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A Golden Age For Downtown

The 50th anniversary of the Plaza brings back memories of a time when the Strip was luring visitors from Downtown Las Vegas

A Golden Age For Downtown

On its 50th anniversary, the story of the Plaza offers a timely reminder of the early pioneers of Downtown Las Vegas, their business strategies and how future generations built on their legacy to enable an unlikely revival of Downtown Las Vegas.

At the midway point between Salt Lake City and Los Angeles, the relatively verdant Las Vegas seemed the most suitable location for a station on the Union Pacific Railroad. Opening in 1906, the station was to be the cornerstone of the city, with customers alighting to what was to become Fremont Street. The modern station was built in 1940, servicing rail passengers to and from Las Vegas. The Art Deco architectural treat was demolished in 1969 to make way for the Union Plaza Hotel and Casino at No. 1 Main Street.

After years of negotiations, by the late 1960s, Las Vegas businessman Frank Scott had persuaded the Union Pacific Corporation to develop the station at the gateway to Fremont Street. With Upland Industries, a subsidiary of Union Pacific, funding $9.8 million of the $10.5 million construction for the initial 22-story, 504-room property, the Union Plaza Hotel and Casino opened on June 2, 1971, with the grand opening a month later.

It was an ambitious project for the area. A new train station was integrated in the resort (only closing in 1997 when train services ceased) and with a casino floor at 66,000 square feet, it was the largest in the world. Scott brought in a stellar group of experienced and aligned equity investors, selected to enable success.

J.K. Houssels of the Tropicana, who had previously owned the El Cortez, was in. As was Jackie Gaughan, who had bought the iconic hotel from Houssels. Nevada U.S. Senator Howard Cannon was an original investor, as were father-and-son team Sam and Bill Boyd, who took 12.5 percent of the equity ownership with responsibility to operate. Together, the Boyds had already bought and operated the Eldorado in nearby Henderson to great success.

On Track

The Union Plaza when it first opened 50 years ago

The Union Plaza opened at a formative time for Las Vegas. In 1971, Downtown casinos were still operated by many of the World War II veterans that had set up home in the Silver State, or the remnants of the mob that had yet to be purged. A few miles away on the Strip, a new generation of resorts was redefining the discipline, with themed Caesars Palace dominating. The center of gravity was already moving south.

The Union Plaza was positioned to compete not just against the Strip, but Fremont rivals and the locals’ casinos, but was neither a fully integrated resort with the full range of amenities seen on the Strip, nor a traditional gaming saloon. With over 150 more rooms than any other property Downtown, continually filling the rooms of Union Plaza was to be a challenge.

As many of the key investors were active in the gaming industry, there was no shortage of contributions to the proposed strategy of the property.

The influence of Gaughan was evident, with the Omaha bar featuring the Sun Spots as the social hub. As the hotel was located on the site of the train station, there was a nod to that history as a theme, with uniforms evoking those worn by rail workers. Sam Boyd was able to implement many of the operating ideas that had been successful in Henderson, such as the revolutionary move to have women dealers—a move that was as controversial with other executives as it was overdue. Boyd also brought entertainment to the property’s showroom in the shape of musical theater, which, despite initial skepticism, also proved successful in attracting locals for nights out.

The divergent opinions on strategy among the ownership group came to fore, despite the financial success of the young property. With a wide range of business interests in the city it was Sam and Bill Boyd that were first to amicably alight in 1973. They parlayed the profits locally, opening the California in 1975, followed by Sam’s Town in 1979.

After the Boyds’ departure, operations were assumed by innovative operator and investor Gaughan, already an established figure in Downtown Las Vegas, known for his hands-on approach and customer engagement. Gaughan had a clear vision of who his customer was and who the Union Plaza customer should be; Gaughan was the man for Middle America.

During his initial stewardship, the property took a pivot, taking the innovative and revolutionary step to open the first casino sportsbook in Las Vegas. Gaughan, in line with the collegiate spirit, backed a young Steve Wynn to acquire an ownership interest in the Golden Nugget, only yards from the front door of the Union Plaza. Within a couple of years, the Golden Nugget was to surpass the Union Plaza as the largest property in the locale.

