Cosmopolitan of Las Vegas
The Cosmopolitan of Las Vegas is a resort casino and hotel on the Las Vegas Strip in Paradise, Nevada. It is owned by The Blackstone Group, Stonepeak Partners, and Cherng Family Trust and operated by MGM Resorts International. The resort includes a casino and 3,033 rooms across two towers, as well as a 3,200-seat performance theater and various restaurants.
The project was announced in 2004, by a joint venture that included real estate developer Ian Bruce Eichner. Construction on the hotel towers began in April 2007, following excavation work for an underground parking garage. Deutsche Bank helped finance the project, and eventually took over ownership in September 2008, after the original developers defaulted on a loan. The resort's interior underwent several redesigns, and plans to include a condo hotel component were ultimately scrapped.
The Cosmopolitan opened on December 15, 2010, and at $3.9 billion, it was the most expensive Strip resort built up to that point. The resort proved to be popular, although casino revenue lagged behind other amenities. Deutsche Bank sold the resort to The Blackstone Group in 2014, for $1.7 billion. Blackstone made numerous changes which improved gaming revenue, and the company also negotiated a deal with the Culinary Workers Union, whose members had protested at the resort over the lack of a union contract. The resort operations were sold to MGM in 2022, while Cherng and Stonepeak joined Blackstone as owners.
History
Background and construction
Plans for the property were first announced in April 2004. The developer, 3700 Associates, was a joint venture formed by David Friedman, Ian Bruce Eichner, and Soros Fund Management. The development group purchased the future site of the resort for $90 million, from a company controlled by Margaret Elardi, former owner of the New Frontier. Further details about the project, including the Cosmopolitan name, were released in November 2004.The project was expected to cost $1.5 billion, with the opening initially scheduled for late 2007 or early 2008. The majority of the resort's rooms were planned as condo hotel units. Sales began in February 2005, helping to finance construction of the resort. A partnership was announced in April 2005 for Hyatt Hotels to operate the Cosmopolitan's hotel and condo hotel units under the Grand Hyatt name. However, the condo component was largely scrapped by the time of the resort's opening.
A groundbreaking ceremony was held on October 25, 2005. Perini Building Company served as general contractor. The Cosmopolitan was built on 8.5 acres, considered small in comparison to most Strip resorts. The minimal acreage necessitated a vertical design. In January 2006, Deutsche Bank provided a $415 million loan to finance excavation for an underground parking garage. Perini spent approximately a year excavating 60 feet below ground. Construction on the hotel towers began on April 9, 2007, with the placing of the first steel beam. In total, the project would use 41,000 tons of steel.
The Cosmopolitan property surrounds the Jockey Club timeshare buildings to the north. The resort was built on what used to be the parking lot for the Jockey Club, whose residents were provided parking space beneath the new resort. County building planners had concerns about the project's density; its hotel towers were built directly alongside the Jockey Club, separated by five feet at the closest point.
In January 2008, the Cosmopolitan's developer defaulted on a $760 million construction loan from Deutsche Bank, and resort officials sought to raise an additional $400 million for construction. With the Cosmopolitan facing foreclosure, Hyatt partnered with project lender Marathon Asset Management to buy out Eichner and complete the resort. However, Hyatt and Marathon could not come to an agreement with Deutsche Bank, which began foreclosure proceedings in March 2008. Hyatt had no further involvement in the project, and Deutsche Bank was unable to attract any other buyers.
Construction continued, and Deutsche Bank took over ownership in September 2008, purchasing the project out of foreclosure for nearly $1 billion. The bank held discussions to partner with a gaming operator, such as MGM Mirage or Hilton Hotels. Hilton announced its upscale Denizen Hotels brand in March 2009, and considered renaming the Cosmopolitan under this name. However, further development of the brand was suspended a month later, following Starwood Hotels' accusations of industrial espionage.
Deutsche Bank ultimately decided against a third-party hotel operator. At the end of 2009, the bank filed for a gaming license as the resort's sole owner. By that point, the project was two years behind schedule and $2 billion over budget. At a final cost of $3.9 billion, it was the most expensive Las Vegas resort built up to that point. The rising price of construction materials, as well as subsequent redesigns, had contributed to the overall cost.
