If you thought the recession and hotel overbuilding would lead to the end of the giant-hotel arms race, think again. Since late 2006, the 6,118-room First World Hotel in Genting, Malaysia, a technicolor mammoth if there ever was one, has borne the honor of the World’s Largest Hotel. Now, an even more ginormous hotel is being planned, in Las Vegas.
A holding company that includes the AFI Group, formerly known as Africa Israel Group, is scheduled to ask Clark County commissioners today for use permits to build a 6,745-room hotel, casino and retail complex on 60 acres along Harmon Avenue west of the Hard Rock Hotel.
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Approval of the permits would allow the development group to go to investors and banks seeking financing for the project. No price on the project was available.
The timing is interesting, to say the least. Hotel overbuilding (and a subsequent recession-enhanced glut of rooms) has been the predominant theme of late, so why would hoteliers be looking to expand their inventory at this time?
The answer lies in the timeline. You don’t build a hotel — and especially not a hotel of this size — in just a few months. The current project is just in the planning stages, so we might not see such a behemoth rise for another three or four years.
That said, it’s not obvious that this is a great idea. Will the economy be ready for a mega-hotel four years from now? Will the financing be lined up for this project over the next few months? And even if it’s built, and the economy recovers, will the masses come? The hotel is not planned for the Strip — the land sits next to the Hard Rock Hotel, several blocks from the Strip itself.
I don’t see this happening. I don’t know if anyone is making odds in Vegas, but I would bet on the rainbowtastic Malaysian monster to win out in the Guinness Book of World Records. Color me skeptical.
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January 10th, 2009 at 1:29 pm
OK. First of all, it certainly seems that Vegas has been more than able to “absorb” what has been termed the “coming glut” of excess hotel capacity for years now — and in the process has been named one of the fastest growing cities in the US for several years.
Gaming in America is an obsession. Couple that with the return of the “sin city” theme (as opposed to “family Vegas” which didn’t work) — and throw in a large dose of luxury and creature comforts — and you have a genuinely desirable and enjoyable destination. The profits in gambling alone more than underwrite the “ginormous” costs of building what are now multi-billion dollar behemoths — and with direct reference to “timelines” — just as it has taken years to plan and erect these edifices at enormous costs (much funded by bonds / construction loans) — similarly the timeline to recoup these investments is similarly measured in years.
I.e., simply put, these massive hotels are not designed to recoup costs or turn a profit for several years. However, in the interim, they are capturing what is in fact a piece of a growing pie. I.e., this is not a “zero sum” game given that the “pie” is not “static” but rather growing (with no end frankly in site). The appetite for gaming again is essentially insatiable — the allure of “sin city” continues to grow unabated — and the casino success rate is generally very high. In my opinion there is room for two kinds of hotels in Vegas — “boutique” hotels a la Palms — and giant monolithic structures which boggle the imagination. Those hotels at risk are the ones in between.
In summary, hotels need to fall in my opinion into one or the other category to be successful — and as long as banks continue to underwrite the huge costs of building massive hotels they will continue to be built (and securing prominent positions close to the most trafficked areas only adds to the value of the investment).
January 11th, 2009 at 8:34 am
Compete for the world’s highest hotel, most luxurious hotel, and “World’s Largest Hotel”. Yet seldom hear competition of “world’s most comfortable hotel”. Too hard to set up judging criteria? Good luck with the world’s biggest hotel.
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January 12th, 2009 at 4:17 am
AJG said it much better than I would’ve. What’s more, there will always be people who need to experience something bigger, better and more expensive than what their peers have experienced.
Those are the people who will keep this hotel afloat in 4 years’ time.
January 15th, 2009 at 1:57 pm
Bigger isn’t always better i would rather be comfortable try a vacation home remember bigger means more money from your pocket.
September 15th, 2009 at 7:08 pm
I think we have enough hotels in Vegas. They cant even keep what they have full why would you build bigger and at all? I dont think even in a good economy Vegas can support all those hotels…