, the 67-story hotel on the north end of the Las Vegas Strip is finally open.
Nevada Week sat down with its COO, Colleen Birch.
Well, congratulations on this opening, more than 20 years in the making.
What do you think distinguishes Fontainebleau Las Vegas from all the other resorts on the Las Vegas Strip?
(Colleen Birch) Thanks for being here.
I'm super excited to share our story.
You know, we are a fully integrated resort, tallest habitable building in Las Vegas.
It gives us a little bit of bragging rights at 67 floors up, meeting space that's over the top, and our adjacency to the West Hall of the Convention Center across the way.
And what I really think sets us most apart, you know the building itself is beautiful, and our food and beverage programming is going to be over the top, but it's our people that set this place apart.
-Tell me more about that, because I know you are very unique in your hiring methods and your outlook on that.
-Investing in culture and investing in hiring, making sure people are very good fits for our business, was incredibly and will be incredibly important for our success here.
So we've coined a phrase that's "polite with a personality," this idea that you can offer great, great service.
But if we do a good job of getting to know our guests, and we let our guests know a little bit something about the members-- we call ourselves members versus employees.
I don't believe that membership is unique to somebody who is part of our loyalty program.
We are all members of Fontainebleau Las Vegas.
-How many positions do you have left to fill?
How many have you filled?
-Gosh.
I think we about 5,896 in our member count.
And peak season, so we've got the full season just right around the corner, and it will push us over that 6,000 mark.
-Okay.
so that's-- 6,000 total is what you're looking for?
-Yes.
A lot of members who are just so excited to open our doors tonight and really show this city what is, I think, the best kept secret.
-Now, that outlook on hiring and your methods, is that something that developed as a result of properties having trouble getting workers to come back after COVID, or is that something that's existed in Fontainebleau's long history?
-Well, when I joined this project in November of last year, working with leadership team-- and our Senior Vice President of People, Kim Virtuoso, was an exceptional partner in this process for me.
But coming up with criteria--who do we want in this building, and what is going to resonate with our guests--we felt we needed to do something a little bit different than your typical career fairs and just allowing kind of a first come, first served.
We really wanted to be specific about who we were selecting to join this team.
-So what did you do different?
-I'll tell you what, before you even got to interview for your job, you came in for an audition, just a "culture audition" we called it.
So we were gauging who you are as a person and trying to figure out do you have hospitality in your heart.
And then if you don't, we sent you-- we politely said it's probably not a good fit for us.
And then the second round of that was sitting down with leaders who needed to talk to you about the skills to actually do a given job.
But I'm a firm believer that you can teach the skills, and teaching hospitality is a little bit more difficult.
-I mentioned the long history of Fontainebleau.
So the original location, Miami Beach, opened about 70 years ago.
Are there influences of Miami Beach here at this property?
-Absolutely.
So I'll tell you what, Fontainebleau Miami Beach will turn 70 next year in December, so we get to partake in the 70th anniversary of such an iconic brand.
There are definitely some pull-throughs from Miami as it relates to Fontainebleau Las Vegas.
So the columns that you see in our casino floor, those are the same lobby columns in Fontainebleau Miami Beach.
We've got a Bleau Bar here.
Everything in Las Vegas is a little bit larger, as we know.
So our Bleau Bar is larger than theirs.
But I'll tell you what, they've got a great legacy there in terms of who they have hosted and how they have made people feel, and we plan to do that very same thing.
-Will you tell me about this sculpture behind us.
-So a gentleman named Urs Fischer is the artist, and there's murals above and one on this other side as well.
This is called-- this is part of his Lovers series, and this is the third Lovers sculpture.
That's about as much as I know.
I'll tell you what, I'm excited to meet him.
I think he's in the building.
I haven't met him, but I'm going to sit down and make him help me understand what was going through his mind.
I just think it's stunning.
And this welcome reception here in our South Lobby, just adjacent to the West Hall, and our meeting space is just above us.
I think it's just a stunning, stunning piece of art.
-It does.
It stops you in your tracks.
So 2008 is when construction on this property halted.
It didn't resume until 2021.
How dramatically did the plans change between 2008 to 2021?
-The bones of the building were still here.
And I think it was a bit of a myth that this building hadn't been taken care of in all of those years.
That is absolutely not accurate.
So there was maintenance in a way that allowed us to pick up the pieces when our ownership group came back into the fold in 2021.
