Closing Of The Sahara Las Vegas – The Real Story

When I heard that The Sahara was going to make a major announcement last week, I figured one (and only one) thing: They were announcing investments and improvement in their property. It only made sense. New hotel construction is out of the question given the current saturation of Las Vegas rooms. But a number of mid-level (similar category) hotels to the Sahara have been in the process of upgrades and renovations. With Las Vegas tourism numbers on the upswing, I figured The Sahara would be jumping on that bandwagon.

OOOPS (on my part). The actual announcement was that come May 16, 2011 the hotel would be shuttered.

This simply made no sense. Other similar properties were holding their own and reinvesting despite the economy. For The Sahara to hold on through the worst of the recession and then simply shut just as things were picking up signaled a big JDLR in my book. (JDLR is a Las Vegas term used mainly by casino surveillance and stands for Just Doesn’t Look Right).

Let’s look at examples of The Sahara’s direct competitors and others in the mid-level hotel market:

* The Stratosphere Las Vegas – This hotel (known as Vegas World when I moved to town) just spent $20 million dollars in upgrades. Both to the casino and to the rooms. Their upgraded rooms are going for more money and we hear are quite popular. While people note that The Sahara is isolated (a possible reason for it struggling), The Strat is even more isolated.

* Palace StationWhat? Ted… that is a local’s casino. Yes it is. I agree. It happens to by MY local’s casino (I can see the Palace hotel tower — and also the Strat Tower — from my front yard). But when I cruise the parking garage at Palace, you know what I see? License plates from California, Arizona, Oregon, New Mexico, and beyond. These very people exit the I-15 and instead of turning east toward The Sahara, they turn west towards Palace Station.

The entire Station casino chain has recently hired 1000 people, some of which to boost the staff at Palace. Another Sahara competitor upgrading, not cutting.

Side Note: You can tell quite about about a hotel’s occupancy and clientele simply by observing their parking garage.

* The Riviera – They have re-opened their buffet, opened the new Queen Victoria British Pub, and are re-doing their gaming tables.

* Circus Circus – Did not close anything down even during the worst of times and in fact have added Rock ‘n Ritas bar/restaurant. They still the worst buffet in town (you have that hospital food taste in your mouth after eating there). But at least they kept it open!

* The Plaza – Not in close proximity but a direct competitor in terms of class of property. The Plaza is in the middle of a top-to-bottom upgrade including all newly remodeled rooms.

* The Tropicana – Just concluding a $100 million upgrade. Incredible. The rooms are nice, the new marble and carpet in the hotel makes you feel like you are in a swanky place, the South Beach theme has been needed in Las Vegas for a long time, and one look at the new Nikki Beach and Cafe had us swooning.

In the meantime that all of the above happened, The Sahara has closed two hotel towers, closed their buffet, and severely limited both their food offerings and hours of food outlet service. (Side Note: This was a boon to local pizza companies as late-night, drunk-and-hungry hotel guests called out for pizza delivery). No wonder people were staying at Palace Station instead of on The Strip at The Sahara: Palace has numerous, nice quality, reasonably priced food options including a 24 hour cafe.

So exactly what the hell was going on with this closure? I set out to find out.

The Saturday night after the announcement, I took the arduous 2 mile drive from my front door to The Sahara. The place was mostly full and very lively (partially thanks to Spring Break and March Madness) I listened to employees talk among themselves. I listened to what appeared to be former employees who had come down (after hearing the announcement) talk with their former co-workers. I talked to employees.

I found out something interesting. I assumed that they would have it in for current Sahara owner Sam Nazarian. The ones I talked to didn’t. They instead cited the terrible management that Nazarian put in place. Not a management vs. employee beef but simply how badly the place had been run.

For the uninitiated, Nazarian is a nightclub mogul from Los Angeles who bought The Sahara 2007 with plans to completely refurbish it into a trendy, upscale property. The economic downturn put his plans on hold.

Now it all started to come together and the closing (from his standpoint) made sense:

1. He needed to clean house with the management team. Yes, they could be replaced. But if they were previously people involved in his nightclub group or that he otherwise has present business relationships with (outside of The Sahara), that can get sticky.

2. He needed to clean house regarding Sahara employees. The majority of Sahara employees are legacy employees with long tenure earning top union wages. And they are older. Las Vegas values youth and looks when hiring. If Nazarian kept the hotel open, he’d have to keep these employees which don’t fit in with his trendy vision of what he wants to do with the property. So, now he’ll get to hire fresh, young faces at significantly lower wages. (Don’t shoot the messenger here. If that bothers you, leave a comment below).

3. Summer is pending. For Las Vegas hotels, this means they have to charge some of the lowest hotel rates but pay obnoxiously high electric bills to cover the air conditioning. The prospects of making a decent profit over the next few months wasn’t promising. The heat also cuts down on the number of people staying at Strat, Riv, or Circus who will attempt the trek to The Sahara. And yes… people make the walk When the weather is not too hot or cold, you regularly see people on the sidewalk headed toward The Sahara. Remember, hotels here look a lot closer than they really are!

Hence, Nazarian pulled the plug.

Final late-breaking note: Local gossip monger Robin Leach (yes, the “Rich and Famous” guy) has teased that “The modern makeover of a legendary Strip hotel is back on the drawing board” and the executive who was holding it up had returned to Hollywood.

We looked at the scenario involving every legendary local property. They were all either remodeled (Trop and similar) or highly unlikely to see any work because of the financial condition of parent companies (Circus, Imperial Palace). Only one property is in position to go through this: The Sahara.

Plus, the makeover is being teased as a very unique concept. Which reads “trendy” and upscale. Fitting Nazarian’s original vision.

Additionally, an executive who had come in and has now returned to Hollywood fits the bill of someone associated with Nazarian. Hotel executives usually don’t otherwise come in from (nor depart to) Hollywood. Perhaps things would be different if Nazarian had hired someone from Las Vegas who knew how to run a casino. (Ed Deline comes to mind).

If the above turns out to be more than conjecture, I’m going to campaign hard that the new project retains the historic Sahara name. You can reposition a property while maintaining the name. The Tropicana did. Real Las Vegas casino people were hired to remodel and run the place. Let’s hope they indeed do the same with The Sahara. People from out-of-state who “think” they know Vegas often end up falling flat on their faces here. When it comes to the gaming and resort business, Las Vegas is its own separate beast and has very little in common with the hospitality industry in general.

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Ted Newkirk
Founder/Managing Editor
Access Vegas