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Destination Europe

Grand plans for mega-resort destinations across Europe wait out the economy

Destination Europe

In the heady days before the economic crisis, various countries around Europe began to attract the attention of developers intent on building casino resorts of a very un-European magnitude. From Spain to Romania, about a dozen plans were announced for huge, mixed-use leisure destinations costing anywhere from €500 million to as much as €17 billion.

Whether inspired by the world-class projects then under way in Macau and Singapore or by the Blair government’s one-time inclination to see destination resorts all over the U.K., clearly more than one person figured it was time Europeans had their own Las Vegas-sized properties.

To date, all those plans have remained just that—plans. Some are on hold. Some are on life support, if not dead already. But just in the last couple of months, a few such projects have been given hope for the future. Hope, but with conditions.

Specifically, two mixed-use facilities in Ireland have received positive reactions from planning boards and can now move forward. The catch: Ireland still needs to decide whether or not it will allow casinos, and if so, how many of those may be casino resorts. If the answer is one and one only, then someone will be in for a disappointment.

Ireland: “Altitude” vs. “Tipperary Venue”

In April, the planning board of Ireland’s County Louth gave its approval for the destination resort “Altitude.” Taking its name from the artificial ski slope at the heart of the project, Altitude is a €440 million effort from Innovative Leisure Systems Ltd. Besides the ski slope, which will be Europe’s largest year-round Snowflex hill, the development includes a 110,000-square-foot indoor concert arena, 80,000 square feet of leisure area with movie theater, bowling alley and other family-friendly amenities, a 40,000-square-foot indoor water park and 80,000 square feet of retail space with a focus on specialist sports and leisure shops.

The original plan introduced late in 2009 included what was described only as an “international casino” should Ireland pass appropriate gaming legislation. Exactly what size casino that would entail is unknown. At present, Ireland has only small, so-called “private” gaming clubs. But the government committee that produced a fairly thorough, well-considered report on the subject of gaming reform suggested that the country could live with at least one large casino resort.

Plans for lodging options are similarly vague, which questions the “destination” aspirations of Altitude. But the developers initially said that a family hostel with 100 beds will be followed by hotel lodging later on.

The first phase, which includes the ski slope, is expected to be operational in late 2012, when the winter sports season begins. When fully developed, the goal is to draw 6.2 million visitors a year.

If there is to be only one casino resort allowed, Altitude will find itself competing with what is currently known as the “Tipperary Venue.” Also introduced late in 2009, this €460 million, 800-acre venture is more focused on gaming and betting, with plans calling for a 60,000-square-foot casino, an all-weather horse racing track and a greyhound track. A five-star hotel with 500 rooms has been part of the plan since the beginning, as well as an 18-hole golf course. As an added attraction, a replica of the White House, as in Washington, D.C., is to be constructed.

The developer is Richard Quirke, who owns among other things Dr. Quirkey’s Good Time Emporium, a 20,000-square-foot, state-of-the-art amusement and gaming arcade in Dublin.

The project ran into opposition from the Irish heritage group An Taisce on environmental grounds, including increased traffic, noise, carbon emissions, helicopter use—in general, sustainability issues. However, in June, Ireland’s national planning board, An Bord Pleanála, gave the go-ahead for most of the project’s components.

Only a below-ground entertainment facility with capacity for 15,000 was rejected due to its being unsuited for the land. Instead, Quirke will alter the plans to add a world-class equestrian center, with open and enclosed arenas and a polo field.

No target dates have been named for completion of the various elements of the project. As with Altitude, the casino component is contingent on the government deciding just how far it is willing to go with casino legislation.

Spain: Caesars, Gran Scala and LVS

Spain has been the focus of destination resort plans since late 2005. That is when Caesars Entertainment—Harrah’s at the time—entered a joint venture to build a 50,000-square-foot casino, an 850-room luxury hotel, Forum Shops retail space, a 3,000-seat theater, a conference center, a spa, restaurants, lounges and bars.

The JV with local partner El Reino de Don Quijote de La Mancha S.A. would build about 120 miles south of Madrid, where the community would feature amenities including golf, residential property and other hotels and attractions. Total investment was initially put at $670 million. However, as a result of the economic crisis, Caesars-El Reino has been on hold for several years.

While waiting for the Caesars development to get under way, a more remote section of Spain became the location of choice for by far the largest mixed-use leisure and casino resort project anywhere within Europe. This was Gran Scala, a €17 billion futuristic city in the eastern desert area of Aragon, just shy of the Pyrenees.

Thirty-two themed hotel-casinos, five major theme parks, a conference center, hundreds of retail shops, restaurants, golf, a horse-racing track, an opera, museums, residences, more hotels—all within a 20-square-kilometer zone built from scratch in the middle of relatively nowhere.

Announced at G2E in 2007, Gran Scala became an immediate conversation piece just for its sheer audacity. The proponent of Gran Scala, International Leisure Development, was not planning to foot the bill itself but rather to bid out the various hotels and casinos to other developers, to be built according to the community blueprint. ILD would purchase the land and arrange for all the necessary legislation and infrastructure improvements with the regional government.

There is no telling how far Gran Scala might have gotten if the economic crisis hadn’t hit one year after the debut of the plan. ILD managed to get the regional government to enact very specific laws to accommodate the project and arranged with local land owners to purchase ground. But as it stands today, three and a half years on, almost half the land still needs to be acquired.

