Las Vegas isn’t very fussy about its history. A building loses its edge or popularity, let’s implode it and start over. It’s happened multiple times in the capital of casinos, and will happen many times again.
So when a building somehow escapes the wrecking ball, it should be celebrated, as was the “new” SLS Las Vegas, built into the bones of the “old” Sahara, when it opened in August.
But it wasn’t always going to be that way. According to Arash Azarbarzin, the president of sbe Hotel Group at sbe entertainment group, the operator of SLS Las Vegas, most of the hotel was slated to be demolished after sbe and a group of investors purchased the hotel in 2007.
“For a moment, we thought we were geniuses and had landed a great deal,” he laughs. “Everything was going strong, and as soon as we announced our project, MGM bought the land across the street, and announced they were bringing in an Atlantis. And next door to us, they were planning the world’s largest tower. The Fontainebleau was in full construction, and land prices were going through the roof.
“And then, of course, the Great Recession happened. So this journey that took us about five, six years; we went through several different iterations of the design. Our first design was really aggressive. We were adding another thousand rooms and a luxury tower to the property. And then the recession hit, we readjusted the plan, and decided to downscale and do more of an adaptive reuse, even though there’s not one common denominator of the old hotel. It’s a brand new asset, even though we paid homage to the Sahara in many different locations.”
Sam Nazarian, chairman and CEO of sbe entertainment, says the Sahara was attractive to him particularly because of its challenging location.
“We went into the corner of Hollywood and Vine in 2005, when none of us would be caught at Hollywood and Vine at 3 o’clock in the afternoon; forget about 2 o’clock in the morning,” he says. “But we looked at the infrastructure that Hollywood and Vine had, the history that Hollywood and Vine used to have, the access, the connectivity to the valley, to downtown, to the Westside. So we converted an old 1920 15-story office building into 96 condos, and we put one of our Japanese restaurants in there, which is an amazing product, and everyone thought we were crazy. They said, ‘You’re five blocks in the wrong direction.’ Fast forward, Hollywood and Vine now is the center of Hollywood.
“We did the same thing when we bought the old Le Meridien Hotel on La Cienega. It was bankrupt; it was built in 1990 as a typical atrium asset. It was across the street from a broken-down body shop and a used car lot. But the bones were great. And now it’s one of the best-performing hotels in L.A. The market around us has changed.”
The same is true for the north end of the Las Vegas Strip, says Nazarian.
“The north end has a lot of the same characteristics. What excites me the most is the good bones and the accessibility, the monorail, the convention center. I have three points of ingress, with Las Vegas Boulevard, Paradise and the monorail. I have Sahara Boulevard, which connects me right into Summerlin, where I live, which gives me that really great focus for the locals.”
The market for SLS Las Vegas is a mix of tourists, gamblers, conventioneers and locals, says Rob Oseland, the president and COO of SLS Las Vegas.
“We have appeal to different audiences,” he says. “The most important is that we’re taking the best of the collection of restaurants, hotels and nightlife venues within the sbe family and tucking them up under one roof in Las Vegas, that being kind of a direct positioning difference for us. Sbe also has been very good at catering to the locals market in both South Beach and in Los Angeles, and then we come at it from a different design platform. We are independent; we’re an entrepreneur; we’re not a large commercial entity, so we want to provide a difference in the market.”
SLS Las Vegas was designed by Philippe Starck, one of the most iconic designers in hospitality, and Joe Faust, the president of sbe in-house development team Dakota Development carried out the renovations. Like Nazarian, he says the “bones” of the property were what gave them confidence that Starck’s plans would work.
“The adaptive reuse can be fun, but when you have to work with the box, as it is, it can be very challenging,” he says.
At the SLS, Faust says it was a combination of reusing and updating existing systems and structures that were in place and completely gutting other sections of the hotel.
“The older parts of the hotel had to be taken down to the concrete and steel,” he explains. “But in the newest tower, which was built around 1990, we found we could reuse the plumbing and other systems that were in place because they weren’t in bad shape.”
Signed, Sealed and Delivered
One element that had to be completely created is the pool areas. Azarbarzin says it’s the signature of sbe entertainment and its hotels in Miami Beach and Los Angeles, and was crucial in Las Vegas as well.
“We completely redesigned the pool,” he says, “and we added cabanas all the way around. We added a small dining venue and a couple of bars, and we added an extra pool, called the LIFE pool, on the roof of the new structure that we put up. So we now have two pools for our guests. One of them is high-energy, and the other one is a bit more mellow, so people can choose and relate as needed.”
Another signature of sbe is the nightclubs, especially since the company has partnered with MGM Resorts in Las Vegas to develop nightclubs—the latest being the wildly successful Hyde at Bellagio. SLS Las Vegas has three venues with two brands transferred from sbe properties in Los Angeles.
