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A Poolside Report from City Center
I write this to you from my poolside cabana at the Aria at City Center, the newest and hottest hotel in Las Vegas, against a background of blaring rock music and helicopters buzzing overhead every five minutes. It’s amazing what passes for a swim suit these days, and some of the tattoos were nothing less than shocking.
I’m here because at a throw away rate of $120/night for a room that is worth at least $500, and discount fares offered by the airlines, it is cheaper to spend a weekend in Sin City than it is to stay home. Hotel flacks glibly tell reporters that with an 80% occupancy rate, they are near profitability. But staff tell me those numbers are achieved only because 20% of those rooms have been mothballed and taken off the market.
The glitzy, ultra modern, Cesar Pelli designed, 16.8 million square foot, 63 acre complex occupies a quarter mile on the city’s fabled Strip between the Bellagio and the Monte Carlo Hotels, and will unquestionably become one of the hedonist Wonders of the World. It includes the Mandarin Oriental, Aria, Veer, Vdara, and Harmon Hotels, offering 4,000 rooms and 2,600 condos. They will be adorned by two casinos, a convention center, a new theater for an Elvis themed Cirque du Soleil show, and parking for 6,900.
I wandered in amazement though the gargantuan “Crystal” shopping mall, where half of the retail space was boarded up in the most tasteful way possible, and marquee luxury names like Fendi, Ermenegildo Zegna, Tiffany, and Louis Vuitton were manned by elegantly dressed and earnest staff, but bereft of a single customer. Despite hiring 12,000 since opening in December, service at the Aria is still glacially slow. My inside guy in Vegas, a blackjack dealer at Caesar’s, tells me this is because it is an all union house. The city is also rife with rumors that the oddly titling Harmon will have to be torn down and rebuilt due to construction flaws.
I spent my free time looking at condos that were initially offered at $600,000, but now could be had for $200,000. To see them, I had to drive through “ghost suburbs”, blighted with dusty, abandoned strip malls and tumbleweed blown office parks that might have been a scene out of a Twilight Zone episode.
Still, how can you hate Vegas? The French toast at hotel Paris, France was to die for, and my masseuse at the Aria, Monique, is clearly God’s gift to mankind.
You really have to wonder what MGM-Mirage’s Kirk Kerkorian, Dubai World, and their long suffering lenders were thinking when they ponied up $8.5 billion for this venture. Excess is in abundant over supply here, and they clearly thought the good times would go on forever. Instead, they created the worst commercial real estate disasters in human history.
Thanks for the great weekend, Kirk!
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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American ingenuity, we build a city in the middle of the desert which was once used for nuclear testing with a limited water supply and people travel for thousands of miles to see it.
Are we insane as a culture? Maybe but we have fun.
Ah, look back time. First trip to Vagas from L.A. in 1953 (Yea it dates me but so f****** what!!) Flamingo the first thing ya hit then I believe the Stardust and Desert Inn were there--maybe the Riveria--memory kinda fades. had to walk damn near every where--few cabs & expensive. Need to take a leak--go behind one of the catsus along the strip.At 17 you could walk a long ways. After an army stint, lady friend worked for the L.V. Dist Atty. Drove up there from L.A. couple of times a month. Comp tickets for every show you wanted @ D.A.'s office. Sinatra & Basie ringside etc. Rooms $9.00/ nite (we had freebees) All you could eat after midnight $1.95.
Now, I drive to L.A. to see old friends and won't even stop. L.V. is a shithole compared to the late 50's early 60's. Crap city, crap people and destined to death. Live in Colorado now. Water for L.V., Phoenix, Tucson--adious. L.A.? City of 3,000,000 maybe. It had 1.5 Million when I am talking about. Man, talk about an incredible time to be alive and in that city. Bye bye American dream. Demographics are a bitch. Sorry for the disjointed look back. Milestones
Las Vegas: the butthole of western civilization
Little perspective here.
