In historic vote, LVCVA approves purchase of Riviera
By all accounts, it was a historic vote.
In just more than an hour on Friday, the Las Vegas Convention and Visitors Authority board of directors agreed to purchase a Strip hotel that has been operating for nearly 60 years and at the same time, jump-start a project some say is bigger than the state’s Tesla Motors deal in Northern Nevada.
Board members unanimously agreed to spend up to $191 million, $182.5 million for the 23-story hotel and its surrounding amenities and $8.5 million to cover related acquisition costs.
Approval of the transaction occurred simultaneously with authorization of a lease-back agreement that will keep operation of the hotel-casino in the hands of Paragon Gaming, a Las Vegas company that manages the property for Connecticut-based Starwood Capital Group.
Paragon will be responsible for closing the property, which marks its 60th anniversary on April 20, and turning it over to the authority for demolition. Paragon is expected to close the property May 4.
Paragon CEO Scott Menke said the plans call for the entire hotel-casino, including the restaurants and shows, to remain open until the closing date.
“We have been running at 80 percent occupancy,” Menke said. “We want our guests to have the full Riviera experience.”
DATE WITH IMPLOSION SPECIALISTS
Once the property is closed and furnishings are cleared, the building will be turned over to the authority, which will have the responsibility of setting a date with implosion specialists.
Menke said the primary concern is finding new employment for the hotel-casino’s nearly 1,000 full- and part-time workforce. He said Friday that Paragon is working with several Nevada agencies to assist in the transition. Paragon is still determining the severance package for the employees.
Paragon developed a website for employees that includes job training tips and information, and a listing of jobs throughout the Las Vegas Valley. Also, the company is working with Nevada JobConnect’s emergency response team and has been in contact with the eight unions that represent Riviera workers.
“We’ve had a huge response of support from local and regional gaming companies looking for experienced and well-seasoned people,” Menke said. “We hope to be effective in helping everybody connect.”
Paragon is also looking to move conventions and meetings booked at the Riviera Conference Center after May 4. He said the closure will displace 150,000 room nights already booked.
TURNING ‘CASH-FLOW POSITIVE’
Privately held Paragon, headed by Dianna Bennett — daughter of the late Las Vegas gaming pioneer William Bennett — began managing the Riviera in June 2013 following a major shake-up that included the firing of the CEO.
Menke said the resort became “cash-flow positive” in all its operating areas during its tenure.
“The engagement of the employees turned the property around,” Menke said.
Paragon will begin planning to dispose of gaming equipment, hotel room furnishings and other items from the Riviera. He said the historic Las Vegas photographs that adorn the Riviera’s walls belong to the convention authority.
The life-size bronze sculpture of seven G-string clad dancers from the Riviera’s “Crazy Girls” topless show, in a line as seen from the rear, is owned by Norbert Aleman, the show’s producer.
Aleman said Friday the statue, which has become a photographic stop for Strip visitors since its 1997 installation, will be moved “to another location on the Strip.” He said he is in negotiations with three properties to move the show.
Meanwhile, the convention authority, which is responsible for marketing Las Vegas to the world, will work with architects and engineers to develop a site plan for the $2.3 billion Las Vegas Global Business District.
A LOOK TO THE FUTURE
Authority officials showed off renderings of a prospective profile of the campus, but CEO Rossi Ralenkotter emphasized that they only illustrated some of the needs expected to be addressed in construction and not a preview of what it would look like.
To Ralenkotter, the vote represented the next step in what is expected to be a five- to eight-year effort to change the city’s meetings and conventions industry landscape.
Although managers plan to close the Riviera, one of the city’s first high-rise resort properties, and lay off an estimated 1,000 employees, the authority will hire architects and engineers to upgrade the campus.
Ralenkotter envisions the project occurring in two phases involving expansion and renovation.
In the first phase, the authority will add 750,000 square feet of new exhibit pace and 187,500 square feet of additional meeting space. The second phase would involve renovating existing space to create 100,000 square feet for general sessions and 100,000 square feet for new meeting space.
Ralenkotter said some kind of people-mover transportation system also is planned because of the distance from the Riviera’s front doorstep on Las Vegas Boulevard to the Convention Center’s existing South Hall.
The authority estimates that 6,000 construction jobs would be created along with 6,000 projected permanent jobs supported with $221 million in salaries and wages projected to be generated.
DRAWING NEW SHOWS
Improving and expanding facilities is expected to draw at least 25 new shows that the authority’s sales staff already has contacted about relocating their events to Las Vegas. Besides new shows, existing events can be expanded for more attendance.
Chris Kersting, CEO of the annual Specialty Equipment Market Association car show that appears in Las Vegas every November, told board members Friday that SEMA endorses the expansion effort because it will enable his event to grow.
“For Las Vegas to be No. 1, it has to continue to modernize and expand,” Kersting told the board.
One person who spoke during the meeting’s public comment period asked board members to consider the historic significance of the Riviera. The man, wearing a T-shirt that said, “Save the Riviera,” asked board members to consider an alternative to acquiring and imploding the hotel.
Las Vegas Mayor Carolyn Goodman, a board member, questioned the loss of the many jobs at the Riviera but was assured that the resulting construction project would hire even more people and would keep the city ahead of rival cities trying to steal business.
“This is a vote to secure us for the next generation,” said board member Charles Bowling, an executive at Mandalay Bay. “To the competitors who want to steal business from us, this project says, ‘Not so fast.’ ”
Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find him on Twitter @RickVelotta. Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Find him on Twitter @howardstutz.
