Cosmopolitan of Las Vegas CEO Bill McBeath is familiar with his neighbors and competition on the Strip.
That’s because he used to run many of them. McBeath was once president of Treasure Island, the Mirage, Bellagio and City Center.
Now a year into his job at the Cosmopolitan, the resort has posted modest profits for the last two quarters, but still needs to get its casino floor to add more to the resort's bottom line.
The Cosmopolitan also has labor peace, recently signing a four-year deal with the Culinary Union. And it continues its foodie reputation attracting Egg Slut and several other unique restaurants next year.
McBeath said the Strip resort is even in the process of building a new, larger race and sports book.
Oh, and if that’s not enough – The Cosmopolitan Tuesday celebrates its fifth birthday.
Bill McBeath took over from John Unwin as Blackstone Group was taking over ownership from Deutsche Bank.
"I think last year we made substantial improvements to the casino floor. We recognize that we have this incredible brand and all this energy a lot of walk traffic but we really weren't taking advantage of the walk traffic."
"Equally as important is embracing that we're a casino. I mean Deutsche Bank really didn't want to own a casino. They finished the project ultimately to sell it and I think 'slot' was a four-letter word with the previous administration. Our slot revenues are up 25 percent year to date."
Have you had to focus less on non-gaming amenities like restaurants and bars to focus on gaming?
"No, I think to the contrary. We're trying to add additional programming to the casino floor to make it more sticky. We removed the Book and Stage bar and lounge that took a pretty large footprint of what I like to call right in the middle Park Avenue and it wasn't generating the revenues or contributing the kind of revenue per square foot that you like to see in that kind of geography in the middle of your facility. So, that's been changed to a new dynamic, hipper, lounge called Clique and then directly adjacent to that we have our new high-limit slot lounge."
What other amenities do you have for high roller customers?
"I think the Talon Room, which is the high limit gaming room, has been open for about three years was very tastefully done, very wonderful space, But probably not big enough to expand consistent with our strategy today. So, we've converted 1,500 square feet of retail space that was adjacent to that to make it a contagious offering with the same designer who did the interior design before. So, we'll be able to add about 40 percent more tables in the existing Talon Lounge"
Are there plans to expand the sports book?
"It's not relatively small. It's extremely small. It's on the second floor. I've never had a mainstream casino amenity like the sports book on the second floor. It doesn't have a true lounge. It doesn't have oversized screens. So, not only do we have plans for it, we're in the midst of it right now. We've taken roughly 8,000 square feet in the southeast corner of the casino, which was some of the lowest performing slot plays contribution, and are building out a brand-new race and sports book with a 22 seat race and sports book bar, big-screen TV's, 90 inch TV's, living-room seating. We're going to expand from the 2,500 square feet on the second floor to roughly 8,850 square feet on the main casino floor."
Will skill-based games have an impact on slot revenues?
"I think skill-based gaming is clearly in its infancy. I don't see that it's gotten any traction anywhere, where it's created a meaningful product that has extended to the millennials. I think the millennials are the immediate gratification society today and you better create something that is interactive and that they can embrace. They're just not ones to sit around and what for a static program or reel spinning to change"
"I don't think there is this transformative program coming, but I do think it will be addressed and someone will find a niche and a medium between the current gaming offerings and the millennials expectations."
Will the Cosmopolitan report a profit for fourth quarter and the annual report for 2015?
"Those would be forward looking statements. We're very excited about the traction that we have. We're very excited about the operating performance of the asset. We believe we're going to continue to grow to much higher levels than we're at now. We have a great trajectory and I think we have a great strategy and a great management team. The owners in Blackstone, they just get it. It's just been a phenomenal experience working with them. The support that they give us. I think that the Cosmopolitan's best days are clearly ahead of them."
How do you see the economic recovery in Las Vegas?
"Well, when we talk about the economic recovery, we live in a macro-environment. The world is truly flat. The U.S. economy obviously has increased and stabilized from the dramatic events of what we call the Great Recession in 2008, 2009. GDP clipping along at 2 - 2.5 percent is a positive thing, but it's not the kind of robust growth that moves the needle that we saw in the mid-2000 with 5 - 6 percent GDP."
"Vegas is reliant on a lot of international business as well and the baccarat revenues in Las Vegas are what helped us get through that very, very trying time and with a lot of the things going on in China: the devaluation of their currency, the federal government's crackdown on corruption and graft has effected Macau significantly and to a lesser degree us. But this is the first year we've had baccarat drop going down in the last 10 years."
"The macro-environment is still trying. The U.S. economy has given us a broad base support. Vegas continues to out perform because of that."
Do you expect Blackstone to sell the Cosmopolitan in the near future?
"Well, I wouldn't say in the future. I think the value that we're going to create for the owners is a little more long term. That's what was exciting for me to join them and I invested with them. Ultimately, you don't want to undersell something, but they saw an asset that the replacement value was over $4 billion, we bought it for $1.7 billion and it was on a pretty positive trajectory and we thought we could accelerate and that's what we're doing right now"
Culinary Union contract is done. How does the Cosmo benefit?
"I think we benefit by demonstrating to the workforce, the stabilized workforce, the previous owners recognized the neutrality and invited the union in and then spent four years negotiating over tick and tack... Our point of view and we did a kickoff back in February, John Gray the chairman of Cosmopolitan and global head of Blackstone Real Estate Fund, said 'look we have done business with the union before, we recognize the value. We want to create a stable work environment where people feel valued and secure.' That is my belief and we kind of put the pressure on ourselves to try to put this in the box before the year's end."
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