As I live here in Sin City, I can vouch for the fact that everything at the new CityCenter complex is pretty much as MHFT described it.
I had a colleague visit me from LA recently in connection with a trade show and we decided to eschew the new place because we got an even more unbelieveable deal at traditional Las Vegas standby Caesar's.
How does $49/night on a weekend sound?
Even so, the pool was filled with unbelieveable hotties in all manner of skimpy 'kinis.
But, the wife was remarking to me about the Tatoos on most of the young men. It seems personal illustration is all the rage.
But, I do agree that this places' Achilles Heel is the water situation - Lake Mead is expected to run dry by 2016.
After that, then what?
Krvtkpt. Laughing swordfish
DKM Trading Division
Anonymous online: Unmasking Web posters
http://www.myfoxboston.com/dpp/morning/anonymous-online-unmasking-web-po...
What do you mean "a room that is WORTH at least $500..."?
"Worth" is whatever is marked to market. Whatever the market will bear. It doesn't seem to be bearing much more than $120 right now...if we've learned anything during this crackup-boom-under-way, it's the difference between PRICE and VALUE...
Vegas - who cares ...
Water is the ultimate doomsday event approaching Las Vegas. Lake Mead's surface level is steadily dropping and once it falls below the city's intakes, that source will be cut off because further drainage could disrupt power generation for millions. That leaves groundwater which is pretty much gone in a wide radius around the city. One plan under consideration is a network of pumps drawing from the rest of the state; the downside is that wells would go dry for small towns, ranchers, and rural homeowners. Right now Vegas has the political clout to roll over most objections, but eventually they will reach the borders and get little sympathy surrounding states. This is not an over-the-horizon scenario. The end is approaching and when it arrives other problems won't matter.
In addition to cutting off Belagio's fountains, wouldn't a dropping Lake Mead put a crimp in the Strip's nightly light show? I think Mead's other purpose is to provide water to spin the hydro-electric turbines of Hoover Dam.
The mere existence of the city of Las Vegas is an abomination.
Never mind the hedonism, the crassness, the worship of gross excess --- it was nothing but short-sighted insanity of the highest order to build a city of 1,000,000+ in the middle of one of the hottest and driest regions of the world. The unsustainability of the place is self-evident to anyone with more than a one-year time horizon. Like Dubai, Abu Dhabi and Riyadh, Las Vegas is destined to be little more than a depopulated desert ruin that future visitors will marvel at, much as we marvel at Persepolis and Petra today.
As for those short-sighted fools who chose to live in such a fundamentally unliveable place, lemmings who followed each other into a sun-baked Hell, whose property values will relentlessly continue to fall even as their utility bills climb to the sky, I have no sympathy whatsover.
I agree and leave to the perpetually noxious MHFT to file one of his reports from this soon to be mothballed town.
Honestly, who cares about Las Vegas?
(Fucking slow site made me inadvertently double post --- AGAIN!)
Most things considered it’s kind of impressive that they can still maintain the happy face.
CRE - I cringe at the beating the big players are taking. Condos to be had at 33% original asking price?... That’s a haircut, enema, and circumcism in one.
Italian proverb
Four gamblers couldn't support a chicken.
"I’m here because at a throw away rate of $120/night for a room that is worth at least $500..."
obviously not.
Pretty good since I bought puts several days ago. BP will survive longer than Las Vegas since it will leave America. This will leave the 1 million+ lawyers suing each other until they sink into the GoM toxic waste.
"Still, how can you hate Vegas?"
Very simply. it's populated by low-life idiots from the valley. They don't wander into the better neighberhoods when in CA so why should well-mannered people suffer to go to their low rent disneyland?
From just exactly which valley would that be? There are a few hundred thousand vallies in the USA, you know.
"Losers average losers."
-Paul Tudor Jones
Please ZH leaders: don't post any bullshit about Vegas RE being overbuilt, Deboralee Lohrenzana's scorching tits, or whether the iPad will save Apple. We have Bloomberg for that useless bullshit. Thx
Hear hear!
