Harrah’s has so many billions in debt reporters are hailing the company for not being crushed by it yet. The one action the company has taken recently that surprised many was to take over Planet Hollywood through assuming more debt. And, as I noted this morning, yesterday brought rumors Harrah’s is trying something similar with Palms. To many a company that has billions in debt taking on more debt seems counter-intuitive. But Harrah’s only chance for paying off its debt is that casinos in Vegas (and, elsewhere) become wildly profitable again. If that does not happen, most every casino company in Vegas will likely be going bankrupt in the next few years or forcing their creditors to accept huge losses. And, if the return to massive profitability does happen, well, the more casinos owned the better for paying down debt. Or, at least that was my theory of Planet Hollywood and Harrah’s. It isn’t a bad idea among weak choices. But if Harrah’s has made some such calculation with Palms and Palms Place they are making a huge error. Why? Because without George Maloof the Palms is simply an off-Strip property even further from the action than the Rio (which Harrah’s already owns).
While other resort companies have had their finances endlessly dissected in the media that has not been the case with The Palms. I can not speak for the local business press. But I suspect that as a private company, operator and owner Maloof can keep much of the casino’s business out of the newspapers. That would be his choice. Even in boom times Maloof was never much for discussing the money aspects of his property. And, as a result, I think few have credited just how good George Maloof is at running a casino. Unlike the impeccable business credentials of Harrah’s head Gary Loveman (or the make-believe MBA of another former resort company head), Maloof is unlikely to impress Wall Street types with his UNLV degree. But he gets the business of gambling very specifically. He knows how to create atmosphere to make his casino appealing to players every bit as much as gawkers. That is the Maloof secret and something Harrah’s can only destroy. And, that is no insult to Harrah’s.
I assumed with the construction of Palms Place as a residence/condo/hotel without gaming, Maloof was facing the issues faced by similar projects at Planet Hollywood, Vdara at CityCenter and Trump in terms of selling units. But until yesterday, I had heard nothing specific on the money situation over at the Palms beyond one casual conversation tinged with dark humor I had about the state of the Vegas economy in general with Maloof (Palms specifically never was mentioned) a couple months ago at an event.
But if you are a fan of Vegas, The Palms without George Maloof is simply inconceivable. Maloof made The Palms the center of celebrity culture and that helped Vegas boom for the past decade. And, Maloof did this without appearance fees and other ploys outside traditional casino room comps. Maloof just made Palms a cooler place than any other casino in town. This is where celebrities went. And, they brought tourists who wanted to see them.
Harrah’s should figure out that you can’t buy the Palms because the property is a massive expression of Maloof’s personality that he has poured a decade of his life into creating. Perhaps, even more than Wynn, no casino’s value is so linked to an owner. Wynn has had years to craft managers, at every level, who can carry on with his style should he retire one day. Maloof is still the creative force not only for Palms but for much of Vegas in terms of innovation and presentation.
The one key to understanding what makes Maloof so impressive has nothing to do with celebrity and suites with stripper poles. And, that is what almost everyone misses about the Palms. Here is the view from FT.com about the Harrah’s purchase rumors that makes my point:
“Harrah’s might take a more utilitarian approach with Palms and Planet Hollywood, by toning down some of the glitz and boosting appeal to middle market customers. Then the idea would be to feed those customers to other properties in the Harrah’s portfolio.”
People want casinos without glitz? The ignorance here is breathtaking and one assumes Harrah’s executives know better. The Palms actually already caters to the middle market customer. The casino also heavily works the local market. That is in a nutshell the genius of Maloof: he owns an off Strip property that he made the signature of Vegas hip while never forgetting his core audience was locals and middle class tourists. Other resort companies have forgotten the regular tourist in a myopic pursuit of the wealthiest patrons, not Maloof.
Yes, Palms has a handful of suites so luxurious they generate press. But they have many, many more affordable rooms, even in the Fantasy Tower. Yes, they have expensive restaurants, but there is also a food court with a McDonalds. There is no food court in CityCenter. Yes, that is a significant statement about both properties. Guess which one gets gamblers better?
So, while there are the hot nightclubs you read about at Palms there is also a lounge and regular bars. Similarly, there is the Playboy Club for those who want to live large while downstairs at Palms there are locals lined up for specials in various low stakes gambling promotions.
