Chef Stakes Vegas Claim Off Strip

08.04.2006, Lesen Sie hier den Bericht über «Chef Stakes Vegas Claim Off Strip».

It's been a rough season for development in booming Las Vegas, which bubble-watchers have long cited as ripe for a pin-prick. But even as some high-profile projects such as Icon Las Vegas and Las Ramblas have fallen or faltered, others have been moving ahead. And for those with a clear plan that includes an attractive consumer hook, not to mention access to land, capital and construction expertise--in other words, a strong business plan--the market may still be open for business.

One such person is Charlie Palmer, the chef-restaurateur whose classic Aureole, with its striking wine tower and harnessed wine angels flying high to retrieve precious cargo, helped lift Las Vegas cuisine out of the buffet line and into four-star, white-tablecloth territory when it opened in the Mandalay Bay in March of 1999. Now, Palmer wants to do something similar for Las Vegas hospitality.

Buoyed by the growing success of his $55 million restaurant business--with properties in Las Vegas, Manhattan, Washington, D.C. and a small California hotel--as well as by the pace of growth in Las Vegas, Palmer is moving aggressively forward with plans to build and operate a 400-key, 35- story boutique condo-hotel in Las Vegas. Even as the straight condominium market for properties like Related's Icon Las Vegas has stumbled there, the condo-hotel market has remained strong, surprising many observers.

Projects such as Mirage's The Residences at MGM Grand and the Cosmopolitan have sold at robust prices. A year-end 2005 report from Performance Marketing & Associates, a Las Vegas group, studio apartments at the MGM (nyse: MGM - news - people ) project achieved $1,000 a square foot; those at Cosmopolitan reached $1,190.

There are no guarantees, but Palmer is trying to cover as many bases as he can, using an approach to hospitality grounded in a strong business sense and a familiarity with the customer base that fills his roughly 2,000 seats every night across the country. Palmer hopes that the brand loyalty he has cultivated through his signature mix of fresh, top-quality ingredients, sparkling presentation and attentive service will translate into an embrace of his hotel concept.

That concept is a gamble on a growing segment of the Las Vegas market: the business and vacation visitor for whom gaming is a low- or no-priority distraction, but who still wants to participate fully in the lifestyle choices--eating, drinking, partying and shopping--that the desert city has to offer. To that end, the CharliePalmerHotel will not only be gaming-free, it will also be off the Strip, though not far; residents will have unobstructed views of the Strip one block east and the mountains to the west.

"The more congested Las Vegas Boulevard becomes, the more key position we're in," says Palmer. Especially important is that "no one can build next to us and block our views."

The site, at the southwest corner of Tropicana Avenue and Dean Martin Drive (formerly Industrial Road) is now occupied by the forlorn Golden Palms casino-hotel, a 150-room 1970s dump (and former HoJo's property) that was acquired in the late 1980s by Palmer's development partner, Marvin Lipschultz. Diners today can avail themselves of an International House of Pancakes. Lipschultz, a one-time home-builder from Chicago who now lives in his hotel's faded Elvis Suite, has been scheming for years to redevelop the property, and has teamed up with Palmer in hopes of seeing that dream realized.

Guests at the CharliePalmerHotel will probably be able to order pancakes, too, at one of the three restaurants he is planning for the project; the nightclub, near the top floor, will probably not offer them, but who knows? These facilities, as well as all the interiors, are being designed by Adam Tihany. Along with a spa, back of house and other amenities, these are expected to take up about $100 million of the estimated $380 million development cost.

Besides nailing down the land, Palmer has assembled a kitchen cabinet of operations, marketing and development personnel. Perhaps most importantly, he has locked up local construction giant and former Vice Chairman of Mandalay Bay Resort Group Bill Richardson. Richardson has the clout to shepherd the project through today's labor-shortage minefield. As for managing rising materials costs, that will be everybody's headache.

Palmer has also secured the blessings of management at MGM Resorts and the Four Seasons, which in 1999 asked Palmer to rescue the hotel's floundering in-house fine-dining establishment by bringing in a Charlie Palmer Steak restaurant; between that and Aureole, the Las Vegas restaurants bring in about $18 million a year. (Palmer also took over management at the Sterling Club, the private club at Ternberry's exclusive high-rise complex). The Four Seasons is a non-gaming hotel atop MandalayBay, but with a separate entrance that allows guests to avoid the casino. Palmer has no trouble acknowledging what is driving his move to build: "Ambition," he says bluntly. "For the last ten years, I've been a player in the development of Las Vegas. Real-estate developers and hoteliers have come to me to enhance their properties with a great restaurant that will increase visibility and values," says Palmer. "Developers have said to me that what I provide will help them bring in X dollars more per square foot. At some point, we need to be the developer."

Palmer also acknowledges that the move to development is a risky one, to which he and Lipschultz are contributing about $47 million in equity, about three-quarters of which is based on the value of the land, according to a Cushman & Wakefield appraisal "It's certainly risky--there's risk to everything we do."

But the nascent developer believes firmly that the negative press on recent Las Vegas condo projects is well outweighed by what is happening on the ground with the condo-hotel market. "I don't see those going by the wayside," he declares "Everything we look at that is real and being built is completely sold out. If you can sell at the right price, you can build it." Of course, the right price is the $64,000--and up, because that will buy you nothing--question. Palmer expects sales to begin at around $1,000 a square foot.

Another key member of the team, the man responsible for the day-to-day grind of development and management--which is not to say that Palmer himself isn't hands-on--is Charlie Palmer Group CFO Richard Femenella, who has been with Palmer for nearly nine years. A tough C.P.A. from Queens who headed up operations for New York restaurateur Buzzy O'Keefe, proprietor of the Water Club, a power hangout on the East River, Femenella has been part of the company's growth from its roots as a small New York operation. Palmer recalls waking up one day three years ago and realizing things had grown too far too fast. "We had a thousand employees, but no real corporate structure," he recalls. He stopped growing until he could get that in place.

Palmer appears to have planned out his line of attack the way he approaches a well-managed table stunner. "We built from the operational side first," says Palmer flatly. "Everybody builds and then sources the manpower to operate. I can't afford to take those risks." Palmer also hired former Las Vegas Life publisher Rick Becker to head corporate sales, and the young, hip Blue Tipping Group marketing concern to run his sales and marketing campaign, which is expected to kick off in earnest in May. "We'll start taking soft deposits in late May, and I think we'll have a good indication quickly where this project is headed," says Palmer.

While others in the group suggest that the CharliePalmerHotel will be the first of several, Palmer himself dismisses such talk. "We are truly a one-project team, and we do one thing at a time and make it successful. This is a huge project for us, and it will have 100 percent of our focus until it's completely successful to my satisfaction," he insists. "Then we can look to the future."

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