Especially concerning the juvenile, puerile and oversized soft-porn postings of a certain permabullshitting permabull named Leo. If that irrelevant crap does not constitute spam, I don't know what would (except for the incessantly posted links by the evil clown SuperSpammer, er, SuperCycle).
"I spent my free time looking at condos that were initially offered at $600,000, but now could be had for $200,000."
Six months later, "I spent my time looking at condos that could be had for less than $100,000 but were once priced in the $600,000 range. Now that water costs so much in this town, no one takes a bath anymore unless they buy real estate. Also, with the oil drilling moratorium and cap-n-tax BS, energy runs over $1000 a month for 1200 sq ft condo. Last, without immigration reform, the drug cartels have started to displace the mafia... and finally, a caricature of Harry Reid was commissioned to a wooden nickel after his loss to Ms. Engle."
"...discount fares offered by the airlines" - excuse me, but no private G4? not even a LearJet? What kind of a hedgie wannabe r u? please don't tell us this is all short-term inconvenience casued by your investments in the BP common.
anyway, $600k condo for $200k? hard to believe, unless $600k was wastly overpriced, even at the very top of the market. i would buy it for 30-50k, but only if there was no property tax. and they'd ahve to pay me another $200k to live there. middle of the friggin' desert next to nuke test sites... there is plenty of other "sin cities" around the globe... if i could afford to retire now, i'd pick Rio... if i had $100+mil, then once condo in Rio and one in Monte Carlo...
"What kind of a hedgie wannabe r u?"
Hey, at least he rented a cabana. That's gotta be about 5 benjamins for the day.
If I saw my financial advisor driving around in a $500,000+ car or flying around in a private jet, I would take my money and run away as fast as I could.
What sort of geiger counter readings are you getting at your hotel?
LMAO!
Completely unsustainable in every way; economic, ecologic, societal. Vegas is toast.
What he said.
Completely unsustainable in every way; economic, ecologic, societal. Vegas is toast.
and what about the yen? 95, then 100, then 120. What aboutthat trade?
my favorite mgm head scratch. sold stock to dubai at 84 (great trade), then turned around and started buying the stock within a month or so in the $90's. Uh, guys, what finance textbook did that come out of. Of course, all the sycophantic analysts applauded the repurchase.
And if I recall correctly, Kerkorian was also loading up on GM during 2005-2006.
Alzheimers or just dementia?
Yes and no ... By the end of 2006, he exited all GM ownership
Was there a point to this article? How yesterday's BP trade working out for you?
PWNED!
Is a Vegas vacation tax deductable if a ZH article is published?
If so Tyler, could you publish the article I'd like to write about the economic conditions in Maui?
JTS
Maui ... It's good here in Maui
Hummm ... is my new computer deductible if my comment is published? Or do I have to promote my blog in the comment, so it's a marketing expense?
Sounds like a long opportunity. Where do we sign up?
"oddly titling Harmon" -- sign me up.
Wasn't ths same thing posted about a week ago by madhedgefundtrader?
if hedonism and narcism can be defined as religion yes
If I want to gamble and relax, I go to Reno. Vegas is like a leaking breast implant, phony, disgusting, and doomed to fail.
Archaeologists 20,000 years hence will study Las Vegas and conclude that it must have had some religious significance, since it would clearly be impractical to build and maintain a city this size in the middle of the desert.
And they will be right, after a fashion.
- as your attorney, I advise you to watch the Movie "Fear and Loathing in Las Vegas".
http://www.youtube.com/watch?v=Zm7r491n-8o&feature=related
and to rent a very fast car with no top...
Agreed. Great Avatar.
If you have not read Hunter Thompson's "Fear and Loathing in Las Vegas", you owe it to yourself to do so. A great book.
Oh yes, one of my favorites from that era.
Vegas, of course, is The Main Nerve of the American Dream.