It was realy the design that changed a little bit.
So original design, there was some people in town-- the Plaza actually bought some carpet and some of our furniture when we shuttered.
I say "we" because I was a part of this property for nine months in 2008 until the property halted in June of 2009.
But the-- You know, the renderings, the artistic choices kind of had to change just because the climate has changed, and you know... -Right.
I would imagine.
-Users' tastes have changed.
-Uh-huh.
-Things are cool now that weren't cool in 2008.
-And for locals who have driven past the unfinished building for more than a decade, thinking of it as an eyesore, as a reminder of the Great Recession, how do you go about changing their attitudes, or do you?
-Oh, absolutely.
I think you'll walk in this door or even drive by-- we have a commitment to the exterior in as much detail as we do on the inside.
Amazing landscaping, actually a beautiful art installation at the southwest corner, if you haven't seen that.
So I really just believe it will be one time in this building, and then you'll say, Wow!
-And finally, you are contributing to the development of the north end of the Las Vegas Strip.
What else would you like to see here that will ultimately help drive business to Fontainebleau Las Vegas?
-Well, we've got a vacant lot adjacent to us.
Our ownership group talks, and I think it would be lovely if we purchased that land so that we can be in control of what happens just north of us.
-But you would like to do something on your own over there?
-Gosh!
If we'd had our choice, yes.
-I mean, is that in the works?
-I think it's an idea, but I think that would be premature.
-Okay.
Thank you so much for your time.
-You're welcome.
Thanks for being here.
-Now, Fontainebleau's Grand Opening comes a little more than a week after Durango Resort & Casino celebrated its own Grand Opening.
On Durango's marquee, a message congratulating Fontainebleau... a nice touch.
Located in the southwest part of the valley, Durango took almost two years to complete with a $750 million price tag.
More than 1,200 employees were hired in time for the Grand Opening.
Nevada Week's Maria Silva takes us inside the newest Station Casinos property.
-Amber, it's always an exciting time when a new property opens up.
People are waiting outside for hours just waiting for those doors to open up.
- Congratulations!
-I can tell you, we are so lucky to get a VIP tour.
Here to tell us all about it is Dave Horn, the Vice President and General Manager.
-Hi.
-Let's talk about this beautiful place.
-Yes.
-Worth the wait.
(Dave Horn) It is.
It's a lot of emotion and passion project and 19 months in the making to get this thing going.
It's worth the wait, for sure.
-What makes this place so special and sets it apart from any other place?
-Well, we've done a lot of different things from a luxury brand standpoint to, you know, the finishes, the marble that's extensively used everywhere, our lighting, some of the artistic treatments, but, more importantly, what the content is, you know, the restaurants and the rooms and what we've done for those treatments.
That's what's gonna set it apart as a new generation.
-And let's talk a little bit.
Where we're at right now, earlier during our tour, when you were giving us a VIP tour, your face just lit up when you were talking about this area.
-Well it's gaming.
That's my background.
It's what I've been doing for the better part of my time with this company.
And I see how this pit is designed and how we laid it out, the lighting, our high-limit, our gaming salons.
I think it's a beautiful pit for everybody to enjoy.
I can't wait for them to see it.
-Let's talk also about your sportsbook over there.
And that place is pretty awesome.
There's so much to see and do.
-For sure, it is.
And it's-- you know, everybody has something new for sportsbooks, but for us, it's an intimate setting.
I've said this many times: It's a place you can bring a date, which wasn't always something to consider.
But with what we did with The George, with the all-encompassing viewing, there's no bad seat in that venue, The George patio.
I think our race and sportsbook is one of the best in the city.
-And let's talk a little bit also about your different restaurants.
You have so many different options, starting with Eat Your Heart Out over there.
-Yeah.
So our Eat Your Heart Out hall of foods, 10 different venues, including our Drink bar.
We brought Oyster Bar from Palace.
We have, you know, an exciting array of family-owned operations from the city.
Outside from California, you've got burgers, you got pizza.
I can list them all.
There's so many, but it's going to be unlike anything anybody's seen.
-I had a big smile.
I'm a foodie; I love to eat.
That Oyster Bar, it just has my heart.
-Yes.
-Let's talk about some of your other restaurants that you have in here as well.
-So we have The George, which is next to the sportsbook, as mentioned.
That's going to be an upscale race and sports bar feel.
-Definitely a brunch place.
-Yeah, for sure.