That is the magic of Maloof; he has managed to make Palms many things at once while doing all brilliantly. Without Maloof’s constant fine tuning and firm operational control, The Palms has little to no chance of retaining anything like its current value as a porperty. Robert Earl did not make Planet Hollywood worth more though he was a good salesman for the property. Maloof is different. He gets gamblers, celebrities, locals and tourists. For now he is an irreplaceable part of The Palms’ market value. Without Maloof, few would see a need to keep driving past the Rio if they want a Harrah’s middle marketed property. (Photo: Sarah Gerke)
You know, you’re SO right here. It’s so easy to forget that The Palms has always attracted “skilled” video poker players with its “loosest video poker in town” and has a players’ club that’s really popular among us locals. They’re already catering to the middle market… Just not in the way that Harrah’s is used to.
Harrah’s will probably be able to integrate PHo into Total Rewards and turn it profitable, but The Palms is a totally different story. It’s off Strip, and it’s been brilliant in walking this tightrope between keeping the local players happy and turning up the “sex appeal” for the 20-something jet-setting visiting hipsters. I just can’t see how Harrah’s could keep making this work.
You are absolutely correct. I pray Harrahs never gets a hold of the Palms property. They would only destroy its charm. George Maloof is the creative force behind the Palms. I love George! I love the Palms!
Well-stated, Richard. No one writes better about the current scene in Las Vegas than you do.
Hi just came across your blog and been reading some of your posts and just wondering why you chose a WordPress blog dont you find it difficult to do anything with? Been thinking about starting one.
George wants it all. He gets locals in the joint and forces them to listen to cool east coaster gansta. It is a pretty impressive operation. George flys by excellent customer service but unfortunately some of the staff have a really bad attitude. I am speaking of a few jerks who work at the players club and Moon. The pit, waitress, and slot staff have a good attitude.
It will be cool if Harrahs takes the Palms. I figure some day Harrah’s will just own every casino on planet. Then I only need to call one phone number to make a reservation! The only thing I don’t like about Harrah’s is – Harrah’s stole the Horseshoe from Binnions and are not giving it back. By the way, the front Craps table a Binnions now has babe dealers on the weekends….that is cool. One last thing, Palms is located on Winner Way. Try winning lots of cash there and see what happens….WINNERS ARE NOT WELCOME AT THE PALMS
GEORGE MALOOF I wrote a letter to a few weeks ago regarding and idea for your hotel .I know its a long shot to meet up with you but this is las vegas .THANK YOU SAL PASSALACQUA PHONE 7022339995.
To the Maloof Family:
You have provided me some of the best days of my life.
Thank you 3X. Your staff rocks, always have, always will.
As a VIP with Harrah’s (18 yrs Total Rewards) and a very generously treated VIP with your Property (from the beginning), I would respectfully as to speak with you at your convenience to discuss some ideas. Some timely ideas. Some ideas that perhaps may be making their way to you shortly…those ideas.
If the ink is dry or if the ink will not need to dry,speculation,fact or fiction, please call me.
Thank you and again, I could write a book about the best days of my life and there would be more than a chapter dedicated to the Palms. George, you and your family have made your father proud – you cared about everyone else – first.
Vegas will make or break Palms 2.0 – afterall, vegas built it with George’s Permission (and only as a true King should build the city in which he lives). Vegas loves you George and your family. If 2+2=7 do it, if not then please put the pen down.
By the way, you all looked terrific on Larry King, happy, confident, and gracious. I appreciated what was said about “we put family first” and never let business risk what is really important. To you all who nailed a live interview with the best in the business and I could only watch and smile, and remember…
Let’s take the Magic of the Palms to the next level shall we -the gold goast is Clear. And the purple light shall lead the way. Its about time the world had an Oasis of magic, a place to broker peace, turn it off, dance a jig, take in a view, and perhaps see a ghost…..
Oh and my black labs are named Angel and Blackjack. We pick up their new ‘sister’ a English brown chocolate female – 8 weeks old. She shall be ‘Ithica Rose’. For the love of the game and George, thank you for giving back to the people of LV, for like Chrome of Hearts, you keep it real – solid, not plated, always. Vegas can smell a fake in a new your minute.
Your Staff and Gaming Experience Sir are the real McCoy.
777
T. David Hitchin (Trev)
trevor.hitchin@gmail.com
208 841 2591
George Maloof and his family have always created a friendly atmosphere on the property. They are such down to earth people. I have watched these brothers go around the casino always respecting and treating people equal. They were never arrogant or cockyIt would really be terrible for them to lose this property as the Maloof name is the property. I love how they are so close as a family and its very touching when you see the brothers together. How often do you walk into stations casino and see the brothers on the property or see them on the property at all? I am a great customer of the Palms and always see the family there, that’s what makes it the Palms. I wish all the best to the Maloofs and hopefully they can turn things around. Thank you for all the memories!! Some of the best times of my life were at that property!
I NEED TO MEET YOU MR MALOOF