The highly anticipated SLS Hotel in Las Vegas has posted a first quarter loss of $35M during its first year of operation on the strip. This is pretty surprising considering the massive investment into the property and the success of the SLS brand in a number of other locations around the United States and abroad.
The property brought in first quarter revenue of $38.4M with the casino accounting for $9.1M, hotel revenue accounting for $13.6M and food and beverage bringing in $15.7M. This high contribution from F&B is no surprise and is a trend that’s been steadily growing in Las Vegas over the past 5 years as the market changes from a gambling only destination to an all encompassing entertainment destination.
Faced with less than stellar revenue it’s unclear what direction the SLS will head in at this time, but it probably makes sense for them to expand their F&B offering since that’s clearly the primary driver of revenues. On the casino side, the hotel will have a difficult time competing against the bigger venues on the strip that have more amenities to cater to large players and are willing to take on more casino risk.
Perhaps the biggest thing that the SLS has going for it is its collection of highly popular restaurants including Bazaar Meat by Jose Andres as well as Katsuya by Starck which are hugely popular in the US. If the property continues to make strategic relationships with popular restaurateurs and brings a slew of great dining options to the strip that could be a way for the property to continue increasing revenues.
Another key problem that’s pointed out in many reviews of the property is the location is less than ideal with huge competitors in much more convenient and accessible areas in relation to the hotel. While this may not seem like a huge deal, getting around on foot in Vegas is time consuming and location matters.
It will be interesting to see how SLS progresses in the coming years with Resorts World slated to open close by in the next 3 years. In the meantime, the hotel is introducing a number of steps to improve operations and hopefully drive the property into profitability moving forward.