Why Can't Vegas Stop Building?
Friess, Steve, Picon, Michael, Newsweek
Byline: Steve Friess and Michael Picon
No place in America rivals Sin City as the epicenter of the recession. The town has crapped out, with see-through condo towers and abandoned homes as common as pasties on showgirls. Yet even as the city struggles to fill its 148,000 hotel rooms, a new 3,000-room casino-resort, the Cosmopolitan, opens this week on the Strip. Why keep betting on Vegas, despite the lousy odds? "It's like someone who wants to play one more hand of poker," says UNLV economist Stephen Brown. "'Just one more, maybe I'll win it all back.'"
The gamble: CEO John Unwin says the $3.9 billion project will "create trips to Las Vegas that wouldn't have happened." It could also renew interest in MGM's troubled CityCenter next door.
The payoff: The project is generating terrific buzz. But as Treasure Island owner Phil Ruffin says, "Room rates in Vegas suck. This is only going to make it worse."
The gamble: Billed as the biggest private contruction project in the U.S., the $8.5 billion condo and hotel complex would "begin the recovery" and spark a 7 percent rise in visitor traffic to Vegas, predicted MGM Resorts CEO Jim Murren.
The payoff: MGM has had to cut the price of CityCenter condos 30 percent and has closed on only 30 percent of them. One unopened hotel that's part of the complex may be imploded.
The gamble: The developer declared after the recession hit that completion of the 68-story, $4 billion resort-condo would "turn this around."
The payoff: After $3 billion had been spent, lenders pulled the plug in 2009, bankrupting the project and leaving a hulking shell. Carl Icahn purchased the now mocked "F'Blew" for $156 million and sold off the furnishings. …