Avoiding the temptation to compete with the Nugget for high-end customers, in 1983 the Union Plaza added another tower and convention facilities to capture the emerging midweek convention business, bringing the total room count to over 1,000.

In 1990, Gaughan acquired the holdings of Union Plaza initiator Frank Scott, followed by Upland Industrial’s participation in 1993, becoming the majority shareholder and ending the relationship with Union Pacific. With the “Union” link terminated, and initially against his instinct, the property was renamed “Jackie Gaughan’s Plaza.” Customers would reflect on the friendliness and family feel of the property, plus the good value. It really was Jackie Gaughan’s Plaza.

Changing Direction

Jonathan Jossel has been president of the Plaza since 2014

Surprisingly, gaming in Downtown Las Vegas remained unaffected by the various crises on the Strip during the 1980s, as the market for their gambling-centric hospitality offering remained robust. However, by the end of the decade, Wynn’s focus was on opening the Mirage, which prompted generational development on the Strip and the beginning of Fremont Street’s decline.

As an attempt to improve its fortunes, 1995 saw the opening of the Fremont Street Experience and the pedestrianization of Fremont Street. However, there seemed to be no apparent benefits to casino revenues and the attraction was certainly not to the benefit of the Plaza, as it was located outside the perimeter of the canopy and across Main Street from the pedestrian precinct. Gaughan was to keep the property out of the Fremont Street Experience for the duration of his ownership.

The effects of Strip development and proliferation of regional gaming were to shock operators’ business models. Downtown Las Vegas was particularly vulnerable to systemic movements in the expansion of gaming, losing business to local and regional casinos and to nearby Laughlin, which had a similar value offering on a larger scale.

At year end 2004, it was evident that the model that had been successful for decades was broken. Due to the high levels of vagrancy and perceived levels of crime, locals avoided the area. Bill Boyd, Michael Gaughan (son of Jackie) and the Fertitta family built well-regarded locals casinos in the Las Vegas suburbs to meet the growing population across the valley.

For many tourists, Downtown was not an attractive place to spend valuable leisure time, thus leaving patrons as aging and less affluent, predominantly from the Midwest and Hawaii. These were the customers that had been targeted in the 1970s and ’80s heyday.

In 2004, aged 84, Gaughan sold the Plaza, Gold Spike, Vegas Club and Western casinos, plus over 60 acres of land to Barrick Gaming and Tamares Real Estate for $82 million. Tamares was to acquire Barrick’s interest in the portfolio the following year.

All Change

London-based Tamares seemed an unlikely owner for a portfolio of legacy assets in what seemed a moribund gaming market. Led by Finnish native Chaim “Poju” Zabludowicz, the group had invested widely from telecoms to real estate but had no track record in Las Vegas and no experience operating casinos.

Tamares was not interested in the casino business, but having witnessed and benefited from urban regeneration in other cities, such as New York, Washington, D.C. and London, Zabludowicz believed that Downtown Las Vegas was ripe for such a transformation.

As part of Tamares’ London-based real estate investment team, Jonathan Jossel had studied gaming and casinos as part of his college degree, something that none of the previous owners of the Plaza had done. Charged with implementing Tamares’ real estate strategy, the young executive relocated to Las Vegas to survey the possibilities.

Zabludowicz’s investment was early, but others were soon to follow.

With an ambitious mayor in Oscar Goodman at the helm, there was a desire to drive business and commerce Downtown. Shortly after Tamares’ investment, the Epsteins were active in investing and refurbishing the El Cortez and other assets on Fremont East, real estate group CIM acquired the shuttered Lady Luck in 2007 to become the Downtown Grand, Derek Stevens made an initial investment in the Golden Gate in 2008 (which was a precursor to acquiring Fitzgerald’s in 2011 to form the D, and Circa, which opened in 2020), and lastly with the arrival of the late Tony Hsieh in 2012 and his Downtown Project, there was a concerted effort, and capital, to reinvent Downtown Las Vegas.