The Gran Scala concept still exists, but is much scaled-back, with the most recent plan calling for a first phase of eight or nine casino-hotels, two large theme parks and four smaller ones. As of this writing, a major land payment requirement was fast approaching, which if missed could put into question the future of Gran Scala.

None of the above difficulties appear to have done the desirability of Spain itself any damage. According to Michael Leven, president and COO of Las Vegas Sands, Spain is a fine location for a mega-project.

“I think Spain is extremely anxious to do what (LV Sands CEO Sheldon Adelson) has now said, a European Las Vegas kind of environment, tailored to the European taste level,” Leven told GGB editor Frank Legato at the recent opening of the Sands Casino Resort Bethlehem hotel. “Sheldon has in mind a long-range plan, over nine or 10 years, to build out a Strip kind of environment, with integrated resorts and all the rest of the amenities you might see in a Macau or in a Singapore.”

When asked about Gran Scala and whether the history of that project was anything to be concerned with, Leven said Gran Scala in its latest configuration lacks retail and MICE components. He said that in an LVS integrated resort, casinos occupy less than 5 percent of the total space and in some properties as little as 2 percent.

Naming the Madrid and Barcelona vicinities as the best locations, Leven said, “The government of Spain is looking for jobs to be created, looking for more tourism, and we’re hoping that they will be aggressive in terms of grants and incentives that they provide to somebody who is willing to bring that in and put up the capital to make the investment. Probably in the next four or five months we will know whether Spain is feasible as a European location. If not, we’ll look somewhere else.”

Romania: Leisure Dome

By July 2009, the economic crisis had been in the general public’s awareness for about 10 months. One year earlier, initial planning had begun for the mixed-use destination Leisure Dome, a project intended for Romania from Netherlands-based Axion Leisure Development.

Confidence in the future was not running high when the project was announced to the public, and today in Europe, every other week brings renewed talk of Greece defaulting on its debt obligations. But through it all, ALD owner George Barbulescu, himself originally from Romania, has remained positive, almost defiant. That attitude has helped him in his continued quest for financing.

“We have had a lot of reactions from banks on the order of ‘not right now, wait a bit,’” says Barbulescu. “And we respond, ‘It is now that you need to be investing, to show that you are ready to move on.’”

Leisure Dome as originally designed involved a total area of about 400,000  square meters—about 4.3 million square feet. As the name implies, every indoor element of the resort would be within a single domed enclosure: an 8,000-square-meter casino, 620-room hotel and 5,000 square meters of MICE facilities.

The largest area of 63,000 square meters is dedicated to diverse, family-oriented sport activities such as a subtropical water park, ice skating, skiing, golf, tennis, bowling and so on. Retail space measures 37,000 square meters; a spa, 11,000. Movie theaters and arcades occupy 20,000 square meters.

Leisure Dome plans call for the use of solar, wind and geothermal energy sources with the goal of being self-sufficient with regards to water and energy. The use of waste and other means to generate energy is intended to come as close as possible to a state of zero carbon emissions.

Not content to wait for easier times, Barbulescu has continued to remind Romanian government officials of their own ongoing objectives, such as job creation and promoting foreign investment. And besides continuing to improve the design of technical systems, the search for funding continues.

Barbulescu said recently that three sources of funding are being explored. At the E.U. level, the European Investment Bank and the European Bank for Reconstruction and Development have been approached, and according to Barbulescu, appear willing to participate with loans. The second source is private partners, which still remain to be secured.

The third source is again from the E.U. well, but in this case in the form of grants. Because Romania is one of the newest countries to join the E.U., it is eligible for aid from Brussels to be used in all sorts of ways, including job creation, infrastructure development and original projects. Leisure Dome when completed will directly employ 4,300. Together with the goal of carbon-neutral operation, the project could be a candidate for such grants.

Once the financing is in place, Leisure Dome will take about four years to complete.

“The financial forecast is that by 2014, the world will be at the level of business activity that was in place before the crisis began,” says Barbulescu. “We are aiming at where the economy will be.”

Hungary: Three, Two, One…

Hungary has seen its mega-resort future go from three billion-plus-euro projects to just one. And that remaining one is still uncertain at last check.

The €1.3 billion Dream Island was to occupy Margaret Island in the middle of the Danube River, between the two parts of Budapest. Lead developer Plaza Centers N.V. planned a 40,000-square-meter casino with over 200 gaming tables and 4,000 slots, 3,000 hotel rooms, 1,000 leisure apartments, a convention center, opera house, theater, marina and high-end retail space. The project was announced in June 2008, but was dropped from the Hungarian government’s priorities list in November 2010.

King’s City was another €1 billion project that promised a lot. But trouble started early when a land-swap deal involving a government-owned parcel at the Lake Velence location came under investigation. Ultimately it too lost its priority status and faded into oblivion.

The remaining project is EuroVegas, a €5 billion, five-property venture near the border with Austria and featuring a signed agreement with Seminole-owned Hard Rock International. The plan announced in 2009 calls for a Hard Rock casino with 100 tables, 1,500 slots, a sports book and poker room, plus a 316-room Hard Rock-branded hotel.

But again, with little to no news forthcoming from those involved in the project these last two years, doubts as to its future remain. Foreshadowing potential problems, in March, Austrian business website FriedlNews reported that there were increasing local concerns over such things as traffic and the ecological effects of EuroVegas. More disturbing was the news that the awarding of the five gaming licenses to the developer was being looked into by the government.

The upshot of all this is that the European consumer will have to wait a little longer to see the first local mass-market, mega-casino resort. Until then, there are plenty of flights heading East or West.