Smash or crash, which is it Cosmo?

Two trains of thought surround the opening of the $3.9 billion Cosmopolitan of Las Vegas.

The 2,995-room hotel-casino will either bring a successful niche property to the Strip or be a colossal financial failure.

Analysts, following an announcement the much-delayed Cosmopolitan was taking room reservations for its Dec. 15 unveiling, explored both concepts.

Bank of America/Merrill Lynch gaming analyst Shaun Kelley said the Cosmopolitan’s initial room rates — $300 for opening night and $275 for the weekend — priced the property far above Aria, The Venetian and Bellagio.

Kelley thought the Cosmopolitan, tucked into an 8.5-acre site between CityCenter and Bellagio, would hurt MGM Resorts International, which operates more than 40,000 hotel rooms on the Strip, by slicing into the casino operator’s business.

However, by pricing the property’s rooms at a premium and hoping guests are willing to pay for amenities such as kitchenettes and outdoor balconies overlooking the Strip, Cosmopolitan operators are taking a risk.

The Cosmopolitan, which Deutsche Bank took over and completed after the project, which began construction in 2005, fell into foreclosure, is a stand-alone resort. There is not a customer loyalty base to tap into. Operators are relying on a heavy marketing campaign and the Cosmopolitan’s status as the only new resort opening on the Strip in 2010 to build a buzz.

“Cosmo’s location should help it capture foot traffic, however, the real issue is a lack of an independent gaming or separate or convention database,” Kelley wrote. “Without these (or a partner to provide them), Cosmo will have to compete for transient biz, which is already highly competitive.”

Union Gaming Group Principal Bill Lerner, who used to work for Deutsche Bank, said the lending institution doesn’t want high-end play. That renders the Cosmopolitan less competitive with MGM Resorts, Wynn Resorts Ltd. and Las Vegas Sands Corp.

“Deutsche opted against a professional gaming brand management structure, which may have been a distribution solution and is pursuing traditional hotel database affiliations,” Lerner said.

The Cosmopolitan, because of its vertical nature, has a boutique feel. A redesign from initial concepts placed the casino along the sidewalk at street level.

Lerner thought the Cosmopolitan could pull room rates up going into 2011. The market, now at 148,542 rooms, continues to absorb CityCenter and other hotel expansions. The Cosmopolitan is opening just 2,000 hotel rooms, which represents a 1.3 percent room capacity increase.

Some say one additional room in the market is one too many.

Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz.