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The Cosmopolitan of Las Vegas hotel opened in December 2010 during the height of the global recession, which decimated gambling revenues up and down the Las Vegas strip.
Well before that time, the city had been evolving into a more lifestyle-oriented destination that prioritized trendy dining and entertainment over slots and sports books, but the economic downturn sped up the city-wide focus on developing more celebrity chef restaurants, among other revenue-generating ideas.
The Cosmopolitan, along with its neighbors on either side, ARIA and Bellagio, have led the dining and nightlife trend in the city since the recession. ARIA and Bellagio have more celebrity restaurants than most cities. At The Cosmo, especially since the Blackstone acquisition, the hotel has invested heavily in an attempt to differentiate itself by focusing on more edgier, global, and youthful brand partners, many of which also have high-profile owners.
Some of the more well-known outlets are Zuma, Momofuku, Eggslut, STK, Scarpetta, and multiple José Andrés outlets.
“The Cosmo took advantage of a marketplace that was moving away from gaming as a primary driver of visitation,” Bill McBeath, president and CEO of The Cosmopolitan, told Skift. “The revenue composition of the resorts in Las Vegas in the last 25 years has gone from 80/20 casino-to-non-casino revenues to 70/30 the other way.”
McBeath, who previously helmed ARIA and Bellagio, came aboard as The Cosmopolitan’s CEO following the Blackstone Group’s purchase of the property in May 2014 for $1.73 billion in cash. Blackstone, which tends to buy underperforming properties, make significant capital improvements, and then sell, paid almost 17 times the hotel’s cash flow of $103 million in 2013, according to the Las Vegas Review Journal.
In August 2015, the hotel reported a profit for the first time.
Most recently, The Cosmopolitan launched a new website and digital strategic plan steered by the R/GA agency. Additionally, the signature, three-story Chandelier Bar — which set a new precedent for lobby socializing in Las Vegas — is presently undergoing a major renovation.
We spoke with McBeath about the importance of hotel restaurant programming, design trends, and digital platforms to remain competitive on the Las Vegas strip.
Skift: How do you stay in front of trends, whether that’s design, food and beverage, or entertainment? Do you have a lot of agency people help with that?
Bill McBeath: When I got here, I went out and got all the brands I wanted. I didn’t rely on anybody. I said I want to get this person and this person and this person. As soon as I landed here, my first call was to Zuma in London, but they were very close to signing a contract with someone already in Las Vegas. So I told them, “You will be making a big mistake,” and now we have them opening here. Same with David Chang and Momofuku. David’s been courted up and down the Las Vegas strip by every single owner and operator, and I met with him one time and we had a great dialogue and basically shook hands and did a deal.
And I found Eggslut because my daughter goes to USC, and she’s like, “Dad, I got the coolest place.” And then she told me the name and I was like, “Yeah, that might even be a little too edgy for us.” So I went down there and watched the two-hour line two or three different times, and I was like “Oh my God, we have to do this.” And guess what, we open up at 7 a.m., and there’s a line until 2:30 in the afternoon every single day.
Skift: So why do you feel you’re able to attract these brands?
McBeath: We are governed differently and we’re not as committee-driven, and I think that we can make decisions a lot faster and we can execute faster than anybody. We built out $60 million worth of stuff, literally, if you figure we’ve owned the hotel for 18 months. The casino isn’t even close to the old casino. It doesn’t even resemble it. Likewise, the Starbucks, the race and sports book, the high-limit slots, and Clique, the new high-limit lounge.
Just even something like Eggslut. Can you imagine some of the boards here in town, these big public companies, discussing whether they should put an Eggslut in one of their venues? Our board members and my colleagues at Blackstone are the most intelligent, sophisticated people in the world in real estate and hospitality, and I didn’t even approach the subject of Eggslut with any trepidation. I said it’s a great brand, it’s a little edgy, this and that, and it was a one-second conversation.
Skift: At the same time, on either side of you, Bellagio and ARIA have great restaurants too, as well as half a dozen other hotels on the strip. So how is your hotel specifically positioned against its competitive set to define your brand with a singular identity?
McBeath: I think that we are the number one destination for premium food and beverage options under one roof inside great spaces with great common areas that create a tremendous amount of kinetic energy and activity. People want to be in fun spaces. People want energy. They want to see people. They want to be seen. They want to be in activated spaces. People demand to be entertained from the time they walk in your building, including the restaurants. Just having good food isn’t enough, just having good service isn’t enough. You have to have engaging inspiring design that evokes the personality of the restaurant.
