Venetian Casino Resort, LLC

views updated

Venetian Casino Resort, LLC

3344 Las Vegas Boulevard South
Las Vegas, Nevada
Telephone: (702) 414-1000
Toll Free: (877) 283-6423
Fax: (702) 414-1100
Web site:

Limited Liability Company
Employees: 3,500
Sales: $186.0 million (2001)
NAIC: 721120 Casino Hotels

Venetian Casino Resort, LLC is a limited liability company serving as the operator of The Venetian Resort Hotel Casino, located in Las Vegas, Nevada, on the plot of land formerly occupied by the Sands Hotel. The hotel property is adjoined by the Sands Expo and Convention Center, from which the Venetian draws a substantial percentage of its business. The Venetian, situated along the Las Vegas Strip, is a $1.5 billion, 3,036-room, 35-story gaming and hotel facility featuring full-scale replications of several of Venices famous landmarks, including the Doges Palace, the Rialto Bridge, and the Campanile. The Venetian includes more than 100,000 square feet of gaming space, and the largest standard hotel rooms in the world.

The Career of Sheldon Adelson

The opening of the Venetian on the Las Vegas Strip in 1999 marked the beginning of a new chapter in the roller-coaster career of its creator, Sheldon G. Adelson. In many respects, the Venetian represented the denouement of Adelsons career, incorporating certain aspects from previous chapters in his personal history, which found expression in the surreal replication of an Adriatic city in the middle of a Nevada desert. Adelsons rise in the business world smacked of the classic entrepreneurial success story. This could be a rags-to-riches story, Adelson was quoted as saying in the October 23, 2000 issue of Business Week. But my family was too poor to own rags.

Adelson was born August 4, 1933, the son of a cab driver. Raised in the working-class Boston neighborhood of Dorchesterreferred to as a slum by someAdelson entered the entrepreneurial world at age 12. He borrowed $200 from his uncles credit union to buy the rights to sell the Boston Globe on a corner near his home. The war in Europe was over, and Adelson had experienced his first taste of financial independence, however meager the proceeds from newspaper sales may have been. His dreams soon escalated beyond what newspaper sales on a Dorchester street corner could offer. Adelson, as a youth, pined to own a block of stores, a strip, presenting him with the opportunity to pick whatever he wanted without having to pay for it everything from candy, pastry, pickles, a haircut, and a bicycle.

As a young adult, Adelson experimented with several career choices. He attended stenography school after high school, preparing to become a court reporter. He studied corporate finance at City College in New York City. By his early 20s, Adelson was operating his own business, selling amenities to motel operators. He sold small packages of shaving cream, shampoo, soap bars, and similar items to his clientele, items that, at the time, were rarely found in motel rooms. His exposure to corporate finance at City College led him into financial consulting and real estate, fields in which Adelson demonstrated considerable skill, registering his first genuine success in the business world. By the mid-1960s, when he was in his early 30s, Adelson had parlayed his efforts in financial consulting and real estate into a career as a venture capitalist. He held investments in as many as 75 companies, possessing stakes in everything from pet stores to nuclear energy firms. It was the fulfillment of his childhood fantasy on a grand corporate scale far removed from the streets of Dorchester.

Adelson had become a millionaire by age 35, but his rise to riches soon collapsed. The stock market plummeted in 1969, delivering a deadly blow to his far-flung investments. He lost his fortunenot for the last timebut wasted little time lamenting his loss. I turned around, he reflected in an October 1984 interview with Nations Business,went right to work, and started again. He returned to real estate brokerage, a field I found very easy, he remarked in his Nations Business interview, and began rebuilding his fortune. By the early 1970s, Adelson was working in two directions. His attention to the real estate market led him into converting apartments into condominiums. He worked for a company that owned thousands of apartments, providing him with a steady stream of work, but when interest rates climbed during the early and mid-1970s, the company Adelson worked for declared bankruptcy. Adelson was unable to recover his investment and lost everything except for one apartment building he had purchased to convert into condominiums on his own.

Before Adelsons condominium-conversion business collapsed, he developed interests in a second direction. In 1971, he purchased controlling interest in a small publisher of trade magazines, which provided indirect entry into a business field that Adelson would exploit like no one before him. From his perusal of trade publications, Adelson learned of a real estate exposition that was scheduled to be held in Anaheim, California, in 1972. At the time, his condominium-conversion business showed no sign of slowing, prompting him to make plans to attend the exposition. Once in attendance, Adelson was struck by the operation of the exposition rather than the subject matter of the exposition. In a matter of days, he realized he wanted to be in the convention business, not in the real estate business.

