Celebrities Make Vegas Casino Hot Property

L A S   V E G A S, Oct. 8, 2003 -- One after another, the celebrities sashayedacross the red carpet leading to the Skin pool lounge one recentSaturday night at the Palms hotel-casino.

The unpredictable MTV host Tom Green trailed Hilton hotelheiress Nicky Hilton as a sea of people craned for a glimpse of thestars. Lance Bass from 'NSync, comedians Damon Wayans and DavidAlan Grier made their entrances, along with an endless parade ofbeautiful young women.

Observing the saucy scene was a grinning George Maloof Jr.,owner and operator of the Palms.

"People are fascinated with celebrities," Maloof said. "Youjust can't do this anywhere else in Vegas."

Slot Machines and Female Celebs

Maloof has built a smallish off-Strip hotel and taken it to thetop of hip heights with a heavy dose of slot machines and arelentless marketing campaign featuring the likes of Britney Spearsand Leonardo DiCaprio.

Maloof's business model for the 430-room Palms covetsjawdroppers like Playboy models and Jessica Simpson, instead ofexpensive showstoppers like Celine Dion.

"If you have the girls, you are going to get the guys," Maloofsaid about attracting customers to his $265 million resort.

In comparison, megaresorts like The Venetian and Mandalay Bay,which each opened with more 3,000 rooms, cost in excess of $1billion to build.

"Our return on that 265 will be close to 20 percent," Maloofsaid. "Nobody is getting that in town."

Prime Positioning

Mention of the Palms pops up in all the right magazines andtelevision shows — Details, Maxim, FHM, Access Hollywood, E! News —entrenching its position as THE spot in town.

"I would say the Palms is at the forefront in terms ofvisibility. Right now it's probably No. 1," said Anthony Curtis,editor of Las Vegas Advisor, a consumer newsletter that trackscasino promotions and gambling trends. "You never know who you'regoing to see." Bringing celebrities to Las Vegas is nothing new. Most casinocompanies court stars and starlets. They comp them, fete them andregale them. Casino developer Steve Wynn used Frank Sinatra toburnish the Golden Nugget's image and gangster Bugsy Siegelfestooned the Flamingo with performers from Hollywood.

The 39-year-old Maloof is taking the glamour strategy in a newdirection by continually holding high-profile events with young,trendy stars. It has earned him the title in Details Magazine ofthe "smartest young casino operator in Las Vegas."

Some gambling insiders think he may be the Strip's next SteveWynn, high praise since Wynn is viewed as a visionary fordeveloping The Mirage, Treasure Island and Bellagio hotels thathelped transform Las Vegas Boulevard in the 1990s.

"Las Vegas has been known for very high-profile openings andevents. In terms of an ongoing, all-out commitment to drawcelebrities to your resort, I think the Palms has been the mostaggressive in doing that," said David Kirvin, a partner at KirvinDoak Communications, a public relations firm that represents manyof the top resorts, entertainment and restaurants in Las Vegas. Itrepresented Maloof for the Palms' groundbreaking, but not sinceopening.

A Confident Businessman

The kudos didn't come easy to Maloof, who opened the 42-storyPalms about two months after Sept. 11, 2001, to a chorus ofnaysayers and a sinking economy that caused casinos across thecity to lay off thousands of workers.

Maloof wasn't a new player to the one-upmanship of the casinomarket. He is a graduate of the University of Nevada, Las Vegas,and previously owned the Fiesta casino that catered to localresidents. Maloof, whose family is majority owner of the NationalBasketball Association's Sacramento Kings, credits his prior casinoexperiences as a stabilizer in a very uncertain time.

"I was really confident," he said.

But after sinking tens of millions into the Palms, Maloof knewthere was no turning back. He had to move fast, and immediately setout to create his casino's identity, one that would make or breakthe property's fortunes.

Maloof knew what he didn't want: families and foreign touristsvisiting Las Vegas for the first time. How to accomplish theopposite? Let MTV take over a suite and fill it with sevenattractive people who weren't sheepish in front of the camera. Givethem the hottest bar in town, a rooftop lounge called Ghostbar.Install strippers' poles in some rooms for bachelor andbachelorette parties. Build 24, 8-foot-long beds for some very talland rich athletes (the Palms sponsors the Kings). Then throw inconcerts by Nelly, Jay-Z, Pink and let them perform in a club thatonly holds 1,800 people — not an inexpensive proposition.

End result: lots of buzz, plenty of hype and an endless stream of 20-something and 30-something customers willing to leave theirmoney in Las Vegas.

Maloof says that it's easier to throw around money when youdon't have to answer to Wall Street corporate analysts. "Iguarantee I overspend," Maloof said. "I don't have to watch everydollar. I'm a private company. If I want to go out and spendwhatever I want to spend to work … a great event, I'm going to doit."

DiCaprio and Buddies Do Vegas

The Palms whisked DiCaprio and about 20 buddies on a private jetfor his birthday party last year that lasted three days. "He brought a lot of his celebrity friends with him like TobyMaguire, which was an added bonus," said John Culetsu, Palmsassistant general manager. "The benefits from a PR perspectiveprobably far outweigh the cost of a traditional advertisingcampaign."

But celebrities and magazines aren't enough to keep thisgambling boat afloat. Maloof also aims to attract slot machineplayers, the bread and butter of gambling revenues.

The Palms has about 2,000 slot machines, which make up about 70percent of gambling revenues, Maloof said. About 80 percent of theslot revenues come from Las Vegas residents.

"We are very dependent on the local slot players," Maloofsays. "Once you get that slot revenue, it's like an annuity. Andas long as you take care of it … that allows you to spend moneyon other areas so you can do special events. I know that my slotsare going to bring in so much a day."

No Plans for Mega-Resort

The steady revenues have allowed Maloof to begin reviewing hisoft-rumored expansion plans that include a new hotel tower.

"There's a demand for it," he said.

Maloof has no intention of transforming the Palms into anothermegaresort like the Rio hotel-casino across the street or thosethat tower over the Strip.

"I don't want to become a 1,500-room property," he said,though he declined to discuss expansion details.

Gambling insiders estimate that after a soft opening, the Palm'scash flow seems to be increasing quickly.

"They seem to be growing their market share with a veryattractive entertainment product," said Bear Stearns gamblinganalyst John Mulkey said. "We believe an expansion of non-gamingamenities at the property would generate healthy returns." Chris Hageseth, 34, hopes the Palms continues to embracecelebrities. He couldn't resist sneaking into the Stuff Magazineparty that Saturday night after the red carpet entrances. He had toget closer to the action.

"It's not your typical Vegas casino," Hageseth said. "It'sthe scene. Where else in the world do you get this?

If You Go…

THE PALMS: The hotel has 440 rooms, with rates ranging from $139per night to $7,500 for a suite. Call (866) 942-7777 or visithttp://www.thepalmslasvegas.com for more information.