THE STRIP: Historic Tropicana poised for pricey renovation
Q&A with Alex Yemenidjian, one of the new owners of the Tropicana
Las Vegas Review-Journal (Las Vegas, NV)
August 16, 2009
BY ARNOLD M. KNIGHTLY, LAS VEGAS REVIEW-JOURNAL
New Tropicana co-owner and chief executive Alex Yemenidjian is still
getting himself and his team acclimated to their new surroundings.
A former top executive at MGM Grand Inc., Yemenidjian is working
15-hour days trying to revitalize one of the Strip’s remaining
historic properties, which he acquired July 1.
Without the luxury of being able to tear the property down in the
current economic environment, Yemenidjian and his partners, Canadian
private equity firm Onex Corp.., are launching a nearly $100 million
plan to renovate the 52-year-old property.
Much of what the Tropicana of tomorrow will look like is a project in
flux.
The boardroom outside his office is covered with sketch boards,
photos, and carpet and floor samples of what the new rooms will look
like.
Yemenidjian, who ran MGM Studios after leaving the gaming industry,
plans to transform the property into a South Beach Miami-themed
resort.
He plans to go before county planners later this year with extensive
construction plans that include building a new nightclub that will
overlook the Strip.
The property’s revitalization took its first public step Aug. 6 with
the unveiling of a new "Tropicana Las Vegas" logo.
Question: You talked about a large remodel of the property before the
gaming regulators. Has that begun and what changes should the public
notice first?
Answer: It has definitely begun. I spend approximately 40 percent of
my time in design and construction meetings dealing with the physical
transformation of the property. The first phase is the complete
refurbishment of the employee dining room, the construction of a new
employee lounge, and the renovation of all back of house offices and
common areas.. This phase has been designed, permits are being pulled
and construction begins August 24th. It
The second phase is our convention and exhibition center, all our
hotel rooms and all related common areas. We are about 75 percent done
with the design of this phase and we expect to complete construction
by next spring.
The third phase is the renovation of most of our dining
facilities.. The design of our new buffet is almost done and we will
start designing the remaining restaurants in the next few weeks.
The balance of the project is more complex. We are now in the design
development stage and, as soon as we have complete construction
documents, we will go out to bid. But we will be implementing many
cosmetic changes in the casino as we go along, so the public will
certainly begin to notice meaningful changes before the end of the
year.
Question: What has been the biggest challenge in the first month since
taking over the ownership and operation of the Tropicana?
Answer: Without question, the biggest challenge has been dealing with
issues that are left over from the bankruptcy proceeding. I have never
before acquired a company that was in bankruptcy, and the process is
long, inefficient and very expensive. For someone who thrives on
efficiency, the bankruptcy process is very frustrating.
Question: One of the issues that is still pending from the bankruptcy
is the use of the Tropicana name. What is the status of the pending
lawsuits on the use of the Tropicana name and are you talking to
Tropicana Entertainment to get the dispute resolved quickly?
Answer: We are not currently in discussions with Tropicana
Entertainment regarding the pending lawsuit, so most likely this issue
will be resolved in court.
Question: Is there anything that has surprised you in the first month?
Answer: I have been pleasantly surprised by the tremendous reservoir
of good will that exists in our work force. The team members love this
company, love their jobs and are beaming with pride. Considering how
previous administrators have neglected the property, neglected the
operations and neglected the employees, it was very
freshing to find that despite all that neglect so much pride and
passion can be harnessed. And regardless of what happened in the past,
I am keenly aware that change can be scary for many of our team
members. But change also irrigates the human condition.
Question: What is the biggest challenge for your team being new to the
market and operating in this environment?
Answer: Actually, most of our team has very extensive experience in
the Las Vegas market. Of the 11 vice presidents, only one has no
experience in this market or in the gaming industry for that matter,
and that is by design. That is Nancy Gregory, our vice president of
entertainment. Given that the execution of a successful entertainment
strategy in this fiercely competitive environment is probably the most
difficult challenge we face, I wanted to have someone who was only
constrained by the limits of his or her imagination.
Question: What has been the biggest challenge building a gaming
company from scratch?
Answer: The biggest challenge right now is the lethal combination of
the economic downturn coupled with a severe supply-demand imbalance in
Las Vegas. To be sure, building a gaming company in the midst of an
economic downturn like the one we are currently experiencing is akin
to trying to build a house in the middle of an earthquake. Room
revenue is the only segment of our business that has any meaningful
pricing power, and that segment has totally collapsed.
And to make matters worse, there is a huge supply of additional
capacity coming into the market in the next 12 months while demand is
actually contracting.
So we are all hoping that the excitement of the opening of the
CityCenter project creates more demand than it consumes.
Question: Your partnership with Onex Corp. is the property’s fourth
ownership in three years. Many of the employees have been here through
the upheaval from the absent ownership of Aztar to Columbia Sussex’s
mismanagement and bankruptcy. How do you heal the morale and convince
the staff of you and your partne
Answer: In an environment characterized by broken promises and
sustained neglect, in order to have any credibility with the work
force, any new promises have to be followed by swift execution and
delivery. It is no accident we are fast-tracking the physical
transformation of the property, and that we are starting with the
employee dining room and the employee lounge before anything else.
Question: How are you reaching out to customers to let them know about
the changes?
Answer: We are not reaching out to the customers just yet. We don’t
want to promise anything if we are not ready to deliver on that
promise.
Question: When you left MGM Grand you said you had wanted to return to
the casino business as an owner. Did you think the opportunity would
be on the Strip?
Answer: Frankly, I didn’t know. Since December of 2007 my partners and
I have seriously looked at more than 20 opportunities, both domestic
and international. We did not limit ourselves geographically. We
continue to look for additional acquisitions or greenfield
opportunities in various markets, including additional acquisitions in
the Las Vegas market. That our first acquisition happened here is
fortuitous because we always wanted our new gaming company to be
headquartered here. And we are keenly aware that this is the major
league: (MGM Mirage majority shareholder) Kirk Kerkorian is the
smartest man I know, Steve Wynn is the best designer of hotel-casinos
in the world, Sheldon Adelson went from 0 to 60 faster than a Ferrari,
and (Harrah’s Entertainment Chairman and CEO) Gary Loveman presides
over the largest hotel-casino company in the world. In this league,
you don’t lose your lunch.
Contact reporter Arnold M. Knightly at [email protected] or
702-477-3893.
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