With an external casino operator engaged to manage the Plaza, Tamares’ focus was primarily on real estate. However, as the Great Recession of 2007-2009 hit, Las Vegas was affected worse than any other city in the U.S., and both gaming revenues and visitation across the city went into freefall; between 2005 and 2010, gaming revenues fell 25 percent in Downtown Las Vegas.

The Plaza had to take radical steps.

At the age of 29, Jossel applied and was awarded an unrestricted gaming license, becoming the youngest unaffiliated person to do so in the history of the city.

In a move that was as opportunistic as it was bold, the Plaza acquired furnishings from recently bankrupt Fontainebleau, a casualty of the Great Recession, and closed the property for a full renovation. Reopening in 2011, Tamares retained the name the Plaza, when others were promoting a rebrand.

“With the Great Recession in full force, we saw the renovation as an opportunity to make the Plaza ready for a new generation,” says Jossell, who was part of the management team at the Plaza before being named president in 2014. “We didn’t want to implode, rebuild or even rename the property, as others did, as we understood the importance of the brand and legacy. We invested in the rooms, the casino and all the amenities, but tried to retain the culture that our customers had experienced over decades.”

An astute student of Downtown operators, Jossel sought to modify the property for a new age, lifting from history and retaining the ethos that had been inculcated over decades Downtown. Where Binion focused on poker, Jossel saw bingo. Not sexy, but for the thousands of annual bingo players coming from across the U.S. to play the game, tournaments at the Plaza have become a pilgrimage. The hotel has also become home to an annual pickleball tournament, the hottest fad among seniors.

Back on Track

At the time of the Great Recession, several commentators were ready to write off Downtown as moribund, and the stunning return of Downtown Las Vegas was far from inevitable. Between 2011 and 2019 gaming revenue Downtown increased by 39.3 percent, outpacing the Strip, which posted an 8.9 percent increase over the period.

As mentioned, the exit of the old guard and new ownership provided an injection of capital, with almost all major properties undergoing some form of modernization. The city of Las Vegas supplemented this by implementing a gentrification program, complemented by opening and improving a significant range of non-casino-related additions, such as the Mob Museum, Neon Museum, formation of the Fremont East Entertainment District and the various investments of the Downtown Project, driving younger patrons in particular. This reinforced Wynn’s adage that amenity is the cause and revenue is the consequence.

The promotion of Downtown as a value-driven authentic experience chimed with the visitation trends; as Las Vegas became less a gaming center and more a tourist destination, a visit to Downtown was a tourist activity. The demographics began to skew younger—in 2011 the average age of the Las Vegas visitor was 49, but by 2018 this was 45.1. In 2011, 34 percent of Las Vegas tourists visited Downtown, but by 2018, this was 46 percent. In real numbers, this equates to an increase of 6.1 million to over 19.3 million visitors. For context, in 2018, double the number of people visited Downtown Las Vegas as Barcelona.

Final Destination

The cooperation that existed with past generations of owners is also present, to an extent.

The Boyds and Gaughans did business on a handshake, which has left future generations to untangle issues like property rights and easements, usually amicably. The principle that guided this cooperation is that something that is good for one of the operators, is good for all.

However, the notable exemption is with the Slotzilla zipline. Opening in 2014, as part of the construction, a decision was made to build a concrete wall which would obstruct the view from Main Street down Fremont Street for the first time since 1906. The action was taken to apparently disadvantage the Plaza, as it was not part of the Fremont Street Experience.

On a commercial level, it appears unnecessarily churlish and contrary to the spirit of community cooperation. Moreover, for those with an eye to Las Vegas history, it is cultural vandalism of the highest order, denying the continuity of a rare historic aspect to visitors and locals alike. For those that honor the legacy of Las Vegas, the zipline is a shameful reminder of the small-mindedness that can arise on occasion.

