Thursday, February 3, 2011

Money Can't Buy You Class... But It Will Buy You Ass

Remember the discussion that ensued when Wynn Las Vegas suddenly and shockingly decided to close Alex last month?

Well, this just confirms what we were saying all along.

Beverage revenue rose 7 percent during the last fiscal period, to $909.6 million, for the 39 Strip casinos generating annual revenue of at least $1 million. Strip beverage revenue rose 2 percent in fiscal 2009. The Strip accounted for 66 percent of beverage revenue from the state’s highest-grossing casinos.

The booming nightclub industry in Las Vegas, including the emergence of a 24-hour, pool-centered party scene and a slew of elaborate new clubs and drink menus, is partly responsible for the increase, analysts say.

New clubs and lounges at CityCenter, Encore and Hard Rock Hotel, which opened a rooftop bar and pool as part of its expansion last year, are among the new venues noted in the report.

Today’s opulent nightclubs offer a potentially more expensive experience than the more mundane drinking holes of years past, said Brian Gordon, a principal with Las Vegas consulting firm Applied Analysis.

During conference calls with Wall Street analysts last year, Wynn Resorts CEO Steve Wynn highlighted the runaway success of Surrender nightclub and the attached Beach Club at Encore, which opened May 25.

The performance of its nightclub venues in Las Vegas stands in “sharp contrast to the softness in the market,” while generating high profit margins, Wynn told investors. The company reported a 16 percent increase in food and beverage revenue in the third quarter, in large part because of the new venues, surpassing revenue generated in other departments, with the exception of gambling.

It's all about the money, honey. And right now, the money is being made in the day/nightlife industry. That's why MGM, Caesars, Wynn, and LVS are all falling over each other to open more clubs and revolve more and more of the other amenities in their casinos around their nightclubs.

When just looking at the bottom line, why should Steve Wynn care about maintain extraordinary culinary standards at his hotels' restaurants when the money is being made at Surrender, XS, Encore Beach Club, Tryst, and Blush, and Wynn executives suspect most within the target demographic group for their clubs don't really care for the "fru-fru eating" offered at restaurants like Alex? Never mind that Wynncore now risks losing its entire foodie reputation. It's all about the dollar signs, baby.

So are we supposed to expect more of this in the future? Or is this just another fad that will change and/or die? And does Las Vegas' reputation as a great foodie destination hang in the balance?

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