The patio is perfect for that.
We have our Nicco's steakhouse, which is just top-level.
It's unlike anything we've done before.
It's a very vibey room.
The food's gonna be great.
We have the Mijo Mexican restaurant with all of these, by the way, having fantastic patio options as you tour each restaurant.
And then we have our Summer House, which is going to be same thing, very hot brunch spot, excellent patios, great food.
-Let's talk about those rooms.
-The rooms are very nice.
A lot of work went into the comparisons to make sure that we had a luxury product and that the finish and the treatments--the mattresses, the sheets, the pillows--everything is something that you say, Okay, this feels like it's luxury.
-You have great views as well.
-If you go to the north side of this tower, you have panoramic views from Red Rock Canyon all the way to the Strip.
-I geeked out.
You have espresso machines in the rooms.
-We do.
That was definitely a must.
-And this is what's also great about this location: It's really centrally located when you think about from the Strip.
So you will get a lot of tourists and visitors coming this way.
-Yeah.
I think a lot of people underestimate that that drive from the airport or to Allegiant or to T-Mobile is very short.
And that puts us in a good spot, you know, as a tourist coming in here, coming off the Strip to enjoy the city.
Then from a local standpoint, you have four-way access, so it's very easy.
-Let's talk about New Year's Eve.
We have to talk about the big game coming up.
You guys are already sold out.
-Yeah.
We have done pretty well in booking, and we're still booking a lot of our players.
But from a general population standpoint, it's going fast.
And we're opening into busy time, New Year's Eve, Super Bowl.
We aren't gonna get a break.
-And let's talk about our locals.
That's what you're all about.
What message do we have for the locals?
-We are ready to blow your socks off.
Our team is ready more than anything.
That's what makes us great is our guest service and our team members.
And everybody is excited to see the locals and the regulars that they've known at the other properties they've worked at and to see the new people ready to bring in.
-So I we're gonna continue with this VIP tour, Amber, again, definitely a must-see.
It is phenomenal.
It is beautiful in here at Durango Casino Resort.
All right, we'll see you later.
Ready to tour?
-I'm ready.
Let's go.
-All right.
So the openings of these resort and casinos should be signs that the economy is strong, right?
But what about those fears of recession?
We bring in Andrew Woods now.
He's the Director of UNLV's Center for Business and Economic Research.
Andrew, welcome.
-Thanks, Amber.
-What do these openings indicate to you about Southern Nevada's economy and the economy overall?
(Andrew Woods) Well, I appreciate being on here, and thank you for the question.
I still think that it shows that Nevada is a good bet for the leisure and hospitality industry.
Seeing we have these openings, we have expansions going on at the same time, we've rebounded from the pandemic much better than we had initially anticipated at the Center for Business and Economic Research.
So it continues to show that the economy continues to grow.
Certainly, there are some scars that we see from both the Great Recession still to this day and from the pandemic.
And those certainly have us concerned, but still continues to show that leisure and hospitality is the main driver of our economy.
It counts for 1 in 4 jobs here in Southern Nevada.
It counts for 1 in $3 generated out of Southern Nevada is that industry.
So it's still very important for our economy and our prosperity.
-Which makes a potential recession even scarier, though, for Southern Nevada.
What are you hearing about that possibility?
You and I have been talking about that possibility for more than a year now.
-So CBER does not forecast recession in the near term at the moment.
We do update that forecast quarterly, so things can change very quickly.
We do have concerns that from the elevated spending levels at some point that will have to kind of cool down a bit as we see with higher interest rates.
So we see higher credit card interest rates, we see that the cost of living is still significant, and I would say that inflation is not done.
We're certainly better than we were a year, year and a half ago when it was 9%, and now we're at 3.1% headline inflation.
I do think that there are concerns that we will-- things will cool here in the coming months and that the record sales tax and record gaming revenue is probably going to cool down.
And we're seeing some of those early indicators.
That doesn't mean that we're forecasting recession, though, either at the moment.
-Okay.
So a cool down, if that does happen, we haven't seen it yet, though, as we discussed with Christmas shopping numbers, right?
-Yeah.
People love-- we all love to holiday shop.
They have come out much stronger than we realized or anticipated.
So I know just from Cyber Monday, Shop Small Saturday, Black Friday, it was about $12 billion spent, and they're estimating a record for the quarter of about 966 billion spent on holiday spending from Halloween all the way to New Year, which is still pretty incredible that the American consumer, I have to thank them for continuing to keep us all afloat and continue moving forward.