Nonetheless, 50 years on, the Plaza is now neighbor to the first new, ground-up resort in Circa, and within short order Symphony Park will be connected to Main Street via a pedestrian park, opening up the property to increased footfall and local access to residential and commercial tenants.

Fremont East, once a no-go area, has become an alternative hangout for locals and tourists, much of which was instigated by Jossel, as Tamares is a major real estate owner in that part of the street. Farther south, the Arts District has new restaurants opening weekly, despite the Covid-19 pandemic.

Jossel has built on the foundations set by the early generation of owners. Resembling Jackie Gaughan’s iteration of a family atmosphere, the property today meets the needs and expectations of the customers. They know that other places have newer facilities with greater amenities, but the Plaza is genuine and honest.

Gaughan was there with a handshake, as is Jossel, a social media star, with a podcast and thousands of Twitter followers—a 2021 barometer of customer engagement. In Jossel, the Plaza has a steward worthy of comparison with his august predecessors.

As the Plaza celebrates her golden anniversary, the iconic entrance glitters brighter than ever, marking the intersection between Main Street and Fremont Street. No longer towering over its rivals in height, as younger challengers have emerged, it stands poised with maturity and a renewed confidence, comfortable with its place in a highly competitive market—a market that it helped build not just once, but twice.

As appropriate to the property, martini glasses should be raised high to toast the efforts of all those involved in this remarkable story, past, present and future.

DOWNTOWN LAS VEGAS GAMING REVENUES, 1984 O-2019
Year Table Revenue ($m) Slot Revenue ($m) Total Revenue ($m)
1984 $ 201,185 $ 247,023 $ 448,208
1985 $ 214,163 $ 276,999 $ 491,162
1986 $ 209,212 $ 296,469 $ 505,681
1987 $ 232,836 $ 350,577 $ 583,413
1988 $ 245,550 $ 371,061 $ 616,611
1989 $ 265,047 $ 406,660 $ 671,707
1990 $ 211,374 $ 360,955 $ 572,329
1991 $ 217,332 $ 448,812 $ 666,144
1992 $ 214,547 $ 475,184 $ 689,731
1993 $ 196,325 $ 481,036 $ 677,361
1994 $ 200,136 $ 473,023 $ 673,159
1995 $ 204,309 $ 430,326 $ 634,635
1996 $ 193,582 $ 477,925 $ 671,507
1997 $ 192,063 $ 479,027 $ 671,090
1998 $ 176,070 $ 496,433 $ 672,503
1999 $ 165,301 $ 496,186 $ 661,487
2000 $ 160,159 $ 507,586 $ 667,745
2001 $ 165,971 $ 511,524 $ 677,495
2002 $ 161,693 $ 488,806 $ 650,499
2003 $ 167,373 $ 483,563 $ 650,936
2004 $ 178,145 $ 478,343 $ 656,488
2005 $ 159,679 $ 486,817 $ 646,496
2006 $ 150,947 $ 472,356 $ 623,303
2007 $ 150,204 $ 476,098 $ 626,302
2008 $ 139,437 $ 437,244 $ 576,681
2009 $ 120,262 $ 397,642 $ 517,904
2010 $ 116,589 $ 371,597 $ 488,186
2011 $ 116,827 $ 374,914 $ 491,741
2012 $ 118,257 $ 386,612 $ 504,869
2013 $ 126,628 $ 369,978 $ 496,606
2014 $ 138,221 $ 369,034 $ 507,255
2015 $ 154,402 $ 387,398 $ 541,800
2016 $ 163,894 $ 400,737 $ 564,631
2017 $ 199,860 $ 431,394 $ 631,254
2018 $ 200,834 $ 449,107 $ 649,941
2019 $ 217,173 $ 467,749 $ 684,922

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Oliver Lovat FRICS is visiting faculty at Cass Business School in London. As CEO of Denstone, he advises customer-facing, asset-backed businesses on strategic competitive advantage and maximizing value. For a full version of this research, contact him at [email protected]

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