George Maloof isn’t where he was four years ago. Back then, he was riding an epic winning streak. He had just opened the Fantasy Tower at his Palms Hotel, complete with such only-in-Vegas accommodations as the Hardwood Suite (with its in-room basketball court), the Pearl theater and the world’s only Playboy Club. Maloof had been unstoppable since November 2001, when the city was looking for an exit from the “Family Vegas” strategy of the 1990s, and he provided the blueprint by opening the Palms. The off-Strip hotel pioneered a sleek new approach, built around nightlife and celebrity glamour. It put the nightclub at the heart of the Las Vegas experience, and in the years that followed, most of the billion-dollar Strip casinos copied the formula. Maloof was hailed as a wunderkind—maybe the next Steve Wynn.
Then, in the mid-2000s, the burgeoning condo market beckoned: A new tower, Palms Place, was going to bring residential living to the resort. It opened in early 2008. Like so many similar projects, it was the wrong thing at precisely the wrong time, and as the economy tanked, a whirlpool of debt threatened to sink both Maloof and the Palms.
Earlier this year, the Maloof family restructured its debt, and Leonard Green & Partners and TPG Capital became the hotel’s majority owners, leaving the family with just 2 percent of the property. George Maloof is no longer in charge of day-to-day operations—he’s been moved upstairs to the chairman’s desk.
Like the city he loves, Maloof, 47, has had a rough couple of years. But this has always been a city of second chances, and, like most of us, right now he’s looking over the horizon for his.
In this wide-ranging talk, he discusses his rise to prominence, the glory years of the early 2000s, the disappointments that followed and his hopes for the future.
After losing majority ownership, how do you stay focused on the Palms?
You know what? It’s a pride thing, because this is my place. I developed every inch of it, OK, and it kills me to see it sick, it kills me to see it not right.
It’s very humbling, the last three or four years, because I’ve had to give up so much of the ownership of the property. The amount of money that I put back into the property, people think I’m crazy—even some family members, although we all came in together, questioned it a little bit, but they’ve been so supportive. Maybe I’m the stupidest guy in the world, but at the end of the day I can look myself in the eye and say I gave it 100 percent, and I didn’t renege on one thing and my employees are taken care of.
So although I go around town and I hear jokes, either to me or behind my back, I also know that this has been a great town where people respect what I’ve done, and I appreciate that. I don’t listen to the negative stuff because as long as my employees, my customers and my family respect me, that’s all that matters, and I’m going to do the best I can to pull us out of this and move forward.
You grew up in Albuquerque, the son of a prominent businessman. How did you find your way into the hospitality business here in Las Vegas?
When I was young I worked in the family business in our liquor distribution warehouse. Every summer I would load trucks with beer, wine and liquor before they went out on their daily runs throughout the city. And I never missed a day. I got there at 6 o’clock every morning, and I worked until 6 o’clock at night. My mom had to pull me away. When I was 16 and my father died, I went to work at a hotel he’d opened up in Albuquerque called The Classic. I worked there during the summers and after school, and I learned every aspect of the business and became the family’s hotel/real estate guy. I fell in love with it. And I went on to work at various properties that we owned throughout New Mexico and in Anaheim, Calif., over a couple of summers.
I decided to go to school at UNLV when I was 20. I walked on to play football and fell in love with the hotel college. It was like heaven. I would go to school, I would go to football practice, then I’d try all the buffets in town. So one night I’d try the Riviera buffet, the next night I’d try the Sahara, the next night the Tropicana. It was cheap food, you can eat a lot of it, and with whatever time I had left I would walk around the casino. I learned the business that way.
I didn’t have a lot of friends, I didn’t care to have a lot of friends, I hung out by myself a lot, much like I do today, and I was a student of the game. All I cared about was building a casino.
In my senior year, I talked my brothers into opening a locals casino. After looking at several sites in North Las Vegas, we decided to build on Rancho Drive. That was the Fiesta. We opened, but because we didn’t have the financing or much experience running a casino, we closed it right away. To get the financing and learn the operations game better, I moved to Central City, Colo., and opened a small casino there, the Central Palace. I opened it up every morning and closed it down every night. I learned every aspect of the casino side of things—the slot drop, the table games, poker—and it was a very successful place. I lived there for three years.
