EASTERN PROMISE

The $250 million Eastside Cannery will be the first of three new hotel-casino projects opening this year while the economy is struggling with falling home values, $4 gasoline prices and a shrinking job market.

Cannery Casino Resorts co-owner William Wortman isn't concerned, though.

"We're going to open the product knowing the market's down," he said. "We think the Cannery brand has proven to be, even in a down market, very stable."

Wortman said it is hard to judge how customers will respond to a new hotel-casino in the midst of the economic downturn.

However, "We think this product is a product that will create excitement on the east side of town," he said. "There hasn't been anything new down here for many years."

An opening date has not been decided, but the new resort, which is replacing the demolished Nevada Palace on Boulder Highway, will open some time in late August in an older area of Clark County where it will compete with other locals casinos.

The Eastside Cannery will be the first new hotel-casino in the area since Sunset Station, 41/2 miles south, opened in June 1997.

The area also includes Boulder Station, which opened in 1994 and Sam's Town, which added a new 650-room tower the same year.

Brian Gordon, a principal at Applied Analysis, said a new property opening can spark interest in consumers and ultimately raise demand, although the Eastside Cannery will be adding 2,000 slot machines to an established area with lots of gaming already available.

"It's an extremely challenging time in the locals business," Gordon said. "History tells us when new properties open, the market adjusts and there is an absorption period for the market to adjust to new supply. There will be an adjustment period following the opening of Eastside Cannery as well as Aliante Station."

Station Casinos is scheduled to open Aliante Station in North Las Vegas in November, and Wynn Resorts Ltd. plans to open Encore in December.

Jacob Oberman, director of gaming research and analysis for CB Richard Ellis, said a new quality property can grow a market, which in the Eastside Cannery's case stretches from the Boulder Highway Strip to Sunset Station in Henderson.

However, a new property also draws customers from existing properties in the area so the impact on the overall area could be hard to gauge in this economy, Oberman said.

And the Boulder Strip is already suffering.

Boulder Strip casinos reported the largest percentage drop in gaming win, 30.2 percent, in the state in May, according to figures released Thursday by the Gaming Control Board.

For the fiscal year, which dates to July 1, 2007, casino revenues are down 4.53 percent in the area compared to the previous 10-month period.

Oberman noted that operators such as Cannery Casino Resorts look beyond the short-term when building properties.

"They don't build for the year it opens but to help grow the revenue over time," he said.

Construction workers, meanwhile, are working to prepare the new resort for its opening this summer.

Earlier this week, construction workers were laying the last bit of carpeting across the 65,000-square-foot casino floor.

One of the hotel rooms has been furnished and was being readied for a magazine photo shoot while the remaining 307 rooms in the 211-foot hotel tower are in various stages of readiness.

Wortman said the property will begin taking room reservations during the next few weeks.

Work is also continuing on the 16th-floor lounge, which will overlook the valley on all four sides.

Cannery Casino Resorts is privately held by co-founder Wortman, industry veteran Bill Paulos and a subsidiary of investment management corporation Oaktree Capital Management.

The company is in the regulatory process of being sold for $1.8 billion to Crown Ltd., a Melbourne, Australia-based gaming company controlled by billionaire James Packer. There is no date for when the deal will close.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.