News for the Hospitality Executive
|By Rod Smith, Las Vegas Review-Journal
Wednesday, April 14, 2004 - A small army of workers scurried all day and night Tuesday to get Bellagio ready for a reopening today although several government officials described any timetable to restore power and inspect the resort's electrical and safety systems as "extremely fluid."
The $1.6 billion Strip megaresort remained closed and darkened for a third day despite a brief scheduled return of the lights overnight Tuesday.
A still unknown event disrupted primary power about 2 a.m. Easter morning and led Bellagio officials to begin closing the property Sunday, moving guests to other properties and ultimately sending 7,000 employees home because its backup power system had to be shut down. Only 1,000 employees were still working Tuesday.
On Tuesday, county officials who are investigating the loss of power said conclusions about what caused the initial power problem are still premature.
Nevertheless, reports and rumors are already surfacing suggesting design flaws in place when the five-star megaresort was built caused what could have been an avoidable electrical problem.
Also Tuesday, the MGM Mirage board of directors voted unanimously at a regulary scheduled board meeting to approve management's recommendation that hourly workers be paid for days not worked because of the 3 1/2-day power outage at the Strip resort.
Culinary Local 226 Secretary-Treasurer D. Taylor, which represents 3,925 of the resort's workers, was notified of the decision by Mirage Resorts President Bobby Baldwin Tuesday afternoon.
"I think that's great that workers are going to be compensated for missed work and benefits are going to be paid," he said.
Feldman said pay issues beyond Tuesday will be addressed if the company is unsuccessful in reopening the 3,000-room megaresort by the end of today.
Deutsche Bank analyst Marc Falcone said the property stands to lose at least $3 million a day in revenue and $1 million a day in cash flow, a key measure of profitability.
MGM Mirage engineers planned to restore full power briefly sometime Tuesday night, then conduct a second, complete power down, and finally restore full power to the property once necessary inspections are completed, Feldman said.
If the so-called "shunt" -- a fire department term for shutting down and restarting a major electrical system -- works, the company will start the meticulous process of bringing the hotel-casino systems back online, testing each one individually, in preparation for a hoped-for reopening by the end of today, Feldman said.
In addition, Gaming Control Board agents will have to be on-site today to supervise the reopening of the casino.
Agents started working closely with Bellagio staff in the early hours of Easter morning when the initial power failure and shutdown of backup power left the casino without surveillance cameras, Gaming Control Chief Enforcement Officer Keith Copher said.
"We worked with them as much as we could, but it got to the point when they realized the extent of the problem and had to shut the whole place down," Copher said.
Copher said the Gaming Control Board will have to examine the surveillance system after power is permanently restored to make sure the casino still has the coverage required by law and meets all state standards.
Also, gaming control agents will have to verify the electronic memories of all slot machines and make sure all players with credits outstanding are paid before the casino can reopen.
He agreed with other government officials in calling the timing of any opening "very fluid." But he said the Gaming Control Board will have agents on-site whenever MGM Mirage says the property is ready for the process of reproving systems for inspectors.
During a Monday news conference, Feldman said the resort's backup system was turned on after the early Easter morning power disruption but had to be shut down because cables for the property's backup and primary power sources run through the same ducts. Thus, the damage to the primary power cables could not be assessed or repaired with electricity running through the backup cables.
Much of the speculation about possible design flaws is focusing on the fact that both primary and backup cables were run through a single conduit.
An industry insider and engineers who asked not to be named on Monday said the redundancy essential to keeping the resort running was compromised by running both sets of cables through one power duct.
And on Tuesday, a former utility executive involved in the 1998 construction of the resort said Nevada Power offered to build a power distribution system with adequate redundancy that connected the resort to the utility's own power lines.
However, the source said, Mirage Resorts, the original owner and builder of the megaresort, rejected the utility company's proposal, saying it didn't need a "Cadillac" system that ensured true redundancy to prevent a power failure such as the one experienced Sunday. Instead, the company chose to "take a chance" and have its own subcontractors build a system "on the cheap," the source said.
Steve Wynn, who was then president and chairman of Mirage Resorts, was not available for comment Monday and Tuesday.
Another report on the initial cause of the outage surfaced on KXNT-AM saying that Bellagio maintenance workers who were replacing a 12,000-volt circuit breaker Sunday morning tried to force the part in place, causing a back flow of power into the main lines. The back flow overheated, the report said, and burned out main and backup power lines because they were in the same duct work.
Feldman denied that report although he said maintenance crews Tuesday were installing the circuit breaker as part of their repairs to the system.
He said the company will initiate its own investigation after Bellagio reopens.
Clark County is also investigating the cause of the blackout, and Development Services Building Division employees have been onsite with technical experts from MGM Mirage to monitor the repairs.
All of Bellagio's life-safety systems have been operational since the power system failure, including the fire alarm system, the sprinkler system, smoke detectors, heat detectors, fire pumps and the smoke evacuation system, Fire Chief Earl Greene said.
The county said its investigation should determine the cause and what preventative measures may be required.
Feldman also said any decision on whether or not to build a new cable and duct work system to assure redundancy and prevent a repeat occurrence will be made only after the investigation is completed.
In the meantime, Feldman said repair crews have been concentrating their efforts on repairing the damaged cables in preparation for a reopening as soon as possible.
All the damaged cable was replaced by Tuesday morning, Feldman said, and county building, fire and health officials met Tuesday afternoon to discuss how to recertify all necessary systems.
If the power restoration works as planned, inspectors will recertify the building after which the company will be able to start bringing its systems online one-at-a-time to make sure they are working in anticipation of a reopening late today.
"Because of the scope of this situation, the process of returning power to the Bellagio resembles that of the opening of a new hotel," he said.
Prior to re-opening the property, county officials will coordinate re-testing of the primary emergency power systems of the hotel casino, said County Building Official Ron Lynn.
County staff will be on standby to monitor the testing process and help assure the structure will be safe prior to re-occupancy, he said.
A fire engine with crew and two members of the Fire Prevention Bureau will be on standby when the power is turned back on.
When power was interrupted, fire officials tested the alarm system batteries and ensured the fire pumps operated properly, Clark County Fire Chief Earl Greene said, who added at no time in the past three days has there been a fire threat at Bellagio.
"We've been over there every day to make sure they're up and running," Greene said. "When they flick the switch to test (the restoration of power), we'll have engines there for standby just as a precaution."
The other major concern about reopening the hotel-casino centers on the property's slot machines and table games.
They were carefully monitored by hotel security and gaming control agents during the day Sunday while the casino remained open, but there are no video records to resolve any disputes since power to the surveillance systems went down.
Feldman said the casino had sufficient warning Sunday morning to notify players that the casino was going to be closed and settled all but a handful of accounts before the slot machines were shut off. Copher said claims of less than $100 were settled Sunday, but claims in excess of $100 still have to be settled with players, although Feldman said there were only a handful of such customers.
Feldman said the company hopes to be able to check in its first new guest late today at the earliest.
Bellagio plans to reopen casual dining outlets today, but gourmet restaurants are not expected to reopen before Thursday.
MGM Mirage closed Tuesday at $45, down $1.25, or 2.7 percent, on 713,200 shares traded, just above normal trading volume.
Review-Journal writer Adrienne Packer contributed to this report.
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