About that time things started loosening up in Las Vegas, and I was able to secure the financing for the Fiesta. So the Colorado property was the springboard to Las Vegas and the Fiesta, which opened in 1994.
The Fiesta took off and became this locals hangout. The Texas was opening six months after we opened, and everyone thought it would put us out of business. In reality, the opposite happened. We got so busy that our overflow helped the Texas stay in business. We owned and operated that property for seven years. In the meantime, I looked at doing another Fiesta-like property, and I found this land we’re on right now.
The concept of building another Fiesta where the Palms is now lasted about a month. When I started studying the market, I said you need more than just a locals place—you need something that’s going to suck people from the Strip. Hence the Palms. I wanted to create a place that brought the Las Vegas local and the Las Vegas visitor to a property where they could have fun and party with celebrities.
Who did you model yourself on?
I think a lot of people didn’t take me too seriously when I opened the Fiesta.They perked up a bit when I told Michael Gaughan and Tony Marnell that I wanted to build a casino across the street from their properties—maybe their defenses went up a little. They didn’t think I could get it done. It was a very difficult process, but I believed in myself and I didn’t quit. We got it done.
I respected what Bill Boyd had done. Just his style and the way he treated his employees, I thought it was great and I wanted to treat my employees like that. There were certain aspects of some of the Station Casinos that I liked. There were things Gaughan had done that I liked, and even Marnell. So as far as influences, probably those guys, mostly on the locals side—just the way they interact with the community.
In 2002 MTV wanted to put The Real World in Las Vegas, and after at least one other casino said no, it asked the Palms to play host. What made you say yes?
When I was a young kid, I watched Vega$ on TV, with Robert Urich as Dan Tanna. When I would visit Las Vegas, I used to go to the Desert Inn and watch them film. I was so enthralled with that that it was always in the back of my mind. So when this came about to have The Real World, I said absolutely. It’s a free commercial, it’s a way for us to develop a brand really fast and it’s the demographics we want.
And it worked. It meant more for the property than anything. At that time, we were on all the time, and I didn’t have to spend a bunch of money out of market. MTV was spending the money for me. It helped our nightclubs, our restaurants, helped build our brands. It was something that was critical in our early success.
What gave you the idea that nightclubs were going to be so central to the hospitality business?
When we designed the whole layout, I wanted the restaurants off by the pool. If you go to Wynn or Encore today, there’s restaurants off the pool. I started that whole thing. And for the nightclub, the idea was to create this big mega-club off the pool so people can go in and out. So some of those concepts that we did in design were copied and are very successful at other places today.
I understood that when girls and women come to Las Vegas, especially younger girls, they’re going to want to dance. There’s nothing else they’re gonna want to do besides dance, and if you’re an out-of-town kid and you’re trying to score big with a girl, you’re gonna have to wait because they’re gonna have to get their dance thing out of them. So I understood that building a mega-club to create that would also bring in the guys that had money, that would spend money to be with the girls, so that was a critical point of it.
One minute you couldn’t get the other casino owners to take you seriously, and the next you were one of the most high-profile bosses in town. How did you balance being a “celebrity” owner with actually running a casino?
It’s very difficult. I do everything for the Palms. I do everything for my employees. But that’s OK, because they work hard. A lot of them are single mothers who work their asses off, and I have always appreciated that. And if one of them wants to talk to me, I’m here with them. So if I’m a celebrity, it’s more important for me to be a celebrity among my employees and amongst my customers than among the TMZ crowd. It’s not like I’m out looking for TMZ on Friday and Saturday night, hanging out in L.A. I am here every single day. I get up early, and I’m here every single day.
I’m most proud of my relationships with my employees through this horrendous time over the last four years. We could have given up as a family, but we didn’t. We could have declared bankruptcy like most places did in town, but we didn’t. We put so much of our own personal money into the Palms which we’ll probably never see back, and we did it as a way of saying this is a commitment to you our employees, this is a commitment to the community we’re going to make because the community’s been good to us. Maybe I’m crazy and maybe I’m stupid—I don’t have the money I had four years ago—but I made every payroll.