“Sayer’s Club is a brand that we have in Hollywood; it’s our live music venue, where we have performances seven nights a week. People can enjoy a very small, intimate, charming location, and listen to a phenomenal band or DJ that we program for a very small audience. We can only fit a couple hundred people in this venue, so for you to be close enough to touch a band, it doesn’t get any closer than the Sayers Club.”
The Foxtail, another L.A. transplant, was first designed to be a casino lounge, but Faust says that changed in the design process.
“We decided to close it in and open it onto the pool to have the same effect that Hyde does in Bellagio,” says Faust. “So instead of the fountains, we have the pool, and we can use it as a day club as well.”
Finally, there’s the traditional big-box nightclub, LIFE, which seats over 1,000 customers and features the DJs that have become so popular—and wealthy—in Las Vegas.
“Most of those guys,” laughs Nazarian, “worked for us in the beginning making a couple of hundred bucks a night.” They’ll do better than that at SLS.
Target Market
So who is the typical SLS customer? Nazarian gets very specific.
“Our data shows it’s 25 to 55, but the actual direct age is about 41 years old,” he says. “The 41-year-old who still wants service and accountable amenities, but at the same time, wants a product that really has a little bit of forward-thinking and design, and also very good accountable food and beverage. So, every market is a little bit different.”
To convey that kind of experience, SLS Las Vegas has partnered with unique-to-Vegas companies. The retail at SLS is controlled by Los Angeles entrepreneur Fred Segal, whose eponymous stores are legendary in that city.
“Fred Segal was a gentleman in the ’60s who was a big Malibu surfer type—exactly the opposite ofme,” Nazarian laughs. “He built two stores with unique products. So if you’re a jeans guy, a sunglasses guy, an accessory guy, he housed them in West Hollywood and Santa Monica—only two locations existed for the last 40 years—and by giving them the overarching Fred Segal brand, it really set off the counterculture to the big-box retail shopping centers.”
Nazarian convinced Segal to bring his brands to SLS, which now houses seven Fred Segal stores, with jewelry, clothing, accessories and more. “So we have one retailer and it’s spread out throughout the entire property,” he says.
Other sbe partnerships include chefs Jose Andrés, Michael Schwarz and Katsuya Uechi, rocker and designer Lenny Kravitz, photographer Matthew Rolston, and several designers.
Oseland says the goal of filling the hotel with sbe customers from Los Angeles, meetings and conventions, gamblers and locals can sometimes be a challenge.
“Each one of those has a whole set of different demographics, so that’s kind of the baseline,” he says. “From the casino’s perspective, it’s great that you have a good, healthy hotel and a building that appeals to locals, because of the lack of walk-in traffic that we have at the north end of the Strip. We use restaurants and nightlife as an entertainment destination, so there’s a collection of different people who will come here for our restaurant experience and our nightlife. I would say that our nightlife would tend to skew us a little bit younger in perception, but in reality we’re still late 30s/early 40s, versus the city average, which is in the high 40s.”
Oseland believes the locals market has great potential for SLS.
“The first advantage is location and accessibility,” he says. “We don’t have all of the congestion that the center Strip does, and we have access off Paradise, Las Vegas Boulevard and Sahara. And then the other is that we’re right-sizing the diversity of our restaurants and our pricing, so it offers value to locals and it offers a lot more value to tourists. And then the casino loyalty platform—Code—is a hybrid. So we’re not necessarily a Strip program, we’re not necessarily a locals— we’re trying to skew to in-between so it offers value to locals and tourists alike.”
Oseland says the price point of SLS is an important aspect of the “value” that the hotel wants to provide for customers.
“We can’t really afford to be priced exactly as a locals place, like a Stations Casino, but we can’t be a Wynn place, either,” he says. “We’re trying to find that balance in between where people can come here multiple times and discover our restaurants several times a month, if not a week, and have that kind of diversity. Every property seems to right-size its place to its market, and I would say that for us, we’re trying to appeal to that locals customer, and also appeal to a foodie that’s attracted by José Andrés, who’s willing to pay a premium check average for that experience.”
Service Oriented
The third leg of the SLS stool is service, and Nazarian says the key is in having motivated hotel employees.
“Our executives, for the most part, all grew up with each other,” he explains. “So, there is a piece of everyone’s DNA within the ultimate assets today. We all have experienced those trendy cool places, or a restaurant that was cool, or a boutique hotel. In many cases, the arrogance of the employees was shocking. It’s like they owned the place and they didn’t want to serve. So that’s one thing we learned.
“We set forth to just put our head down very humble, hat in hand, and tried to dissect our side of the business. And we get a chance to really incorporate our DNA of accountable service, but also a culture in which people just are happy to work with us. We use a kind of cheesy tagline, ‘It’s a career, not a job.’ If you’re looking for a job, you probably don’t want to work for us. If you’re looking for a career, we’re willing to work with you to make you—and us—better.”