There are some interesting figures in that; for example, some of the excess spending tends to be coming from the top 20% of individuals from an income level.
So the bottom 80% have pulled back, are doing more substitution, in fact, aren't spending as much.
So it's coming more from the top at the moment.
It also seems to be coming from the baby boomers.
The baby boomers continue to also splurge, as we would say.
And to be fair, that's keeping the economy going.
But it does give us hesitation for the rest of us that were kind of pulling back at some point.
We'll all have to pull back, and what does that mean after the new year?
But we said that last year, and American consumer continue to truck along through 2023.
We'll just have to see how 2024 pans out.
-And we were talking about consumer spending habits off camera.
You brought up "buy now and pay later."
-Yes.
-It's become more prevalent.
-Yeah.
So we saw a 47% increase during the, kind of, Black Friday through Cyber Monday period of this trend where you're-- you buy the product now, and you pay later.
And if you don't pay for it later, they charge you interest.
So it instantly then turns into like essentially a loan, and you're paying much higher interest than you would be paying three years ago, because of higher interest rates.
And so we see the prevalence of that.
It makes us wonder, and especially the ease of access to those, if we're setting ourselves up for debt to kind of really pick up here.
We're already at a trillion dollars in credit card debt, which is a record.
And you have to imagine all those outstanding, outstanding debt has now a higher interest rate to it.
It's not just simply that consumers might have more debt.
They're going to pay more on that debt if they have an outstanding balance.
"Buy more, pay later" that might make sense for like large purchases that you pay off over time, and you can do some periodic payments.
But if you miss that payment, you're immediately going to be hit with a much higher interest rate than you've probably anticipated and what you were paying three years ago.
-Back to the Durango and the Fontainebleau openings.
What kind of impact do they have on the local economy?
-Well, several, right?
So again, mentioning that 1 in 4 jobs and 1 in $3 from Southern Nevada comes from leisure and hospitality, you're adding 3,644 rooms from the Durango-- I'm sorry, from the Fontainebleau.
Though I am curious if they're fully open in terms of all those rooms, but we know for every room out there, you're creating about 1.1 jobs in the economy.
So you're creating about 4,000 jobs, at least, from Fontainebleau and maybe even more than that.
And then with the Durango, they right now have 211 rooms.
But as you said, they have well over 1,000 workers they've hired, at least for their opening.
That has an impact, right?
Those are salaries.
Those are obviously also increasing and are inducing demand from visitors to come and spend.
That helps with sales tax collection, which for now is trending a bit downward compared to what we've seen as some of the economy cools off.
It's good to have these going on right now as the economy cools, because it's giving a bit of a boost as we go into the end of the year.
We want them to be successful, right?
Where their place is is really interesting, right?
These are not necessarily properties being placed right where we've typically talked about, like on Tropicana and Las Vegas Boulevard.
We're talking about north end of the Strip near the Sahara and the Las Vegas Convention Center, kind of having an anchor now that's a little more economically vibrant that can really spur maybe more economic development on that side of the town, but also the Durango where-- that's where a lot of population growth for the county is going on is in that southwest part.
You see a lot of development, and Stations has built this casino that seems to me to be more catered to locals.
And in doing so, it's really saying this part of town is economically flourishing right now.
-When do you think we see another big type of development like the Fontainebleau again?
-Well, the Fontainebleau, because it's just, it's so massive, right?
I mean, it's like building a Bellagio.
I think it's going to be at least a decade or more for a property of that size.
I could be wrong.
I would love to be wrong.
But at the same time, it takes, as we see, a long time now for these properties not just to-- it's not so much of an issue of building them, but getting kind of to a place where they are in the credit market able to get financed and that they're going to then pay off for the consumer or pay off for the investors and pay off for visitors and pay off for workers, and the economy kind of fits into that.
We're forecasting for 2024 right now about 40 million visitors, which is on par of what we had this year.
Our record is still above that at close to 43 million.
We would be curious of what kind of anchors in terms of events, but also, as a community, what infrastructure do we need to start thinking about after we went through F1 and we're going to go through Super Bowl here and New Years and NBA and all these other exciting things.
We think there probably needs to be a serious conversation on infrastructure development so that we can push that leisure and hospitality number, visitor number, above 43 million.
