Shuttered motel on Las Vegas Strip up for sale again — at reduced price

The closed Diamond Inn Motel property across from the Mandalay Bay Convention Center is available to purchase through an online auction. The minimum bid is $10 million, and the auction closes Oct. 16.

Known for its pink elephant out front, the low-slung Diamond Inn was built in 1940, making it one of the oldest buildings still standing on the Strip, and occupies a nearly 1.4-acre parcel on the south edge of the famed casino corridor.

Marketing materials describe the site as a prime redevelopment spot, with potential for a resort, luxury high-rise or entertainment venue.

The Diamond Inn, 4605 Las Vegas Blvd. South, just north of Russell Road, went out of business in fall 2023, after Clark County officials alleged numerous building-code violations and ordered the power shut off, county records show.

J.P. King Auction Co., the Alabama-based real estate auction firm handling the sale, tried to sell the property last year with a starting bid of $12.5 million, the Las Vegas Review-Journal reported.

Ultimately, the plot did not change hands and is still held by longtime owner Sam Aldabbagh, property records show.

J.P. King President and CEO Trey Perman said in a statement Wednesday that the Diamond Inn is an iconic property and that the first auction generated strong interest, but the numbers “didn’t align for the seller.”

Perman said the current auction has a guaranteed sale price and that his team looks forward to seeing the vision a new owner “brings to this legendary site.”

‘Comfortable Family Lodging’

Motels on the Strip can seem a bit out of place these days. There used to be more, but Las Vegas Boulevard’s few remaining decades-old motor lodges are small, no-frills affairs and look especially tiny near the massive hotels and other high-rises that now loom overhead.

The Diamond Inn, with its pink buildings with blue trim, previously boasted “Comfortable Family Lodging” on a sign that now features information about the auction.

“Where History Meets Opportunity!” the sign declares.

In fall 2022, the Clark County Building Department issued a violation notice against the Diamond Inn property for work without a permit. The notice listed numerous alleged building, electrical, mechanical and plumbing violations, county records show.

According to the notice, there was “evident” disintegration of structures; electrical gear had been installed on top of each other without approved plans or permits; exhaust fans had been installed in place of second-floor windows without approvals; and a two-story equipment room for plumbing and gas piping was also built without approvals.

In late 2022, the Building Department declared the motel structure “dangerous,” and in June 2023, it issued a 24-hour notice and order to disconnect electric service to the property, county records show.

Days later, Aldabbagh’s lawyers faxed a letter to the county saying that since their client acquired the Diamond Inn in the 1970s, the motel had been subject to numerous building inspections “without meaningful incident,” and that any issues were “relatively minor and quickly corrected” by the owner.

They also wrote that shutting off the power would affect Aldabbagh’s ability to conduct business and deprive “long-term residents” of the motel, and their families, of electricity.

‘Disparate and arbitrary manner’

Aldabbagh also sued the county in Clark County District Court in June 2023, claiming officials were “harassing” him in his “right to carry out a lawful business.”

According to the complaint, Aldabbagh had spent about $100,000 on repairs since the prior year. He also alleged the county was conducting inspections of the motel and issuing citations and other penalties “in a disparate and arbitrary manner,” according to the lawsuit.

He also claimed in court papers that the motel had been inspected dozens of times over the past 40 years and that the county sought to force the motel out of business by disconnecting utility services “under pretextual allegations of building code violations.”

The county responded that the case stemmed from building, electrical, mechanical and plumbing violations, many of which had “created life safety issues,” court records show.

In another court filing, the county cited its discretion around whether to issue citations and argued that it was required to evaluate whether the Diamond Inn’s conditions posed health and safety concerns.

In August 2023, District Judge Jacob Reynolds granted the county’s motion to dismiss the case, court records show.

Clark County business-license records show the motel went out of business the following month.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342.