Richard Branson made a splash on March 30 when he announced that he and a group of investors had bought the Hard Rock Hotel & Casino, with plans to transform it, over the next year and a half, into a Virgin Hotels–branded property. This is the latest evolution for a resort that, in its 23 years, has pioneered in ways that have defined Las Vegas.
When Peter Morton and his team opened the Hard Rock in 1995, most Las Vegas casinos catered to a decidedly older demographic. This made much sense, since people in their 50s and 60s tend to have more free time and discretionary income than younger folks. Hard Rock shook the town up, opting for a more rock ‘n’ roll approach that resonated with younger visitors.
It’s no accident that, in the generation since then, Las Vegas resorts have worked hard to appeal to younger visitors—the recent launch of the Esports Arena at Luxor is only the latest manifestation of this trend. A smaller, boutique property in an era when most operators were trying to be as big as possible, the original Hard Rock saw the future of the Strip; today, casinos from Mandalay Bay to SLS feature sub-brands and boutique hotels-within-hotels, an attempt to re-create the small-house vibe and intimate service the Hard Rock had in its early days.
The Hard Rock also pioneered the dayclub scene with its Rehab pool party, an innovation that has also been copied across the Strip.
But the Las Vegas of the past 23 years has not been all DJs and demographics. Morton sold the Hard Rock in 2006 to Morgans Hotel Group. Morgans began expanding the property, sacrificing much of its boutique charm for the chance to earn more revenue from more rooms and casino space. The Great Recession was not the best time to do this. Five years later, the debt-laden property passed to Brookfield Asset Management, which has continually updated and modernized the resort, although it has not rediscovered Peter Morton’s original magic.
Branson’s Virgin Hotels has some of the lifestyle cachet of Peter Morton’s Hard Rock, and, like Morton, has his own brand to leverage: in Morton’s case, it was the restaurant chain he had started with Isaac Tigrett in 1971, and in Branson’s, it is his Virgin Group, which was, in a happy coincidence, founded a year earlier (1970), also in London. Blossoming from Virgin Records, the group now comprises more than 60 companies serving 53 million customers globally.
True to Las Vegas tradition, this will not be a solely owned resort: Branson’s ownership partners include Juniper Capital Partners, Fengate Capital Management (which is managing an investment of the Laborers’ International Union of North America Central and Eastern Canada Pension Fund) and several others. This, too, is a Las Vegas tradition: Jimmy Hoffa’s Teamster Central States Pension Fund helped a number of iconic casinos like Caesars Palace, Circus Circus and the Stardust start or expand.
Virgin Hotels Las Vegas will be Branson and company’s third project. Virgin Hotels Chicago has been open since 2015 and Virgin San Francisco is due to open later this year. Virgin claims to be exploring locations from Nashville to New York to Edinburgh for future developments. Las Vegas, with its 40 million-plus annual visitation, could be Branson’s best choice to get the Virgin Hotels brand in front of global travelers.
As some of those visitors bemoan the rising prices and decreased intimacy of today’s Las Vegas (which is really a matter of perception), Virgin’s mission to merge “heartfelt service, straightforward value and a seamless, personalized hotel experience” with Branson’s legacy of “smart disruption” seems promising. If the resort delivered in 2019 lives up to the marketing hype, this could be what disenchanted Vegas lovers have been looking for.
Which brings up another positive. In this era of increasing consolidation, an iconic property is getting an ownership group that isn’t already in Las Vegas. With a globe-spanning, deep-pocketed competitor launching in a big way, other properties will have to step up their games. Historically, competition has fostered both innovation and imitation in Las Vegas, and the end result has been more and better choices for customers. One property won’t take the city back to the diversity of ownerships it had in the 1990s, but it does provide another alternative.
Of course, many successful businesspeople have given big press conferences, rolled the dice and come up short in Las Vegas. Branson’s record of excellence does not guarantee his success in a location that has been challenged since the (W) Bush administration. But guest reactions to Virgin Hotels Chicago shines a ray of optimism. A higher proportion of TripAdvisor reviews are “Excellent”compared to much more expensive hotels on the Strip. Tellingly, reviews were equally complimentary of the property’s design as they were of its customer service.
Some Virgin terminology might take some getting used to—calling guestrooms “chambers” seems a little pretentious. But a free daily happy hour for guests (which the Chicago location offers) might go a long way in washing away any misgivings.
Some might say that the big operators on the Strip know what they’re doing—business is booming (at least when it comes to nongaming) and millions of visitors love their Vegas trips. But disruption is just as important in good times as it is in bad. The shift to conventions started after the disappointing summer of 1955, but the initial shift to corporate ownership happened as the industry was expanding in the 1970s, and the Mirage era started amid the general prosperity of the late 1980s.
A sidebar to Virgin’s takeover of the Hard Rock is that it could clear the deck for Hard Rock to return to Las Vegas on a bigger stage. Hard Rock International, which owns cafes, hotels and casinos across the world, did not own the Hard Rock Hotel in Las Vegas (this was a byproduct of the original dissolution of the Tigrett/Morton partnership). Owned today by the Seminole Tribe of Florida, Hard Rock International operates casinos in Florida, Mississippi and many other markets. It is currently renovating the former Trump Taj Mahal into the Hard Rock Hotel & Casino Atlantic City.
Clearly in growth mode, Las Vegas would be a logical place for Hard Rock International to expand next. Perhaps a purchase and remake of the Rio, or even something on the Strip like Planet Hollywood or Mandalay Bay, is in the cards.
Because, if nothing else, Virgin’s plans for the former Hard Rock underscore that Las Vegas is, once more, a place where people want to invest. If they can turn these investments into properties that truly engage and enchant their guests, the city will see its way through any coming storms.