A year after Blackstone purchase, Cosmopolitan has turned the corner

Bill McBeath never viewed The Cosmopolitan of Las Vegas as a quick fix.

He was schooled by his gaming mentors, Steve Wynn and Michael Gaughan, that time is needed to understand your customers and your business.

When McBeath, 52, walked into the Cosmopolitan a year ago as CEO after a division of the multi-national Blackstone Group took control of the stylish Strip resort, he began asking questions of his workforce and the property’s clientele.

Sure, McBeath could have made a few easy adjustments, such as re-configuring under-performing areas of the casino or changing out nongaming amenities that weren’t drawing business.

But he wasn’t interested in short-term results.

Neither was Blackstone Real Estate Partners, which paid $1.73 billion to Deutsche Bank to acquire the Cosmopolitan.

The nearly 3,000-room hotel-casino — tucked into an 8.7-acre parcel between Bellagio and CityCenter — had never reported a quarterly profit following its December 2010 opening. The property’s unveiling followed the apex of the recession that decimated the Las Vegas casino industry.

Deutsche Bank, which took control of the Cosmopolitan through a foreclosure, spent nearly $4 billion to finish and open the resort. The German bank, however, hung out the “for sale sign” on Day 1.

Blackstone brought in McBeath, whose 20-year gaming career included stints as the president of The Mirage, Treasure Island, Bellagio, and CityCenter, to turn the Cosmopolitan profitable.

“We began by asking ‘Why?'” McBeath said. “‘Why do we this?’ and ‘Why don’t we do this?’ We needed to develop a strategic plan that identified who we were in the past, the personality of the business, and what were our successes and failures.”

What developed following six weeks of asking and answering questions was a 165-page business plan that takes the property “from yesterday to 2020.”

A $200 million investment

Blackstone executives signed off on the ideas, which will cost up to $200 million over the next three years. Blackstone Real Estate Group controls more than $81 billion in investments, so McBeath knew he needed to be thorough.

“Jon Gray (Blackstone’s head of global real estate) closed his book and said, ‘Let’s rock and roll,’ ” McBeath said during an interview in his 15th floor office that overlooks the Bellagio fountains.

“These are very sophisticated and very intelligent people,” McBeath said. “(Gray) has a simple philosophy; hire the best in class management, put them into the game and support them.”

Initial changes spurred the Cosmopolitan to its first-ever quarterly profit of $15.3 million for the three-month period that ended June 30. The September quarter brought in net income of $4.7 million.

As the Cosmopolitan marks its five-year anniversary, the property is getting a make-over. Some $35 million in changes are underway, including a new high-limit slot area, a lounge and nightlife spot, several restaurants, and room upgrades. Next year, the Cosmopolitan will move the sports book from the second floor to an under-performing space on the ground level, that will include a Starbucks with access along the Strip.

“We’re just like Disneyland. If you don’t put in new rides, you’re not addressing your customers,” McBeath said. “Millennials and baby boomers are immediate gratification consumers. When you think about and how fast people consume your product, you have to evolve and be on top of your game.”

The biggest change comes with the holidays. Work crews tore out part of the casino and an under-used bar to create a 3,000-square-foot high limit slot machine area and CliQue, a cocktail lounge at the center of the resort.

Since its opening, the property operated high limit slot machines — games that take wagers up to $1,500 per spin — in the high limit tables area.

Kevin Sweet, the Cosmopolitan’s vice president of slot operations and marketing, said slot customers needed their own space, and the property created a high-limit slot area with 65 games.

“The area offers us a much better way to treat our slot players,” Sweet said.

The construction crews also came in handy after a July 25 fire in the resort’s pool area caused $2 million in damage and made headlines because of the spectacular nature of the blaze, which ignited fake palm trees and other flammable foliage.

Once the fire was out, McBeath sent the demolition crews working on the casino up to the pool to wall off the fire-damaged area. The pool was reopened in 24 hours.