Skift: When the Cosmo opened, the Chandelier Bar got a ton of press. What’s the mindset behind the renovation?
McBeath: You have to really understand who you want your customer to be and what their appetite is for certain design elements and optionality. I kind of thought that the Chandelier Bar was over-hyped. I didn’t really understand it because it absorbed a tremendous footprint in the center of the casino. But I’ve kind of done a 180 and understand that it really is an iconic element and that people really do come to see it and take pictures of it.
Having said that, I don’t think it was executed very well, specifically on the ground floor. The banquettes, which oriented everybody inward with these big heavy details created horrible visual sight lines, and made it feel heavy and gave it an almost institutional feeling.
Skift: All of the big hotel groups are trying to figure out how to drive more direct bookings. What is The Cosmopolitan doing in that regard?
McBeath: We just finished the development of our new website, our new booking engine, and obviously our single lowest cost of acquisition is in organic. So our marketing, and more importantly a sizable shift of our advertising budget, is being dedicated to online digital marketing to drive people to our website. When we drive people to our website, it’s our focus to book them right then, right there.
The most important thing is the simplification of site navigation to be able to move easily through the site, so you can see the product options and the pricing, and the availability of those options. That’s first and foremost. It’s actually the whole shooting match. If your site is complicated and you have to toggle back and forth, and if there’s any latency at all, then you’re done. There’s nothing more frustrating than waiting for the rate to appear or for your credit card to be accepted.
Mostly, we believe that we aren’t for everybody and we don’t want to be cookie-cutter, and we don’t want to be a points redemption center for some mammoth player’s club database. We believe that people want individual and unique and socialized experiences, and that’s kind of the program that we’re trying to build on our digital platform.
Skift: So speed and user experience with the new portal is everything?
McBeath: We are in the immediate gratification age and no one wants to wait. Social media has ensured that the world and what happens in the world travels at light speed. People have been programmed that most marketplaces and most transactions are much more efficient than they are in our industry. So I think that’s a big part about doing e-commerce right today, and selling your product on your proprietary website that almost everybody can book either on their laptop, their iPad, or their phone now.
Skift: How else are guest expectations changing, beyond that digitally-driven sense of immediacy?
McBeath: It still goes back to immediate gratification in terms of everything we do. People are nowhere near as patient as they used to be, as it relates to waiting for check-in, and really waiting for any service elements, whether it’s housekeeping, delivery of your bags, or anything else. That becomes difficult for almost all of us in Las Vegas. These hotels are really big operations running 95 percent occupancy year-round, and even though we publish our check-in time is 3:00 p.m., people start coming at 11 in the morning asking, “Hey, where’s my room?”
You know, I travel all over the world and I pretty much know in Europe that if I’m there before 3:00, I’m not getting in, and I’m understanding of that.
Especially with the Millennials, however, who are the epitome of the immediate gratification generation, the expectation is higher and the tolerance is lower. That puts that much greater pressure on all of us, because they don’t tell 10 people when they have a bad experience. They put it on Instagram, Snapchat, Facebook, and they tell 5,000 people. Then they put it on Yelp and TripAdvisor and tell five million people. So I think that the pressure is greater than it’s ever been to deliver on the brand expectation and the brand promise, and we work every day at that.
Skift: What keeps you up at night with regard to the future of hospitality?
McBeath: It’s always about, how do you stay on top? How do you stay relevant? Every day I look at the call volumes. Every day I look at web traffic. I look at conversions. I don’t do much with it, I just like seeing the flow. Considering how much capital is expended in Vegas, I think more than almost any other destination there’s so much competition for the high-end luxury dollar, and there are so many great brands that deliver a great experience. So you have to maintain relevancy and you have create unique and meaningful and emotionally engaging experiences for the customers every single day.
I think that’s what keeps me up at night. So, what do I do next? How do I reprogram this space? I look at the space and I try to understand the revenue contribution by square foot, by each zone in the casino. Can I convert this space into something that will make more money, and what kind of product can I put in there that will change the dynamic and the product offerings and make more money.
Skift: If you were given a blank check to do whatever you wanted with this hotel, what would you do?
McBeath: I have. And we’re doing it.