Monday, April 17, 2006

While competitors on the Strip tear down older hotels to make way for
sparkling luxury resorts, investors buying the Riviera are doing the
opposite. They see a market niche in nostalgia for the Las Vegas of decades
ago. The investors - a geographically diverse group of experienced real
estate investors including Brett Torino, Barry Sternlicht and Neil Bluhm -
intend to keep the old building standing while spending millions on
improvements.

It's a decision that runs counter to the trend. As the Strip evolves from
resorts based on fantasy-themed re-creations of other times and places, the
Riveria will become a themed resort almost by default - one of the last
remaining authentic examples of Las Vegas in the 1960s.

"I think there's a longing for what Las Vegas used to be," said Scott
Butera, a former executive with Trump Entertainment Resorts in Atlantic City
and leader of the investor group. "We think it's a nostalgic asset that has
a brand that can be restored and get the capital it's been missing."

Butera is a former Wall Street investment banker who was instrumental in
restructuring Trump's debt and bringing the company and its casinos out of
bankruptcy.

The notion of nostalgia is a quirky one in Las Vegas, where buildings rarely
remain standing long enough to evoke a sense of history.

For some, nostalgia recalls the Rat Pack days when headliners and live
entertainment ruled the Strip. For others, it is a longing for the Las Vegas
when buffets cost less than $10.

A vintage look and feel is also attracting young customers who never
experienced Las Vegas before it was overrun by themes, and then high rises
and exclusive nightclubs.

While the ultimate plan for the Riviera hasn't been determined, the group
aims to re-create the spirit of the 1960s and 1970s, when the property was
in its heyday, Butera said.

"There's a tremendous history of entertainment at the Riviera," he said. "A
lot of people really cut their teeth there."

The idea isn't new.

The Sahara, Golden Nugget and Stardust have attracted entertainers from the
1960s and 1970s who draw older regulars. Some properties have remodeled over
the years without completely modernizing their interiors.

As more casinos go upscale, places such as the Riviera - one of the oldest
on the Strip - can get mileage out of preserving their properties and
marketing themselves as an authentic piece of Las Vegas history, experts
say.

"I think it makes sense," said Anthony Curtis, publisher of the Las Vegas
Advisor. "The only thing left that's new might just be old. If you've
already got an old place, you wouldn't want to tear it down and start from
scratch if you didn't have to."

Some say the Riviera investors may capitalize on connections to Elvis
Presley's image.

Robert Sillerman is a former concert promoter who is managing partner of
Flag Luxury Properties, one of the investors in the Riviera purchase.

His publicly traded company, CKX Inc., last year purchased majority rights
to Presley's name and image, among other prized family assets.

Some investment analysts, however, say remodeling isn't a successful
long-term strategy. Older casinos become even less competitive amid newer
luxury properties, they say.

Deutsche Bank bond analyst Andrew Zarnett said the investors will most
likely try to improve operations for a few more years before tearing down
the building.

" 'No' doesn't mean never, it means 'not now,' " Zarnett said.

The casino's slot machines are outdated compared with many of the high-tech
slots customers expect to see around town, he said. The rooms could also be
improved and better marketed.

"Given its location at the end of the Strip that's getting more and more
attention, they can pull a higher volume of customers down there" at higher
rates, Zarnett said.

The company has spent about $30 million to maintain its Riviera casinos in
Las Vegas and Colorado over the past three years, a minimal amount in the
casino business, he said.

Others say a lucrative niche exists for casinos that appeal to visitors who
liked Las Vegas the way it was before the spread of expensive hotels, condos
and other attractions.

"The Riviera is going to be surrounded by all these pricey joints," said
Jeffrey Compton, a Las Vegas casino consultant. "They can stay where they're
at and pick up the cash flow from all those other places" that are being
torn down.

"There are people out there who like values - that was the crowd that came
to Vegas for many years," Compton said. "They could keep their hotel and
restaurant expenses low enough to pay a decent amount of money at the tables
and machines."

The Riviera is a mishmash of buildings and passageways that have been added
over the years. The property has attracted a steady stream of customers
drawn to its eclectic shows and bargain prices in spite of a confusing
design and well-worn interior.

One casino operator who passed on the Riviera is Tim Poster, the former boss
of the Golden Nugget. Like other potential buyers, Poster wanted to tear
down the Riviera and rebuild - a proposition that was ultimately too
expensive.

But Poster still believes there's a market for the kind of property that can
create a more personalized casino experience.

"There's a certain amount of charm to be able to take the elevator down and
be on top of the casino," he said. "In some of these bigger properties you
can just get lost."