If there were one property you could point to that has represented the evolution of our city’s casinos over the past 60 years, it would be the Riviera. So it’s only fitting that, in its final days, the hotel-casino is doing so again.
By now you know that the Riviera is being sold to the Las Vegas Convention and Visitors Authority (the $182.5 million transaction was unanimously approved by the LVCVA’s board Friday morning). What you probably don’t know is that, when it opened in April 1955, the Riviera was Las Vegas’ tallest structure at a towering nine stories. Before the Riviera, there was no real need to build up: land was plentiful and cheap. But with the success of early casinos such as El Rancho Vegas, Flamingo and Desert Inn, real estate along the Strip became a more precious commodity. For a while, the Riviera’s height gave it an advantage—it even advertised box seats positioned to view the atomic explosions at the Nevada Test Site—and eventually, the rest of the Strip caught up.
The Riviera was groundbreaking in other ways, too. Initial headliner Liberace was paid $50,000 a week—at the time an unheard of sum that soon led to a bidding war among casinos for star performers, a trend that never really went away. (Those shaking their heads at the massive fees commanded by top DJs today can thank the Riviera.) This sort of practice led to increased competition among casinos, which had both plusses (better offerings for customers) and minuses (bankruptcies).
Yes, the Riviera had money problems from the start—opening along with five other properties will do that—but it still scuffled for a place at the top of the Strip pecking order until the mid-1980s when, buffeted by a recession, it opened the first fast-food restaurant in a Strip casino. At the time, high-rollers were fewer to come by, and they dropped less coin than the masses of low-rollers; in fact, the most successful casinos of the late 1980s targeted the middle-class customer, leading to both a growing segmentation on the Strip and the flowering of “family friendly” Las Vegas. Both moves were critical steps toward the growth of the 1990s.
The Riviera’s apparent fate—being imploded to make way for the convention authority’s $2.3 billion Global Business District—is an indicator of where the future of Las Vegas lies. Just like when quarter slots were the growth sector in the 1980s, today’s Strip economy appears to be about everything but gambling. For proof, consider this: In fiscal 2014, big Strip resorts made more money than they ever have, but gambling revenues haven’t caught up to their pre-Great Recession highs.
Despite 41.1 million visitors (the most ever), the highest hotel occupancy rates since the Great Recession and refreshed properties such as the SLS, Cromwell and Downtown Grand, last year’s gaming win still fell short of the 2008 mark, to say nothing of its 2007 high point. While $300,000 dinner tabs are apparently back, sustained growth in gambling is, for the most part, not. Clearly, in this post-recession era, gambling is as small a part of Las Vegas’ lure as it’s ever been.
So it makes sense that the LVCVA sees more value in the Riviera’s 26.4 acres as a transportation center and convention space expansion than other potential buyers did as a renovated or imploded-and-built-from-scratch casino. Rest assured, if another buyer had been willing to pay more to use the land for a hotel-casino, owner Starwood would have sold to them.
Just as the Riviera kicked off the high-rise era of hotel construction 60 years ago, today the property seems to be signaling the start of another chapter, one that features substantially less gambling and substantially more of everything else related to leisure and business travel on the Las Vegas Strip. As did the Riviera, this new business model will probably evolve considerably over the next half century—perhaps the only certainty in a city as dynamic and ever-changing as Las Vegas.
David G. Schwartz is the director of UNLV’s Center for Gaming Research.