Gaming industry expert Alan Feldman sees the West’s water shortage as the biggest possible deterrent to what he projects as a banner upcoming decade of development along the Strip.
Feldman, a distinguished fellow at the UNLV International Gaming Institute and a former longtime executive with what is now MGM Resorts International, said last week that the Strip is generally healthy, but that solutions will need to be put in place to counter Southern Nevada’s dwindling water resources.
“This is a huge political discussion, but we’re going to need more water,” Feldman said during a presentation at the Orleans. “I think, at some point, the federal government is going to have to step in and override some of the debate that’s been happening at the state and regional levels.”
The Department of the Interior last week announced steps to help mitigate the sustainability of the Colorado River system, which provides water to about 40 million people in the West and in Mexico.
Nevada will lose 8% of its water allotment from the river — which runs into Lake Mead — in 2023, but it’s expected that residents and businesses in the Las Vegas Valley won’t notice those cuts because of conservation efforts already in place.
Still, severe drought conditions for years in the West and the effects of climate change are expected to worsen the water outlook for the region in the coming years and decades.
“There’s so much to talk about how water has been abused by our neighboring states over the past 30 years,” Feldman said. “That’s no longer relevant because we have to deal with the problem in front of us. At some point in America’s future, we’re going to have to deal with desalination, I don’t see any way around that. That’s not something we’d want to see from the states. We’d want the federal government to step in on that.”
The resorts along the Strip, which attract tens of millions of visitors annually, use a lot of water, though much of it is eventually reused.
About 5% of the water allocated for Southern Nevada is used by resorts, according to the Las Vegas Valley Water District. The majority — about 60% — is for residential purposes.
Still, Feldman doesn’t foresee anything that could stop development — and expansion — along the world-famous tourist corridor.
Last summer, the $4.3 billion Resorts World complex opened on the north end of the Strip, not far from the massive new Las Vegas Convention Center’s West Hall expansion. Genting Group, the organization behind Resorts World, also has plans for a lot of additional development on the resort’s footprint.
Also on the north end of the Strip, workers continue to labor on the Fontainebleau Las Vegas renovation project, which is expected to eventually produce a 170,000-square-foot casino. That long-stalled resort project could open as soon as next year.
Earlier this month, developers released plans for a 90,000-square-foot shopping district at the Fontainebleau.
It’s also been reported that casino mogul Phil Ruffin, owner of Treasure Island and Circus Circus, has had discussions with Oakland A’s officials about the possibility of the team building a ballpark on his land.
To the south, a group that includes former Las Vegas Raiders President Marc Badain announced a plan earlier this year to build a $3 billion sports arena and entertainment district near the intersection of Las Vegas Boulevard and Blue Diamond Road, a few miles from Mandalay Bay.
Feldman believes an NBA team will call Las Vegas home — and will likely play its home games at the arena planned by Badain and his group — within the next 10 years.
“I’m bullish about the remainder of the Strip,” Feldman said. “The Strip will become bigger and longer. Fontainebleau and what’s to come at Resorts World, that will be great. Don’t forget, there’s still that space between Resorts World and the Fashion Show Mall, and who knows what will end up there.”
Josh Swissman, a founding partner of the Strategy Organization, a local boutique consulting firm, joined Feldman at last week’s talk in front of a group of commercial real estate professionals. He said he has no doubt that “new hotel towers will pop up” from existing Strip resort operators in the next decade.
“The second phase of the Resorts World buildout will be almost as big as the first,” Swissman said. “It doesn’t take too much speculation to think that the Seminole Tribe will build additional hotel rooms on the Mirage property. In my opinion, you’ll also see a better public transportation system on and around the Strip.”
The Boring Company, an Elon Musk company, has already started building an underground tunnel transport system on the Strip.
Tunnels that allow for movement of passengers inside Tesla cars are operational at the Convention Center’s campus, and from the West Hall expansion to Resorts World. Plans call for that system — called the Vegas Loop — to be expanded throughout the Strip corridor, and to downtown Las Vegas and the airport.
“The way people get up and down the Strip now will look wildly different than how people get up and down the Strip 10 years from now,” Swissman said.
Swissman and Feldman pointed to recent record earnings reports by Strip operators, including from Caesars Entertainment, which operates eight resorts along the Las Vegas Boulevard tourist corridor. For the three-month period that ended June 30, Caesars recorded an EBITDA — earnings before interest, taxes, depreciation and amortization — figure of $547 million, a company record.
On an earnings conference call this month, Caesars CEO Tom Reeg said “there are not strong enough words to convey how well it’s going in Vegas for us.”
Whether it be drive-in visitors — many of which come from Southern California — or air travelers, Feldman said he doesn’t expect interest in Las Vegas as a destination to wane in the coming years.
“The Strip is unique in the world; there are things that happen there that don’t happen anywhere else,” he said. “There’s a magic that happens there. It’s the greatest carnival midway in the history of the world, and it’s free to just walk up and down the Strip.”