Was there a moment in your career at the Palms when you felt that you’d really made it?
Never. I wish I would have had that. I never sat back and enjoyed it. I’ve always said, “Let’s do more, let’s do more, let’s do more, let’s do more.” I can’t sit back, and I kind of wish maybe four years ago I took a couple years off because I think everybody was still competitive. At that point I thought you had to build to stay competitive. It got us in trouble; we had too much debt. So, yeah.
But surely the night the Palms opened—after four years of planning—had to feel great.
It felt great, but my mind was on how to make it better. And I had a pad and a pen, and I was a wild man. And I had a date, who was Paris Hilton, and the poor girl saw me for five minutes. And I told her—this was before she became real famous—I said, “Paris, we’re going to this opening, and I’ll guarantee you I’ll probably be with you about five minutes the whole night. Please don’t take it in a bad way.” She said, “No problem.” And I probably made a million notes and I stayed up all night and then probably all week. You stay on property every day until you fix it. You listen to your employees and you listen to your customers, and that’s the way it goes. I wouldn’t put openings on anybody. They’re brutal, but you have to do them. You have to know what you’re doing, and you have to change things on the spot when they don’t work.
Which is more difficult, hosting celebrities or high-rollers?
Hosting celebrities is an art because you don’t really want to feel like you’re a groupie. So what I do is I give them my number, I talk to their manager, and I tell them if they need something give me a call. Other than that I leave them alone. So I don’t hang out with Lady Gaga.
As far as high-rollers, I’ve never developed a personal relationship with a high-roller, ever. I don’t believe in it, because I always believe that it’s a business and they’re here to play, and at some point when they either win a bunch of money or lose a bunch of money they’re either going to be happy or sad and having a close relationship with them is probably not in the best interests of the Palms.
What is the biggest risk you’ve taken at the Palms?
Taking my personal money and putting it in the Palms these past few years. Nobody does that. They run for cover, they go to bankruptcy. We did it, and we continue to do it. That’s been the biggest risk because although I have an opportunity to get some of it back, I don’t know how much. Hopefully I can get it all back.
Palms Place opened just as the condo market soured. Did the timing ever make you second-guess your judgment?
That’s a tough question. I think it has sometimes. The property now is run as a hotel. It does extremely well and people like it, so from that standpoint the vision worked. I just put it down to bad timing and beyond anyone’s control. I tell myself as much as possible that it was just the circumstances around me. I got caught up in it. Some people didn’t. What do you do? You just keep fighting, keep going forward.
Looking back, what do you make of the highs and lows since 2001? Has anything turned out the way you expected?
I don’t think anybody could have predicted what’s happened in this town. Ten years ago, it was, “Go go go go go, it’ll never stop.” Could I figure out that I’d have two partners here in 2011? No, not at all, I never dreamed of that.
Did I want to still be in the game? Yes. Did I want to go through what I’ve gone through the last three or four years? No. But am I proud of what we’ve done.
If things turn out the way you want over the next five years, where’s George Maloof going to be and what’s he going to be doing?
I want to do what I’m doing now, [but] the day-to-day is a grind, and it keeps you from expanding, keeps your mind from being creative. I’d like to do a little less of that and focus on taking this brand that I created and, with the support of my new partners, building a company that’s not only Las Vegas-based but has other properties. Hopefully the infrastructure we’re going to build over the next five years creates an opportunity to do things with the brand, not only in gaming but in other areas. Maybe on the Internet. Maybe with a lifestyle brand. We’ll need some smart guys to come in here and help us. But why not take the company and grow it?
What is the legacy of your decade at the Palms?
The legacy is that we kicked off the party, and that’s something I’m so proud of because you see it everywhere, you see it today, you see it everywhere. I don’t care what age you are, people come to Las Vegas and they want to party and have fun and that’s why Mr. Wynn built all those clubs there, that’s why Mr. Adelson built all those clubs there. They wouldn’t have done it 10 years ago, I guarantee that. They were anti-clubs, so in a sense I’m pretty proud of that as being part of this great history of Las Vegas.
You take 2001, when all the mega-resorts were frou frou and based on themes. We were the first resort that wasn’t based on a theme; it was just a fun party place to go, you know? I’ll take that.