The sector welcomed Fontainebleau Las Vegas, its newest luxury brand, valued at $3.7 billion, on Wednesday.
With plenty of pomp and fanfare, and Justin Timberlake scheduled to perform, the Fontainebleau Hotel celebrated Las Vegas’ comeback story of the century. Shortly after the 67-story resort was completed in 2008, Fontainebleau became a victim of the Great Recession, then went into bankruptcy in 2009. It was returned to its original owners, Fontainebleau Development, the group behind Miami’s historic Fontainebleau Beach. After a morning ceremony, it was scheduled to open to the public at midnight on Wednesday.
The unveiling of the Fontainebleau hotel comes at a much better time than the last resort to open on the Strip. When Resorts World Las Vegas debuted in June 2021, the market was still in the midst of recovering from the pandemic. Las Vegas is approaching its full pre-coronavirus visitor count, and is expected to do so in 2024. Meanwhile, the city continues to set records for gaming revenues in 2023, even after a historic 2022.
Visitors willing to spend more than ever in Las Vegas are behind the gains, although visitation numbers have not yet returned to 2019 levels. The average budget for visitors who bet in 2023 is $824, according to the Las Vegas Convention and Visitors Authority. Vegas. It was $591 in 2019, an increase of nearly 40%.
Helping record revenues are the wealthier visitors coming to Las Vegas, targeted by Wynn, Encore, Bellagio, Aria, Venetian, Palazzo, Cosmopolitan and Resorts World. Las Vegas’ hosting of the Formula 1 race in November was part of the strip’s marketing to high-end visitors, especially those from abroad.
The LVCVA survey showed that 44% of visitors who came to Las Vegas during the third quarter had a household income of more than $100,000. This is up from 33% a year ago and 29% in 2019.
Luxury resorts offer fine dining, entertainment and high-end retail, all of which have seen significant jumps in spending since 2019.
“Our brand is geared toward what we call ‘confident tastemakers,’ sophisticated travelers seeking fun and invigorating experiences of a lifetime,” said Mark Triccano, president of Fontainebleau Las Vegas. “In turn, we are positioned to provide unforgettable luxury moments with a wide range of programs designed to suit all interests. With 36 food and beverage concepts ranging from award-winning chefs and restaurateurs to the incredible level of design and fine art that we have curated throughout Resort and more, we are certain that what we have created will significantly enhance the luxury market in Las Vegas.”
Casino consultant Brendan Bosman, managing partner of B Global, said the opening of Fontainebleau is a good thing for the north end of the Strip, following reinforcements from Resorts World and the new West Hall of the Las Vegas Convention Center adjacent to Fontainebleau.
It has taken some time for Resorts World to grow its customer base and find its place in the market, but it is “settled down and making great strides,” said Josh Suisman, co-founder of GMA Consulting.
Boseman said it’s too early to know how things will go with Fontainebleau, which faces some of the same problems.
“Fontainebleau has a database from Florida, but those are not necessarily Vegas clients,” Boseman said. “They’re definitely competing at the top level that Wynn is known to go and we’ll see if they can compete in that category. It’s hard to compete with a product that has been a staple of the high-end product in Vegas and the industry at Wynn Resorts. That’s the level you have to achieve.”
Fontainebleau offers 3,644 hotel rooms and suites, a 150,000-square-foot casino, a 56,000-square-foot salon and spa, a 14,000-square-foot fitness center, a 35,000-square-foot day club, a 50,000-square-foot nightclub, and a 50,000-square-foot nightclub. Theater with a capacity of 4000 seats.
“I’m very optimistic about this,” said Josh Suisman, founder of GMA Consulting. “They have a great management team, new restaurants and other brands that are new to the sector and that should increase visits as well. Every new property that opens faces hurdles, but I have full confidence in the Fontainebleau management team.
Symbolically for Las Vegas, the opening marks the end of an era for “that dark structure at the north end of the Strip that had no life inside and was the last bastion of the economic downturn in 2008,” Swissman said. “It’s nice to see this icon disappear. I’m always a fan of new high-end room inventory, especially when Nevada and especially the sector continue to show strong fundamentals in the market. It’s a good time to add that additional capacity.”
Fontainebleau’s geographic location is part of a “shift in attractiveness” of the sector from south to north, and the opening pushes that forward, Suisman said.
“Wynn has done this for a long time and Resorts World has done this since they opened,” Swissman said. “I like to achieve that balance between the north and south ends. Ultimately, it leads to a healthier set of offerings and leads to more potential growth in the sector, because there are some vacant and underutilized parcels of land in the north end. When you have another world-class asset like By opening Fontainebleau close to these real estate opportunities, it will drive more investors and developers to this part of the sector.
Fontainebleau’s proximity to the convention center is expected to increase room bookings, especially since it is closer than Resorts World and has hundreds of thousands of square feet of convention space.
“Our prime location just steps from the Las Vegas Convention Center West Hall expansion provides a great advantage,” Tricano said. “It serves as a cornerstone of the north end of the Strip and provides unparalleled access and collaborative opportunity for meeting and convention planners.”
It’s not just accommodations during conferences, either, Tricano said. A recent trend is that a large percentage of business travelers are adding a leisure day or two to their trips.
“We aim to accommodate these ‘leisure’ travelers, not only with our meeting and conference facilities, but also with our restaurants, entertainment, wellness and gaming experiences to help complement their stay,” Tricano said.
Fontainebleau has been taking bookings for several months, and Tricano said they have seen an “amazing response to transient bookings”, while group bookings are following the same trend with a “very strong response” over the next few years. “As we look to 2024 and beyond, we are confident that the product we have created and the experience we will offer will generate interest and increase bookings.”
Fontainebleau Las Vegas is a joint venture between Fontainebleau Development and Koch Real Estate Investments, the real estate investment arm of Koch Industries.
Jeffrey Soffer, CEO and Chairman of Fontainebleau Development, was the original developer of the project which broke ground in 2007 before the Great Recession and real estate crash caused the project to go bankrupt in 2009. It was acquired in 2010 by billionaire Carl Eschan , who sold it in 2017 to New York developer Steve Witkoff. Soffer reclaimed the property in February 2021 and construction resumed that fall.
“We are making history by bringing together the Fontainebleau brand’s nearly 70-year heritage with the heritage and dynamism of the Las Vegas Strip,” Tricano said during Wednesday’s ceremony. “Our story, nearly 20 years in the making, is a story of resilience and passion and a testament to an unexpectedly resounding reality.”
Brett Mufson, Fontainebleau development partner, said the celebrations are more than just symbolic, but represent a celebration of a 70-year-old brand that has reinvented luxury time and time again. “To open at this level of market and to come here in this way during this time is an amazing accomplishment.”
LVCVA CEO and President Steve Hill said that if someone took the project’s story and tried to make a movie about it, the studio would laugh at the concept. Because it has been unconfirmed for so many years, it makes the opening even more special. “This attraction will help the entire city,” Hill said. “What lifts one boat lifts them all, and Fontainebleau will play a role in the next generation of Las Vegas.”