Derek Stevens is doing something rare in Southern Nevada’s post-recession economy.
While owners of other gaming companies are building additions to their properties or buying existing resorts, Stevens is preparing to tear down older venues and construct a new resort in their place.
Last year, Stevens bought La Bayou, Mermaids and Topless Girls of Glitter Gulch, all properties on Fremont Street, from Granite Gaming. Now, he’s preparing to raze them, along with the Las Vegas Club, which he bought in 2015.
Stevens hasn’t revealed details of the plan, but his past investments in downtown Las Vegas demonstrate a confidence in the area that few people have had.
The Las Vegas Sun interviewed Stevens last week to talk about gaming downtown and his plans. Here are excerpts of the conversation:
In the Nevada Gaming Control Board’s most recent revenue report, the numbers for downtown were much better than other areas. What conclusions can you draw from that?
When you evaluate one month, whether it’s downtown or the Strip or Northern Nevada, one month is just not statistically significant. Many things play into that. Date variances are huge, for example. Easter is one of the slowest weekends of the year. If it falls in March versus April, it creates a huge swing.
The other thing that plays into it are conventions or trade shows falling in one month as opposed to the next. Another example is Chinese New Year, which does not have much of an effect on downtown but does have a huge impact on the Strip relative to baccarat.
You can’t look at one month where downtown seems like it is outperforming. You have really got to look at something like a three-month rolling average.
Yes, downtown had a heck of a month. There’s no question that the addition of the Lucky Dragon (which the board designates as a downtown property) had a big impact. Plus there’s a casino that I don’t want to name, and the way they do their drops (when they count and report revenue to the board) is a little different. So we’ll wait for the next report and see if it doesn’t make up the difference.
When you look at it over a few years, downtown keeps performing well. ... The investments on Fremont East have had a big impact. The shows and what’s been happening at the Smith Center have been great. Increased attendance at the Mob Museum and Slotzilla has also helped to keep downtown growing.
What is the difference a between downtown customer and a Strip customer?
I don’t know that there is much of a difference. Predominantly, we rely on the tourist base as does the Strip. At someplace like Boulder Strip there is a different slant, and it has a more locals and drive-in base of customers.
Downtown is complementary to the Strip, and the Strip is complementary to downtown. When people come to Las Vegas, they’re looking for various experiences. If you’re staying downtown, of course you’re going to go to the Strip and check it out. And vice versa.
One of the key elements for the growth of tourism in Las Vegas as a whole is providing new and fresh experiences to give people reasons to come here. I don’t view our place as competition to locals casinos or the southern Strip or the Strip in general versus downtown.
There are elements that are different at every hotel. We all have nuances, but I don’t see the nuances as being that significant.
Clearly, you’re not going to see people from Hakkasan or XS (Strip nightclubs) down here. You’re not, all of a sudden at 1 a.m., going to have a crew of people with the girls in short skirts and the guys dressed to nines show up. Every property has its own modest variances.
What are the elements that set your places apart? How do you position your properties Golden Gate and The D in the market?
When people come downtown, they have the ability to have broad range of experiences. The statistics say that if you come downtown you’ll probably visit 3.5 casinos while you’re here and that’s great.
You can see Las Vegas history at Binion’s, and you can see a great property at the Golden Nugget. You can visit the Fremont and see the history at Fremont. And when you come into The D, it’s loud and kind of crazy. In general, we view ourselves as a place where you can go and have a lot of fun.
The south end of the Strip benefits a lot from convention attendees. Is the distance between the Convention Center and downtown a problem in attracting those customers to Fremont?
Not at all. It doesn’t take that long to get to the Convention Center from downtown. In a lot of ways, it takes less time than it takes to get to some places on the Strip.
Whenever the Convention Center is busy with a major convention, it impacts the whole area. Some are more localized, and clearly some that take place on the south Strip do not have as much impact downtown. But conversely, events at the World Market Center and Cashman Field have a big impact. There is some proximity element to it.
What role does the appeal of old Vegas play for your properties and downtown?
That’s definitely something different we have. This is where Vegas started. Our first investment in downtown was the Golden Gate, where the address is 1 Fremont. It’s the oldest building in Las Vegas. We wanted to bring some modern amenities to give options for the customers but also protect the historic value of the Golden Gate.
When we rebooted Fitzgeralds into The D, we protected some of the things that made downtown a special place. There’s an element where people want to see where Las Vegas started.
As you work on the new project, what lessons did you you learn from those previous openings?
At the Golden Gate and at Fitzgeralds, we did the renovations and kept casinos open while we did them. I don’t think I would ever do that again. Simply trying to keep a casino open while doing a renovation is not easy, between the construction and the noise and disruption and how it impacts the customer experience.
That’s why I’m looking forward to having a property in an area like the Mermaids, Glitter Gulch, etc., where we get to do this from a clean space and from the ground up.
Our team of construction guys and designers are happy we don’t have to cross paths every morning.
With the exception of the Lucky Dragon, those in the gaming industry aren’t building new casinos from the ground up now. Why are you choosing to go that route?
We get to do a project without the operational difficulties of having an open casino. But it’s not the primary reason.
This city block from Fremont on the south to Ogden on the north to Main on the west and First on the East is one of the most spectacular city blocks in the history of Las Vegas. So a project coming from a clean slate made a lot more sense.
How important is the new development on Fremont East to your casinos and the rest of the western section of the street?
It’s huge. At first, people wondered how is Fremont Street going to interact with the Fremont Street Experience. From my experience, it worked out great. I really respect what Tony (Hsieh) and Fred (Mossler) did with the Downtown Project.
From our business perspective, it had a positive impact. Our customers have a little way to go from our casinos to check out the great bars and restaurants. It’s terrific, and I’m not just saying it. The people in our players club can get deals on meals at Le Thai and other restaurants.
Our customers love the opportunity to eat there and stay here. It’s a very good relationship both ways. Those businesses have to love that there are 6,000 hotel rooms just down the street.
You’re not ready to reveal the design of your new resort, but can you tell us what the general feel of your new property might be like?
It’s not so much that we don’t want to reveal them — it’s just that we don’t have the details just yet. We’re in the middle of the design process right now. We are simply working through the design phase, and it continues to evolve. It’s not like we’re holding back on the name or the design.
We expect to have couple of signature features on the property. It’s going to have hotel rooms, a casino and a lot of fun.
But I can tell you a little more about what is going on with (neon sign) Vegas Vickie.
We weren’t quite sure if Vegas Vickie would come down in one piece. We were worried it would fall apart and be a bit of a problem. But it came down in good shape.
Now we’re getting it refurbished. We put it in a very Las Vegas place, in rehab. When it’s ready, we’ll find a place for it. We are working with a couple of different groups about where we are going to place it. But it’s going to have a very long life.