Opening and ownership changes
The Cosmopolitan opened on December 15, 2010. A grand opening celebration took place a few weeks later during New Year's Eve, with performances by Coldplay and Jay-Z. The hotel opened with 2,000 of its 2,995 rooms, the remainder expected to be open by July 2011. Ahead of its opening, the Cosmopolitan had run Surrealist and sexualized advertisements, which generated a mixed response but nonetheless created publicity for the resort.The Cosmopolitan struggled in its early years amid the aftermath of the Great Recession. It was the last new resort to be built on the Strip until the completion of Resorts World Las Vegas in 2021. The Cosmopolitan saw favorable reviews upon opening, and the hotel rooms, among the most expensive in Las Vegas, were often sold out. The resort's restaurants and clubs were its most popular features. Despite this, the resort would remain unprofitable for years. Like at other Las Vegas casinos, the Cosmopolitan's younger target demographic showed less interest in gambling, an important revenue generator. Furthermore, the property's primary attractions – including retail, restaurants, and pools – were built on the second and third floors, away from the casino's ground-floor location; most Strip casinos intersperse their attractions throughout the casino floor to encourage gambling. The resort added a high-limit gaming area as part of efforts to boost revenue.
Deutsche Bank had always intended to sell the Cosmopolitan. A deal was announced in May 2014, to sell the resort for $1.7 billion to The Blackstone Group. The sale was finalized on December 19, 2014. Blackstone sought to improve the resort's gaming revenue by revamping the casino floor. The company also made changes to the restaurants and entertainment offerings as part of a $200 million project. The changes were successful, and the resort saw its first quarterly profit in 2015.
Blackstone applied its business strategy – "buy it, fix it, sell it" – to the Cosmopolitan. In 2019, the company began considering a sale of the resort, after spending approximately $500 million in improvements. In 2021, Blackstone reached a deal to sell the resort operations to MGM Resorts International. In addition, the real estate assets would be sold to a joint venture consisting of Cherng Family Trust, Stonepeak Partners, and Real Estate Income Trust Inc.. Both sales were finalized on May 17, 2022. MGM purchased the operations for $1.6 billion, while the real estate sold for more than $4 billion, the deal totaling $5.6 billion.
2015 fire
A two-alarm fire occurred on July 25, 2015, on the 14th floor pool deck of the west hotel tower. The fire began in a pool cabana and spread across flammable fake trees, made of high-density foam and plastic. The blaze began around 12:15 p.m., and was extinguished by firefighters within a half-hour.Several hotel floors were evacuated, as smoke had entered the tower through open windows. The evacuated floors suffered water damage after fire sprinklers were activated. Two people were treated for smoke inhalation, and one of them was taken to a local hospital.
The pool reopened a day later, with the damaged area closed off. The cause of the fire could not be determined, although electrical issues were ruled out. Improperly discarded cigarettes were found on the pool deck, but fire officials could not prove definitively that this was the cause.
Litigation and controversies
Name
, publisher of Cosmopolitan, filed a trademark infringement lawsuit against the resort in June 2008. The suit accused the resort of trying to deceive patrons into believing that there was an affiliation with the magazine. Hearst sought $500,000 in damages and a portion of future profits from the resort. A settlement was announced in March 2010. The property, originally known as The Cosmopolitan Resort and Casino, would instead be called The Cosmopolitan of Las Vegas.Condominiums
Prior to Deutsche Bank's acquisition, the resort had sold 1,821 condo hotel units. In February 2009, columnist Robin Leach and two Las Vegas show producers filed a class action lawsuit against 3700 Associates and Deutsche Bank. Leach and the producers had purchased units at the Cosmopolitan, and their suit alleged breach of contract over the lengthy construction schedule and delays. Another class action suit, representing 200 disgruntled buyers, was filed shortly thereafter.A third lawsuit was eventually filed, and the cases were consolidated later in 2009. More than 400 buyers sought to regain their deposits, which amounted to more than $200 million. Deutsche Bank eventually offered partial refunds to buyers. Additional lawsuits were filed in July 2010, alleging that the condominium component had been canceled without any notification to the buyers. Approximately 1,600 buyers had accepted partial refunds as of October 2010, leaving 216 buyers who wanted full refunds. Most of the lawsuits had been settled as of 2012. Some buyers decided to close escrow on their units, and the Cosmopolitan has gradually bought them back as the opportunity arises. As of 2021, the resort includes 14 condo units, and owners have the option of renting them out as hotel rooms.