Divide and Conquer

On the surface, it wasn’t unusual news when the ONE Group announced March 9 that it had acquired the Tropicana’s night- and dayclubs; most casinos outsource their club operations.

But there’s more to the takeover than meets the eye.

In recent years, casinos have gotten increasingly comfortable with subletting major pieces of their real estate, giving up control over operations in exchange for guaranteed rental income. MGM Resorts International, for example, delegated the redevelopment of the erstwhile Fontana Lounge in Bellagio to SBE Entertainment Group.

Likewise, most casinos don’t hassle themselves with chasing down tenants for their shopping malls. The Grand Canal Shoppes at the Venetian, the Forum Shops at Caesars and Miracle Mile Shops at Planet Hollywood are all owned by outside companies.

But no other casino has given up control—for the long term—over something as integral as the pool. It seems that the relationship between the Tropicana and the ONE Group’s club—called Bagatelle—will be similar that between Four Seasons and Mandalay Bay, or MGM’s CityCenter and Mandarin Oriental: a distinct brand and operational presence within a larger casino-resort complex.

At Mandalay Bay and CityCenter, grafting outside brands was part of the project from the beginning, but the timing of the Bagatelle transition is telling for the Tropicana. This is Night/DayLife 3.0 for the Tropicana. RPM barely had time to start its engines, and SPF dayclub never even had a chance to apply sunblock. The Tropicana’s owners have invested a lot of money and have a great property to show for it. But it seems that the makeover isn’t beefing up the bottom line in the way that executives originally hoped.

So, the property finds itself at a crossroads; Bagatelle is new to the Vegas market, and its principals have very definite ideas about how they’ll be positioning their brand: It’ll be a casual but elegant outdoor dining/champagne sipping/relaxing experience. They point to the need for a Vegas pool experience that isn’t a bass-fueled party as a sign that there’s an opening for them.

But for the partnership to pay off, the Tropicana—which hasn’t catered to the champagne-and-sun demographic—will have to shift its marketing to those customers, and offer service and amenities to match.

In other words, Bagatelle might be just the beginning of big changes at the Trop.