Cosmopolitan to be part of Marriott's luxury hotels

27 August 2010

LAS VEGAS, Nevada -- Operators of the soon-to-open Cosmopolitan of Las Vegas found a 32 million-plus answer to questions surrounding the independent Strip resort's lack of a database.

Cosmopolitan operators announced a deal Wednesday with Marriott International to market the $3.9 billion hotel-casino as part of the international lodging chain's Autograph Collection, a portfolio of luxury independent hotels and resorts.

The move gives the long-delayed Cosmopolitan access to Marriott's rewards program, considered one of the lodging industry's largest database of customers. Marriott will market the 2,995-room Cosmopolitan on its website and on the website of the Ritz-Carlton, a Marriott brand.

The relationship allows Marriott customers to use their rewards points at the Cosmopolitan or they can earn points for their stay.

"This is something we have clearly been working on for a long time," said Cosmopolitan CEO John Unwin. "I think Marriott has the best distribution system around. They are the chassis and engine that allows us to continue to develop an iconic brand."

Marriott gains a location on the Strip, something operators of the hotel chain that has more than 3,400 lodging properties in 70 countries and territories had been seeking for years.

"Marriott has been looking for some time for an iconic property in the heart of the Las Vegas Strip and the Cosmopolitan ... will draw the world's top customers year-round," said J.W. Marriott Jr., chairman and CEO of Marriott International.

In Las Vegas, Marriott operates 14 hotels through its various brands, including Marriott, Courtyard, Residence Inn, Fairfield Inn & Suites, Renaissance and the JW Marriott close to Summerlin.

The Cosmopolitan, which began construction almost five years ago and was delayed by financial problems early on, is scheduled to open Dec. 15. About 2,000 of the hotel-casino's 2,995 rooms are expected to be made available, with the remaining rooms phased into the market through July.

Adding the Marriott database puts the independent Cosmopolitan on par with the two largest Strip casino operators.

MGM Resorts International, which has 10 Strip casinos, including Aria, Bellagio, Mandalay Bay and MGM Grand, has 60 million names in its M Life database of customers. Harrah's Entertainment, which has nine casinos along the Strip, including Caesars Palace, Bally's Las Vegas and the Rio, has more than 40 million names in its Total Rewards customer loyalty program.

Union Gaming Group principal Bill Lerner said Cosmopolitan's access to the Marriott database could put some pressure on high-end competitors who might have fared better in the hunt for customers had the hotel not affiliated with an worldwide chain.

"Considering the Cosmopolitan has decided to go it alone on the gaming front rather than partner with an established gaming operator with a regional database from which to draw customers, it makes sense that the Cosmopolitan at least has a hotel partner to help fill the rooms," Lerner said in a research note to investors.

Marriott's Autograph Collection lists 11 properties throughout the U.S. The Cosmopolitan will introduce a new category in the collection and will be the brand's largest property and first casino-resort.

The Cosmopolitan was designed as a hotel and luxury condominium project when ground was broken on the 8.7-acre site between Bellagio and CityCenter five years ago. It had an original cost of $3.9 billion.

German-based investment house Deutsche Bank has owned the Cosmopolitan since 2008. The bank took over the half-finished property for $1 billion when New York builder Bruce Eichner, the original developer, defaulted.

Deutsche Bank said in a recent regulatory filing it will spend $625 million to finish construction of the Cosmopolitan and $265 million on furniture, fixtures and other equipment.

The property's 150,000 square-foot casino, hotel, 13 restaurants and vendors are expected to provide some 5,200 jobs.

After Deutsche Bank took over, condominium sales efforts were canceled and unsold units were turned into hotel rooms with small kitchenettes and balconies overlooking the Strip. The casino, originally planned for the second floor, swapped locations with the ground floor retail space, placing slot machines just a few feet from the Strip sidewalk.

Unwin said roughly 15 percent of the casino's slot machines are in place and almost all of the Cosmopolitan's hotel rooms are completed. He said the resort's job placement center is averaging about 500 applications a day.

Related Links
Deutsche Bank Securities Inc. Gaming Vendor Information
The Cosmopolitan of Las Vegas Details
Nevada Gambling


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