At a partylike press conference with booming music and women in swimsuits dancing on platforms in the pool, Richard Branson performed extravagantly as the newest casino competitor in Las Vegas.
Branson, founder of the Virgin Group conglomerate, and partners had bought the Hard Rock Hotel and announced plans to convert it into a Virgin-branded resort. Speaking at the event, the British billionaire said the new owners would “bring back some magic” to the 1,500-room property a mile east of the Strip.
Virgin Hotels Las Vegas will now debut almost exactly three years after the sale was unveiled on March 30, 2018 – and last year after the coronavirus pandemic turned lives upside down that devastated southern Nevada’s economy and management too Has Delayed Sales Resort Will Open Twice.
Virgin, whose debut was previously slated for Fall 2020 and then January 15, is set to open on Thursday after converting around $ 200 million from Hard Rock.
Richard “Boz” Bosworth, president and CEO of the resort’s group of owners, spoke to The Review Journal on Monday about the purchase, renovations and the pandemic.
The interview has been edited for length and clarity.
What initially made you and your partners buy the Hard Rock?
When we knew there was an opportunity to acquire the hard rock and we knew a transformation was being considered for us, it hit all the criteria for us – adequate amount of meeting and event space, the ability to deny Hard Rock to change and improve and increase casino size, a new food and drink ecosystem, convertible hotel rooms. It will cost approximately $ 1.25 to $ 1.5 million per key to build a resort in this city with all the amenities you need. To acquire an existing asset and transform it, you can do so at a significantly lower cost.
Why go with the rebranding instead of keeping it as hard rock?
The Hard Rock is a wonderful brand and a very successful brand, but we felt that Las Vegas needed something different in this place. The Hard Rock had been here for 25 years, had faced significant competition over the years after the Palms were built, and then Cosmo and CityCenter, and it wasn’t quite the attraction it had been when Peter Morton was Not only was it so successful it created Hard Rock, it changed so much of what a casino resort business is about. But that started to wane, and that happens after 25 years.
Take me back to February 2020 when you locked the doors to hard rock. What feelings did you and your team have and had you even heard of the word coronavirus at the time?
We decided to close the doors completely about a year earlier, nine months earlier. In order to minimize the risk and really renovate this property without disturbing the customers we felt we had to close it. That was a big bowel check to do an operation like the hard rock and say, “We’re not going to phase them, we’re going to give up all the cash flow,” but it has to be the way to do that about this business in the future to expand.
We had heard of COVID by then. I think we knew this was going to have an impact on international travel, that there had to be very well managed hygiene practices, that we had to send someone home if someone wasn’t feeling well, that this wasn’t going to be something that went away quickly. We have seen how the hotel industry around the world reacts to this. When we shut down, we didn’t know we were going into a pandemic and economic shutdown, but we knew we weren’t facing any short-term problem.
When did you start realizing, holy crap, this is going to be big, not just for Vegas, but possibly for your project as well?
I’ve lived on the Las Vegas Strip since 2016. As soon as I started seeing the traffic on the strip go away just after we closed, as room rates dropped and hotel occupancy, especially in, began to drop when we started hearing rumors that the conferences were being canceled, we realized that it was going to be a tough year not just for Las Vegas but for the entire industry.
It never affected your entire build time, did it?
This was not the case, although we had to implement the very typical security protocols. And as you recall, it was because I remember seeing headlines in the Review Journal, a headline that a single construction worker had COVID in March and even into April. We probably didn’t discover our first COVID case until June from one of our construction team members. At the time it wasn’t a headline to have one, but you certainly had contact tracing, we had to clear floors, we had to bring in environmental cleaning. Where we couldn’t completely avoid the bullet were the supply chains. Even today when you walk around the property there is still some furniture, fixtures and fittings being put down and this was generally due to backlog that came in from either Asia or Europe in manufacturing, or the inability to get through customs to come in Long Beach, Houston or New York.
Do you know how many construction workers contracted COVID here?
I would say there were less than 20 between construction workers and team members. At any given point in time, we had 450 to 650 team members and construction workers here.
Before the casinos reopened in early June, what did you think when you saw all these closed resorts and hardly anyone was walking around on the strip?
All of these people are unemployed, the entire hotel industry. Knowing that there were so many people who became unemployed overnight was shocking. Our team members had announced about a year in advance that we would be closing. We had the Stick Around and Come Back program which guaranteed all of our employees a call back to return to their position without interviewing for a new job after we reopened. We gave them a deductible bonus, we paid them off all of their personal free time and they could collect unemployment. Our team members were ahead of the curve in organizing their lives and being notified that they would be unemployed for a period of time and could step into the unemployment system before the onslaught.
As you will recall, former Drew Las Vegas owner Steve Witkoff stopped construction on the project last March. Was that something you thought about?
Not even. We were fully funded. We had raised all of our capital before the property was closed. Our design was complete, our contractors were in place, we were closed anyway, and we had a belief that the world would eventually return to normal and if it did we would be ready to open up.
When did you realize that the fall 2020 opening was not realistic and that you would have to postpone it?
I got nervous about this in July and August. When we started having problems with the supply chain and I saw infection rates go up, I started to believe we might have a problem here. We could have opened on January 15th, but it just seemed totally unsafe for everyone to be here. Just before Thanksgiving, casino capacity dropped to 25 percent.
Could you even make a profit with 25 percent capacity if you had opened in January?
No, it was too small. The date of March 25th was no coincidence for us. We were hoping that sometime in March we would be able to return to the 50 percent capacity level. We started to see improvements in the market. Hotel prices were gradually returning and we wanted to re-open this hotel during the market reopening and hopefully make our own little contribution to the community by adding excitement and new traffic as usually happens when new resorts open.
Contact Eli Segall at [email protected] or 702-383-0342. Follow @eli_segall on Twitter.