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Sahara’s closure on May 16 will mark ‘the end of an era’

CEO says the 59-year-old property is no longer ‘economically viable’

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The Sahara hotel-casino in Las Vegas on Friday, March 11, 2011, the same day the property made the announcement it would be closing.
Photo: Justin M. Bowen

KSNV coverage of Sahara closing

Sahara Announces Closure

Sahara History

Boomtown: Part Six

The Beatles are ushered to their room at the Sahara hotel before performing at the Las Vegas Convention Center on Aug. 20, 1964. John Lennon dons sunglasses and stands in front, with Ringo Starr on the left and George Harrison, looking down behind Ringo.

The Beatles are ushered to their room at the Sahara hotel before performing at the Las Vegas Convention Center on Aug. 20, 1964. John Lennon dons sunglasses and stands in front, with Ringo Starr on the left and George Harrison, looking down behind Ringo.

SLS Las Vegas Hotel & Casino

2535 Las Vegas Blvd. South, Las Vegas

The owner of the Sahara hotel-casino on the Las Vegas Strip on Friday announced plans to close the property on May 16.

"We are working with our partners to assess a variety of options for the property, including a complete renovation and repositioning," said a statement from Sam Nazarian, CEO of SBE Entertainment Group, which owns and operates the Sahara. “While no final decisions have been made at this point,” Nazarian said, “the continued operation of the aging Sahara was no longer economically viable.”

The property, which opened in 1952, has 1,720 rooms. Its closure will add to the woes of the north end of the Las Vegas Strip, where the Riviera hotel-casino's parent company is in bankruptcy and the Fontainebleau casino-resort project remains stalled.

"We see the northern end of the Strip as the future of Las Vegas," Nazarian said in the statement. "With Las Vegas showing early signs of recovery, we are confident that we ultimately will find a creative and comprehensive new solution for this historic property."

The property said about 1,050 employees would be affected by the closure.

D. Taylor, head of the Culinary Union in Las Vegas, said the union would work with some 400 affected hotel and food and beverage employees to help them find new employment or upgrade their job skills.

"I'm not surprised," he said. "At the same time, I'm sad."

Taylor said he's hopeful some of the workers can find jobs elsewhere as the economy picks up.

At the same time, he noted it's been "tough sledding" during the recession for the north end of the Strip, which includes the stalled Echelon resort and vacant land where the New Frontier used to sit.

"It's the end of an era," he said of the Sahara.

The Sahara said it has been working with MGM Resorts International on possible solutions for both customers and employees.

“SBE is fortunate to have a strategic relationship with MGM Resorts International. As a result, we will work together to try to find jobs for Sahara employees in cases where there are open positions in MGM Resorts' properties,” added Nazarian. “We will also work with MGM Resorts to accommodate Sahara hotel and group customers with reservations following our closure.”

The Sahara's human resources department will be working with team members through this transition. The Sahara plans to offer sessions with Nevada Job Connect and provide career counseling.

"We sincerely appreciate the service and dedication shown by the many Sahara team members over the decades,'' Nazarian said. "They have been the heart and soul of this iconic property. We thank them for their longstanding service.''

Last summer, Nazarian told Bloomberg News he was in talks with lenders about restructuring the Sahara's debt and had reached a forbearance agreement with the primary lender, Royal Bank of Scotland Group Plc.

“We’re funding the property,” Nazarian said at the time. “Our commitment is to redevelop it.”

The property's Rat Pack heritage didn't do much in recent years for the Sahara, which was hurt by its lack of any recent major upgrades.

It was also a victim of the explosion in the city's hotel room count since the opening of CityCenter and the Cosmopolitan.

Statistics from the Las Vegas Convention and Visitors Authority show the city's room count reached 149,177 in January, up 5 percent from November 2009.

Visitation to the city hasn't kept up with the capacity additions, pushing citywide hotel occupancy down from 94 percent in April 2007 to 79 percent in January.

Plans for the closure follow last year's announcement that 1,037 rooms at the Plaza in downtown Las Vegas would be closed for renovations.

A bright spot, though, was the closed 349-room Ritz-Carlton at Lake Las Vegas reopening as the Ravella.

Andrew Zarnett, a gaming analyst at Deutsche Bank, said the closure of the Sahara and potentially other uncompetitive properties is not surprising.

"While this may have come as an unexpected event for many, we are not surprised by this announcement as we have been expecting unprofitable and dated casinos in Las Vegas and other markets to shut down, given the continued downward pressure they face from higher unemployment, rising commodity inflation and reduced discretionary spending. In the near-term, we expect other unprofitable casinos in Las Vegas and regional markets to either shut down or get bought out by bigger operators who can reinvest in the property. We believe this closure may impact American Casino Entertainment’s Stratosphere property located in the north end of the Strip, which is now surrounded by Riviera (under bankruptcy), Sahara (closed) and the permanently stalled Fontainebleau project," Zarnett said in a note to clients.

The closure also is likely to harm the bankrupt Las Vegas Monorail, which has a station at the Sahara that is the transportation system’s northern terminus and a connecting point to the Regional Transportation Commission of Southern Nevada's bus transit system. (Related story: Sahara's closure could hurt monorail, but station will stay open)

In an e-mailed statement, Ingrid Reisman, vice president of corporate communications for the Las Vegas Monorail Co., said the station would stay open.

The hotel includes 85,000 square feet of casino floor space and two main restaurants: the House of Lords steakhouse and the NASCAR Café. The hotel-casino’s entertainment options include "The Magic and Tigers of Rick Thomas" and "Striptease," a topless revue, but both went on hiatus and were originally scheduled to return in mid-March.

In 2009, the Sahara closed two of its three hotel towers and its buffet, citing slow business. The hotel’s room rates have been as low as $30 on weekends during the last few years. It recently offered $1 rooms through its Twitter account to entice visitors.

SBE purchased the Sahara hotel-casino in March 2007 for a price estimated between $300 and $400 million. The Navegante Management Group operates the casino while SBE manages the hotel and restaurants.

SBE recently announced plans to rebrand and redesign the Fontana Bar at the Bellagio as Hyde Nightclub. MGM Resorts International had announced a partnership with its new players club card, M Life, and SBE that would allow guests to use the SB Preferred program at MGM resorts.

SBE operates four other hotels, including the SLS Hotel in South Beach, the SLS Hotel in Beverly Hills, the Four Points by Sheraton at the Los Angeles International Airport and Redbury in Hollywood. It also operates several nightclubs and restaurants in the Los Angeles area.

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In January, it was announced that Los Angeles investment firm Colony Capital LLC was investing $35 million in Nazarian's company SBE. Colony Capital also is an investor in Station Casinos Inc. and the Las Vegas Hilton.

Sun reporters Amanda Finnegan and Rick Velotta contributed to this report.
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