Adelsons curiosity was piqued when he learned that the magazine that advertised the Anaheim exposition also owned it. In his October 1984 interview with Nations Business, Adelson explained, I saw that there was a synergism between the magazine and the show, his desires for profit sparked by the relationship among the magazines readers, the expositions attendees, and the magazines advertisers who purchased exhibition space. According to Adelsons calculations, the Anaheim real estate exposition brought in $1 million, a total realized for three days of work. Adelson was hooked, convinced he could orchestrate the same type of shows and turn them into profitgenerating events. His belief in himself proved justified. Adelson, in a few short years, developed into an organizer of meetings without parallel.

Less than a year after the Anaheim exposition, Adelson was ready for his debut as a convention organizer. Through his publishing companys magazine, Data Communications User, Adelson launched his first convention in March 1973, an event intended for users of sophisticated computer systems that was held in Dallas. Two years later, Adelson had a disagreement with the other investors in the publisher of Data Communications User that could not be resolved. Adelson sold his interest in the magazine, but he retained ownership of the expositions, which, along with the condominium building he owned, constituted his assets in the wake of the collapse of his condominiumconversion business.

The Creation of COMDEX in 1979

During the latter half of the 1970s, Adelson devoted himself to the promotion of conventions. He sold his condominium building and used the proceeds to found Interface Group, Inc., selecting Needham, Massachusetts, as the home for his convention and exposition business. The fortunes of Interface and Adelson were enriched exponentially after Adelson read an article about a new product in the computer industry. The year was 1979, and what Adelson read about was desktop computers. Before the year was through, Adelson had promoted and launched a trade show catering to manufacturers and retailers within the then obscure industry niche.

Manufacturers such as Tandy, Heathkit, and a small company called Apple Computer bought booths at Adelsons first Computer Dealers Exposition, more commonly known as COMDEX. The first event, staged in Las Vegas in 1979, was a success, quickly developing into the largest of its kind in the world. For those involved in the personal computer industry, which would record explosive growth for the next two decades, Adelson had provided a Mecca. As waves of attendees faithfully made their pilgrimages to Las Vegas and COMDEX, Adelson turned to the business of generating as much profit as possible from the annual, sometimes seasonal, gatherings.

Adelsons strength was demonstrated in his ability to create profit-producing opportunities from Interfaces conventions and expositions, particularly from the largest of all, COMDEX. I was criticized for squeezing every ounce of profit; I must admit I was good at that, Adelson confided in an October 23, 2000 interview with Business Week. At COMDEX, he sold advertising on banners draped throughout the meeting space, he published a daily newsletter for COMDEX attendees, creating additional advertising space, and he sold advertising on tote bags.

With the profits realized from the highly successful COMDEX, Adelson moved in yet another direction, as Interfaces convention and exposition activities intensified. In 1981, through Interface, he purchased GWV Travel Co., a tour-operating firm with offices in Washington, New York, and Boston. Together, the two Adelson entities were generating roughly $175 million in revenues annually. By 1984, five years after the first COMDEX, Interface produced nearly 40 conferences and expositions a year for the computer industry, including COMDEX/Falla $20 million eventCOMDEX/Winter, COMDEX/Spring, and COMDEX/Europe. COMDEX/Japan was slated for launch in the spring of 1985.

The business of conventions became the art of Adelson. He became a multimillionaire, collecting vast sums from creating venues for people to gather. As his fortune grew, he made other investments, including one transaction that set the stage for the creation of his biggest project, the Venetian Hotel.

Company Perspectives:

The most exciting news to hit Las Vegas goes far beyond typical hotel spas, dancing girls, and ever-erupting volcanoes. Its The Venetian Resort Hotel Casinoa $1.5 billion mega-resort that has redefined the culture of Las Vegas as an upscale travel destination. When the first phase of The Venetian opened May 3, 1999, it created a fully integrated resort that focuses on world-class dining, upscale shopping, luxurious rooms, and deluxe spa services.

1990s: The Sands Gives Way to the Venetian

In 1989, Adelson delved into the hotel business, roughly 30 years after his stint at selling soap and shaving cream to motel operators. He paid $128 million for the Sands Hotel, owned at the time by Kirk Kerkorian. To many observers, the Sands Hotel, once the haven of Frank Sinatra, Dean Martin, and Sammy Davis, Jr., was a run-down hotel property. The Sands Hotels tarnished image was made glaringly apparent when Steve Wynns $630 million Mirage property opened just across the Las Vegas Strip from the dilapidated property acquired by Adelson. Their [the Mirage] front desk looked better than our whole hotel, mused Henri Lewin, the manager of the Sands Hotel under Adelson, in a December 1, 1997 Forbes article. Adelsons ownership of the Sands Hotel proved a disaster. He went through four management teams in seven years, failing to engineer a revival of the storied hotel. As Wynns Mirage, located across the street, went on to pay for itself twice over, Adelsons Sands Hotel lost money for five consecutive years. His frustration was vented in a Las Vegas spectacle. In 1996, Adelson dynamited the Sands Hotel, imploding a failure to make room for a dream.