Because it seems like we're kind of maxing out right now.
You hear the numbers from the airport where they're feeling they're getting full with 55-plus million people going through the airport.
So if we want to get up to 43, 44, 45, maybe even 50 million visitors, what infrastructure?
I think we need to have a serious conversation about light rail, about the monorail, and about boring technology, all of it, and really think about moving both our people, our visitors, our workers, and for you and me if we take the kids to school or we want to go out to eat, be able to get around town and not have to sacrifice, our mobility just because we also have this industry that really powers our economy.
-On that note, how excited are you for the Brightline West high-speed rail line from California?
-Well, we're excited for them to get those shovels in the ground.
I know they were waiting on this, this announcement from the administration, which was very exciting and good for our economy.
-$3 billion toward that project.
-Right.
So if those shovels get in the ground and they start building, then it shows again that it's a good bet, leisure and hospitality in Southern Nevada.
We think it will help with some of the infrastructure needs of getting people to and from Las Vegas.
It also will be interesting to see the economic back and forth between people that live in Nevada and want to go to Southern California, either for business or for leisure, and vice versa, where there may be people doing now business in Nevada who maybe weren't necessarily doing so before, but living in California.
-Could you ever see the point where someone is living in LA, perhaps, and traveling daily to Las Vegas?
-I could see that.
I can see the opposite, right?
I could see not only weekend warrior, but, potentially, you know, commuting back and forth.
And it may help with some of the demand at the airport right now, which is there's still a dominance of flights that go to Burbank and Southern California.
But this might ease or ease some of that demand so we can then focus on other routes that maybe are longer.
But that's not actually my expertise, right?
-Okay.
-I certainly think it will induce demand in terms of people wanting to come to Southern Nevada over time, especially if it proves to be successful in terms of being just as efficient to get people from Southern California to Southern Nevada and back.
-I did want to add the Fontainebleau told us they've hired about 6,000 people.
-Oh, wow!
-In terms of what that does for the unemployment rate in Nevada, not much, right?
And the unemployment rate, so high compared to the rest of the country, here 5.4% compared to 3.9% nationally.
Will you remind our viewers why there's that discrepancy.
-Right.
So a reason why we still have a very high structural unemployment rate is there has been this structural shift in the labor market.
And essentially what that means is there's been a lot of people on the sidelines of the labor market, typically prime age workers, particularly so in Nevada, and we've done research on this.
And they particularly seem to be individuals of prime working age more here than, more so than across the country.
So meaning 21 to 54, typically if they are men, they aren't working as quite at high rates as they were as prepandemic and as they were prior to the pandemic-- or working where they were compared to the rest of the country.
In Nevada, we have an issue right now with about 53,000 workers missing from the labor force that we should have if the pandemic hadn't happened, especially those prime age workers, the 21 to 54.
And so that is keeping our unemployment rate a little bit unusually high, because even though we're getting new jobs, we're backfilling people looking for jobs, because people are starting to come off the sideline, residents here, looking forward now going back into the labor market.
We have a lot of work to get them back in the labor market.
But that kind of reflects that very dynamic nature and the higher unemployment rate, which also is mimicking the leisure and hospitality unemployment rate nationally.
If you look at Nevada's unemployment rate, it tends to mimic the leisure and hospitality rate across the country.
-Why aren't people wanting to work here?
-We're trying to dig into that.
We've surveyed, and what we found, typically, if they're unemployed, they're saying the number one issue they're having is transportation, of course pay, but also skill development.
We think there's a lot of friction in the state.
We see a little bit from the survey research that we're doing statewide on this issue is that they may feel-- they might have been working in leisure and hospitality before the pandemic.
They feel all they can do then to get back in the job market is leisure and hospitality.
And they would actually be interested in other jobs and other opportunities.
And particularly if they had a college degree, during the pandemic they probably left and it was backfilled by other people coming in who also had a college degree.
But they were only going into very specific industries like healthcare, government, which would be public education, etc., and so we need to think about the friction of our labor market and how maybe you can work in leisure and hospitality.
Say you don't want to do that anymore, you can work in healthcare.
You can work in education.
You can work in government.
And vice versa.
Maybe you do those things, and now you want to work on the Strip.
-I've got to stop you there.
We're out of time.
Andrew Woods, thank you.
-Thank you, Amber.
-And thank you for watching.
For any of the resources discussed, go to vegaspbs.org/nevadaweek.
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