Deal will remake SLS hotel tower as W Las Vegas
Lodging giant Starwood Resorts Worldwide has a deal with the SLS Las Vegas to land its first W branded hotel on the Strip, a move that could help lift the financial profile of both the resort and its North Strip neighborhood.
The hotel company will take over the Lux tower, one of three hotel towers at the SLS, and convert the building’s 289 rooms into the W Las Vegas, which will open by September.
Under the agreement, the W Las Vegas will have a separate hotel lobby — branded as the W Living Room — a dedicated entry and reception area for W Hotel guests, and a W-branded spa, outdoor pool and bar area.
A price wasn’t given for the renovation, which will be funded by Starwood Resorts and San Francisco-based Stockbridge Capital Partners, which owns the SLS Las Vegas.
SLS Las Vegas will become part of Starwood’s Tribute Portfolio, which places independently-owned hotels into the company’s global distribution system, allowing customers to use Starwood Preferred Guest loyalty program services.
SLS President Scott Kreeger said the move will help boost business at the 15-month-old North Strip resort that has struggled financially, losing more than $89.3 million in the first six months of 2015, according to securities filings.
Kreeger, who took over as the property’s president a year ago, said the creation of a partnership with Starwood was a good step in improving revenue by bringing in a more upscale customer base.
“One of our centerpiece goals was getting higher hotel occupancy and a higher (average daily room rate),” Kreeger said. “Adding Starwood and W is a bold, strategic move.”
The W brand is considered a luxury product with 47 locations in the U.S. and internationally, according to the company’s website. The closest W Hotels to Las Vegas — in Scottsdale, Ariz., San Diego, West Hollywood and Los Angeles — offer room rates from the high-$300 per night range to well over $700-a-night, depending on the size of the room.
Kreeger said the introduction of the SLS Las Vegas into Starwood’s Tribute Portfolio “will strengthen our business across the board.”
SLS Las Vegas last week ended its association with Hilton Worldwide Holdings Inc., removing the resort from the Curio collection, a group of independently operated hotels connected to the Hilton loyalty program HHonors. SLS Las Vegas had been part of the Hilton group since the resort’s opening.
W Las Vegas will be managed by Starwood while SLS Las Vegas will continue to operate and manage the rest of the property, including 1,324 rooms in the World and Story hotel towers, the casino, restaurants and nightlife venues.
The W Hotel brand has long-been rumored to as a Strip destination. Kreeger said he had discussions with Starwood when he worked for Station Casinos and about making the W part of a planned company development project on the site of Wild Wild West casino. A W Hotel was said to be part of several never-built joint venture developments, including the Las Ramblas Resort complex near the Strip.
Allison Reid, senior vice president of North America development for Starwood, said in a statement the company has wanted to increase its presence in Las Vegas. Starwood has four hotels in Las Vegas — Westin Las Vegas; Westin Lake Las Vegas; Four Points by Sheraton on East Flamingo Road; and the Element in Summerlin.
Reid said the deal with SLS Las Vegas “allows us to expand our footprint and give our members more options on the Strip.”
SLS Las Vegas has suffered because of its location on the north end of the Strip, next to the empty former Wet ‘n Wild site, the shuttered Fontainebleau project and the recently closed Riviera, which is expected to be demolished early next year.
Kreeger also said SLS Las Vegas signed a deal with Live Nation Entertainment, which operates concert promotions and theaters, and will convert the property’s Life Nightclub into an 1,800-seat live concert venue. The transformation is expected to be completed after the first of the year.
Kreeger said the agreement allows the SLS Las Vegas to “broaden its entertainment offerings.”
SLS Las Vegas is a $415 million renovation of the Sahara, which closed in 2011.
Last week, Nevada gaming regulators gave Stockbridge, which owned 90 percent of the resort, initial approval to acquire the 10 percent stake held by Sam Nazarian through his Los Angeles-based SBE Entertainment. Nazarian was considered the visionary behind the SLS Las Vegas, having led the purchase of the Sahara in 2007 and overseeing the redesign.
Under terms of the agreement, Stockbridge will pay a licensing fee to SBE for the SLS name and the property’s restaurant brands that are owned by the company. The deal will be considered by the Nevada Gaming Commission on Nov. 19 for final approval.
According to securities filings, Stockbridge made $28.1 million in capital contributions to the SLS Las Vegas through June 30. After the second quarter ended, the company made additional contributions totaling $13 million.
Kreeger said Stockbridge is “committed to the make the property better” and the deal with Starwood “is a testament to that commitment.”
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Find @howardstutz on Twitter.