Before the Sands Hotel investment collapsed, literally and figuratively, Adelson built an adjacent facility whose presence spurred the development of the Venetian. In 1990, Adelson built the worlds largest convention center, the 1.2 millionsquare-foot Sands Expo Center, designed to house the worlds largest trade show, COMDEX. When Adelson razed the Sands Hotel, he left the Sands Expo Center standing. In the lot created by the demolition of the Sands Hotel, Adelson planned to build Las Vegass premier hotel property, its rooms and concept designed to attract Adelsons prized customers: conventioneers.

Aside from proving to be a perennial money loser, the Sands Hotel in Adelsons eyes was not large enough to accommodate the volume of business enjoyed by the adjacent Sands Expo and Convention Center. During the latter half of the 1990s, more than one million conventioneers visited Adelsons showcase meeting complex annually, and he wanted a hotel that could attract and accommodate those business travelers. In 1995, he sold COMDEX and 16 other convention events to Japanese software distributor Softbank Corp. for a staggering $862 million. The following year, he imploded the Sands Hotel. In April 1997, construction of the new hotel-casino began, its completion scheduled for April 1999.

Adelson relished the opportunity to break with convention in the design of the Venetian. I wasnt swaddled like the others in green felt, he remarked in an April 12, 1999 interview with Business Week. Im going to do things differently, he vowed. The Venetian, like Las Vegass other premier hotel properties, was designed as an elaborate, themed resort, featuring life-size replicas of some of Venices famous landmarks, such as the Doges Palace, the Rialto Bridge, and the Campanile. The sixmillion-square-foot Venetianto be the largest hotel in the world once completedwas distinct because of the type of clientele Adelson was after. Typically, hotel rooms in Las Vegas were designed to keep guests in the casinos. The rooms were small and bereft of amenities. Adelsons Venetian, however, was designed to attract business travelers, the conventioneers who attended meetings and expositions at the adjoining Sands Expo and Convention Center. Accordingly, the Venetians 3,036 suites were outfitted with fax machines, large televisions, telephones capable of handling conference calls, safes, refrigerators, and other amenities. At 700 square feet, the Venetians rooms were the largest standard hotel rooms in the world, according to the Guinness Book of World Records.

When the $1.5 billion, 35-story Venetian opened in May 1999, Adelsons unique marketing approach was put to the test. After a troubled beginning stemming from construction delays, the property began to exhibit some of the potential Adelson had promised. By late 2001, the Venetians casino was generating more than $2,600 in profits per square foot per day, ranking as the fourth best performer in Las Vegas. In early 2002, the hotel itself exuded encouraging strength, supported largely by conventioneers and their corporate travel allowances. With a daily room rate of $213 and 96 percent occupancy, the Venetian ranked as one of the premier revenue generators on the Las Vegas Strip. In the years ahead. Adelson planned to expand the Venetian, intending to make good on a promise he made in an October 23, 2000 interview with Business Week. Adelson declared, This will be the highest-grossing hotel in the history of hotels.

Principal Competitors

MGM Mirage; Park Place Entertainment Corporation; Mandalay Resort Group; Harrahs Entertainment, Inc.

Key Dates:

The Sands Expo and Convention Center is built.
The Sands Hotel is imploded, making room for the Venetian.
Construction of the Venetian begins.
The Venetian opens for business.

Further Reading

Edelhart, Mike, Leaving the Flash Behind, PC Week, November 26, 1985, p. 3.

Gorham, John, High Noon in Vegas, Forbes, December 1, 1997, p. 45.

Nelton, Sharon, Making His Fortune Again and Again, Nations Business, October 1984, p. 47.

Palmeri, Christopher, His Venice Isnt Sinking, Business Week, October 23, 2000, p. 86.

Smith, Stephen, A Corner of America That Is (for a While) Europe, New Statesman, August 9, 1999, p. 24.

Somerson, Paul, Welcome to CALMDEX (COMDEX 1984), PC Magazine, January 22, 1985, p. 33.

Vegas Latest Long Shot, Business Week, April 12, 1999, p. 40.

Weingarten, Tara, Venice, Vegas, Vici?, Newsweek, May 3, 1999, p. 56.

Jeffrey L. Covell