“It was important to send a message for us and for Las Vegas that we were open for business,” McBeath said.

Moving the race and sports book

In the coming months the Cosmopolitan will move its race and sports book, which is operated by CG Technology, to a 6,000-square-foot space near the property’s Strip entrance. The slot machines in the location under-performed the floor average by 20 percent, McBeath said.

“I could have sold pencils over there and made more money,” he said. “Plus, we had a sports book on the second floor that was more of a nuisance. It didn’t fit. The 23 video poker machines in the bar will make more money than the 120 machines I took out of there.

Moving the sports book to a more prominent location serves two purposes. The Cosmopolitan can charge CG more rent and it gives an immediate lift to the area.

“You have to do something to draw people in,” McBeath said.

It’s been an eventful first year for McBeath and the Cosmopolitan. Earlier this month, the property ended is much publicized labor hostility when it reached agreement with Culinary Workers Local 226 on a four-year contract covering some 2,000 noncasino employees.

Gray, during a welcoming ceremony in February, committed that the labor contract would be signed by the end of the year.

“I actually lost a little leverage by Jon saying that,” McBeath said. “I’ve been negotiating with D. Taylor (Unite Here President) for over 20 years. We both had a vested interest in the process.”

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Find @howardstutz on Twitter.

MGM Grand Plans To Add Retail And Dining To Its Strip Facade
MGM Grand President and Chief Operating Officer Scott Sibella said executives are “discussing redeveloping that entire frontage of the building out to the Las Vegas Strip.” (Todd Prince/Las Vegas Review-Journal)
Boyd Gaming planning new corporate campus
Casino operator Boyd Gaming Corp. has filed plans to build a new corporate campus. The plans call for two 10-story office buildings and a six-level parking garage in the southwest Las Vegas Valley. Boyd Gaming operates The Orleans, the Suncoast, downtown's California Hotel and other properties. The new headquarters would be just a mile from its current main office building.
Bellagio Conservatory transformed to celebrate Year of the Pig
The Bellagio Conservatory Team transformed the 14,000 square foot conservatory to commemorate Chinese New Year, the holiday that marks the end of the coldest days of winter. (Rachel Aston/Las Vegas Review-Journal)
CES 2019: Intro uses sound to connect people
Intro, a startup that is part of the Future Worlds Accelerator in the UK, has an app that uses ultrasonic sound to find people and companies nearby.
CES 2019 Video: CES wraps up another year
Time-lapse video of the action at CES 2019 in Las Vegas. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Create your own beauty products
Beauty Mix by BeautyByMe is a product that lets you create your own cosmetics and beauty products. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Picobrew’s home brew machine
Picobrew brings automation to homebrewing. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Surviving CES
What it's like to spend four days working the mammoth tech convention. (Jason Bracelin/Las Vegas Review-Journal)
Haier’s smart home
Haier presented smart home technology at CES 2019.
CES 2019 VIDEO: Foldimate makes laundry day easy
Foldimate has created a machine that will fold your laundry for you. Just feed it anything you need folded and it will do the rest. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Opte device corrects skin spots
Opte from Proctor and Gamble is a device for correcting spots and freckles from skin. It analyzes the area for spots and then covers them with a serum of matching skin tone. (Mat Luschek/Las Vegas Review-Journal)
Circa hotel-casino in downtown Las Vegas unveiled
Derek Stevens reveals Circa hotel-casino in downtown Las Vegas. He plans open by the end of 2020. (K.M Cannon/Las Vegas Review-Journal)
Circa, new casino coming to Fremont Street
Casino owner Derek Stevens announces his new property Circa, coming to Fremont Street in downtown Las Vegas in late 2020. (Michael Quine/Las Vegas Review-Journal)
Dreenk My Oeno makes wine suggestions
At CES 2019 in Las Vegas, the Dreenk My Oeno tells you all about wine.
Polaroid One Step Plus camera unveiled at CES 2019
Polaroid has moved into the digital age with its One Step Plus camera with Bluetooth. With the connected app, it turns your smartphone into a remote for the camera, along with filters and features.
Amazon is everywhere at CES 2019 in Las Vegas
Seemingly everything works with Amazon Alexa
LG Smart Mirror helps you dress snazzy
LG’s Smart Mirror is less of a mirror but more of an assistant to help get you looking snazzy. It takes your image and recommends clothes for you or matches existing clothes with new clothes, which can be purchased right from the mirror. (Mat Luschek/Las Vegas Review-Journal)
Underwater robots make waves at CES 2019 in Las Vegas
Robosea is a company dedicated to underwater robotics. They produce consumer robots for underwater filming as well as commercial products which can be used for underwater research. (Mat Luschek/Las Vegas Review-Journal)
CES 2019 - Victrola record players spin in Las Vegas
A new spin on an old favorite, Victrola record players are meeting a demand for retro products. The brand is also making furnitures with built-in speakers.
CES 2019: Slamtec robots ready to serve
Slamtec is a robotics company out of China whose goal is to provide solutions for laser localization mapping and navigation. They have created two autonomous robots that can be used in areas such as bars, restaurants and malls. (Mat Luschek/Las Vegas Review-Journal)
Mixologiq drink maker appears at CES 2019 in Las Vegas.
This is the Mixologiq drink maker.
CES 2019: Veritable smart garden
Let’s face it; not all of us have green thumbs. And herbs are particularly difficult to grow, considering their constant need for sunshine. Enter the Veritable smart garden from Exky, which does it all for you. (Heidi Knapp Rinella/Las Vegas Review-Journal)
Bonnie Springs Ranch near Las Vegas being sold to developer
Bonnie Springs Ranch near Las Vegas is being sold to a developer, set to close in March. Bonnie Springs, west of Las Vegas off State Route 159 — next to Spring Mountain Ranch State Park — spans more than 60 acres and was on the market for $31 million. The developer and his project partner are under contract to buy the ranch and plan to chop it up mostly into custom-home lots. The plans includes a 25-room motel, a restaurant and a 5,400-square-foot event barn.
Bone-conduction headphones form Aftershokz
Aftershokz offers bone-conduction headphones - headphones that don’t go in the ear.
CES Happy Hour party at Hangover Suite at Caesars Palace
Conventioneers mingled during the Hardware Massive CES 2019 Happy Hour Bash at The Hangover Suite at Caesars Palace in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Autonomous Cars and Futuristic Aircraft Rule CES
Day two of CES was dominated by autonomous cars and futuristic aircraft in the North Hall of the Las Vegas Convention Center.
TekNekSavr fights neck problems caused by smart phones
Atiya Syverson invented the TekNekSavr to help fight neck and head problems caused by strains while typing on smart phones. (Mat Luschek/Las Vegas Review-Journal)
New eyeglasses know if you fall and call for help
The French company Abeye has created eye glasses that will detect if the wearer falls and call for help. (Mat Luschek/Las Vegas Review-Journal)
Company that creates vibrator-like device claims genders bias against CES
Lora DiCarlo is a women-run start-up that creates a vibrator-like device designed for female pleasure called the Osé. This year they were awarded the CES Innovation Award in the Robotics and Drone Category, but a month later the Consumer Technology Association, which runs CES, rescinded the award and their booth. Haddock and her team believe it is a reflection of gender bias and sexism in an industry with a long history of male domination.
CES-Wagz has new pet products
Wagz has three new products to help create better lives for your pets in a digital world. One is a collar with LTE tracking and an HD camera. Also a smart pet door that only lets your pet in and out. Lastly, a device to humanely keep Fluffy out of certain areas of your home. (Mat Luschek/Las Vegas Review-Journal)
News Headlines
Home Front Page Footer Listing
You May Like

You May Like