|By Tom Daykin, Milwaukee Journal
SentinelMcClatchy-Tribune Regional News
May 27, 2007 - LAS VEGAS -- It boasts a glitzy name, but Marcus Corp.'s new Platinum Hotel lacks the Vegas attitude.
It's just a 10-minute stroll from the Strip, home to the Bellagio, Caesars Palace, Mandalay Bay and other mega-hotel/casinos. But the 255-room Platinum has a serene, elegant atmosphere, and not a single slot machine, blackjack table or other gambling device.
Milwaukee-based Marcus does have permission from state gambling regulators to install up to 15 slot machines at the Platinum, which opened in October. But there are no plans to introduce one-armed bandits into its chic environment, said William Otto, president of the company's hotel division.
"Having this total non-gaming thing seems to be a special niche," Otto said. "There are many people coming to Vegas that don't like to gamble."
And there are others who enjoy gambling but need a break from the bright lights and constant buzzing of slot machines and other gambling devices that fill the Strip's hotels, Otto said.
"For some people, that's exhilarating," Otto said about the Strip, where visitors can see an Eiffel Tower replica, the Manhattan skyline, a pyramid and an erupting volcano -- all within a few blocks.
"For other people, it's too much," he added.
For those people, there's the Platinum. Many of its customers are business travelers, and the hotel, with around 4,000 square feet of meeting room space, does a brisk trade with small groups that book 30 to 50 rooms for business conferences, Otto said.
When those groups call for bookings at the city's larger hotels, Otto said, "they're almost ignored." At the Platinum, he said, "They have our attention."
That includes Enzyme Technical Association, a trade group that booked the Platinum in April for a conference. Among the guests was Nena Dockery, an association member from Springfield, Mo.
"I was surprised how quiet it was, as close to the Strip that it is," Dockery said.
The Platinum also is drawing what Otto describes as "upper scale" vacationers who want a quiet hotel that still offers a short walk to the Strip.
The rooms at the Platinum are all suites, with separate bedrooms. The rooms include kitchens, as well as luxurious touches such as flat-screen TVs and large whirlpool bathtubs.
The hotel's amenities include an indoor/outdoor pool, restaurant, lounge and a spa. The spa, similar to the new spa at Marcus' Pfister Hotel in downtown Milwaukee, offers massages, manicures, aromatherapy and other services.
Other non-gaming hotels
Las Vegas does have other "non-gaming" hotels, including a handful on the Strip. The Platinum is unusual, however, because its rooms are actually condominiums available for hotel guests when they're not being used by their owners.
The hotel cost around $90 million to develop, and it was created through a joint venture between Marcus and Chicago developer Michael Peterson, who has done similar developments in other vacation areas, including Lake Geneva and Wisconsin Dells.
So far, all but 15 of the units have been sold, Otto said. The condo sales resulted in a $6.3 million gain for Marcus during the first three quarters of the company's current fiscal year, according to a Securities and Exchange Commission filing. Once the remaining units are sold, the company expects its gain to total around $7 million, the filing says.
Meanwhile, the rental income from hotel guests is split 50/50 between the individual condo owners and Marcus, which in October bought out Peterson's share of the joint venture.
Condos sold quickly
The condos have sold "at a rapid pace," said David Loeb, a hotel industry analyst at Robert W. Baird & Co. He said the Platinum appears to be a good investment by Marcus, both for the gains from selling the condos as well as the rental income from hotel guests.
"For very little capital," Loeb said, "they have a residual interest in the operation of the hotel."
The Platinum's start-up operating losses, exacerbated because Marcus generally couldn't rent out condos until after units were sold, negatively affected the company's third-quarter results, according to an SEC filing. The Platinum's start-up losses might also hurt fourth-quarter results to a lesser degree, the filing says.
However, Marcus also expects the Platinum to contribute to the company's future earnings both through its share of the condo rent, as well as profits from the Platinum's restaurant, lounge, meeting space and spa, according to the SEC filing.
The Platinum provides some geographic diversity for Marcus, which owns or manages 13 hotels and resorts in Wisconsin, Illinois, Minnesota, Ohio and Missouri. Outside the Midwest, Marcus operates five hotels and resorts, including the Platinum.
There's also the intangible benefit of having a property in Las Vegas, perhaps the nation's most dynamic hotel market. The city draws around 39 million visitors annually and seems to be in a continual state of building new hotels.
"It's great to be in Las Vegas. It's very invigorating for our team," Otto said. "You can walk through the hotels and get your batteries recharged."
Copyright (c) 2007, Milwaukee Journal Sentinel
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