Azarbarzin says that the extraordinary customer service at the better Las Vegas hotels were a goal for SLS, but it’s also something they strive for throughout the entire company.
“We didn’t want people to come to this property with a preconceived notion of what a Vegas experience should be, and what is acceptable and what is not,” he says. “We wanted our employees to deliver service levels, and deliver the customer service and the guest experience that not is really that Vegas-specific, but sbe-specific.”
Forgotten Casino?
SLS Las Vegas is sbe’s first entry into the casino business. While sbe is familiar with gaming through its partnership with MGM Resorts, its role at SLS Las Vegas is understated but not ignored. Oseland says the gaming floor in SLS is a little smaller—60,000 square feet—than a typical Las Vegas Strip casino.
“There’s a change that’s happening within Las Vegas and with casino entertainment,” he says, “and that’s that casinos aren’t the only reason why people are coming to Las Vegas anymore. It’s an evolving market where we’re focused on food and beverage and nightlife and entertainment and hotels and retail. And the casino scale is changing as competitors change regionally and nationally, so there’s fewer gamblers coming to the city and more non-gamblers. So we’ve modified our casino to fall into that change in the economy.”
That said, Oseland says gaming is still a primary focus of sbe.
“For a long time Las Vegas didn’t have competition, and now that we’ve found we got competition and we’ve got lots of floor space, we want to create and grow utilization. (In Nevada), you see a decrease in the number of slot units trying to increase energy utilization, so we’ve right-sized the casino with that in mind.”
The SLS player’s club is multi-dimensional, says Oseland.
“It’s not just a gambling club for casinos,” he explains. “It also is tracking non-gaming spend at the SLS Las Vegas, and then it expands it to all of the platform of sbe within Los Angles and in South Beach Miami, so that people who are dining in restaurants and going to hotels and nightclubs can be recognized here in Las Vegas and people in Las Vegas can be recognized in those markets. That’s the real key difference.”
Nazarian agrees that the loyalty program at SLS is designed to recognize all players.
“We’re not just one vertical; we’re not Hilton HHonors,” he says. “We don’t have just hotels, so the complexity of our loyalty program, at the same time, is the opportunity of our program. We actually re-launched that program because of SLS Las Vegas. We’ll slowly start building that gaming awareness and try to keep it very simple. We’ll position it in a very clean, aspirational four-tier program that gets people in, and then ultimately gives them the ability to be recognized. We’re hoping to be the first loyalty program that will work across four disciplines, so it’s relevant in gaming, hotel, restaurants, and ultimately nightlife. It’s something that will be relevant to everybody, but at the same time won’t break the bank of liability on our side.”
Gaming is an important part of SLS, says Nazarian, and sbe is going to learn how to do it.
“We’re very conscious that we’re not a gaming company,” he says. “But, at the same time, we’re also very conscious that we’re delivering an experience that is consistent, where we’re not just putting a big, brand new nightclub in a place that it was never designed for in the master plan, and that nightlife customer who was spending $30,000 on champagne is walking outside into an old hotel, that has no correlation. Our people—the people staying in our hotel—can’t afford that amenity. Accountability to our investors, and the guest experience will be our differentiation.”
Future Focus
SLS Las Vegas is open, but it’s far from the last sbe project. The company has properties under construction or in the planning stages in many cities, including Miami, Philadelphia, in the Bahamas at Baha Mar, New York City, Seattle and Chicago, as well as in Dubai and in China.
Despite this vast array of development, Azarbarzin says sbe isn’t trying to be everything to everybody.
“If you try to do it that way, in my opinion, it’s a recipe for disaster,” he says. “Because you can never be good at anything. So we have worked tirelessly to create a paradigm in hospitality that will adhere to this psychographic that enjoys great dining experiences; they’re foodies at heart, they enjoy energy, they enjoy service, they enjoy the ability to not only be recognized in one location, but, if you’re a high roller here in Vegas, you automatically become a high roller in Los Angeles, in Miami, in New York, in every location that we have.”
The 39-year-old Nazarian is humbled by the success he’s achieved since his family emigrated from Iran in 1979. He talks about his first discussion with the legendary Kirk Kerkorian, the majority owner of MGM Resorts.
“When we bought the Sahara in 2007, one of the first calls I got was from Mr. Kerkorian,” he explains. “And because of my last name, he thought I was Armenian. I didn’t have the heart to tell him I wasn’t, because it was Mr. Kerkorian calling; I was very flattered that he actually reached out to me. Through that call, I met a gentleman named Jim Murren, who at the time was the president and CFO of MGM. And he really just took me in. He was just such a great mentor, and continues to be.
“At that time, MGM was building a project called CityCenter, and they really had made a very strong commitment to the space of innovation, design, architecture—it’s the best of the best. That’s what I want SLS Las Vegas to be.”
