In Las Vegas resort development, the 1954 Fontainebleau was perhaps the most influential property built, despite being situated across the country in Miami Beach, Florida.
Conceived by hotelier and entrepreneur, Ben Novack, and designed by Morris Lapidus, it was the choice of vacation destination by many of the early Las Vegas financiers and casino owners, who enjoyed the sunshine as much as the gambling at many of the underground casinos.
The resort oozed elegance, luxury and aspiration. Lapidus rewrote the rulebook on design, with an iconic curved façade, sweeping lines, circles, light, space and place-making throughout.
The bowtie motif gave the property a continuity in its design and the famous 'staircase to nowhere' was not vanity: it was to create a sense of arrival, a moment, a memory.
Noting the property’s immediate success, Ben Jaffe, a part-owner of the property, looked west, with the aim of creating a Fontainebleau-inspired luxury resort in the burgeoning town of Las Vegas.
Las Vegas' Fontainebleau
Although Las Vegas already had a handful of resorts on the nascent 'Strip,' none yet had gained the stature or cultural pervasiveness of the Fontainebleau.
Jaffe acquired a parcel of land at a location considered to be far away from 'the action,' and had created a separate company, Conquistador, to build and operate. Funds were raised. Alongside Jaffe’s investment were others, some with alleged association with organised crime. Running Jaffe’s new casino was 'illegal' casino operator Phillip 'Dandy Phil' Kastel.
At a cost of $15m, (only $1m less than the Fontainebleau and an amount that forced Jaffe to sell his interest in the Miami property). The Tropicana, as it was to be named, was designed by M. Tony Sherman, the architect behind The Sea Club, Sinbad Hotel, Waves Hotel and master of the 'Mid-Century Modern' form of design that was so prevalent in Miami Beach.
Unlike the casino-centric template, the Tropicana was conceived as a resort foremost, and as such, the target customers were the same as those that would be found at the Fontainebleau. The new property was well received and lauded as the finest in town, but as his alleged criminal associations were exposed, 'Dandy Phil' was denied a licence and was out.
Locations differ and offerings adapt, the fundamentals of customer psychology do not. The ability to create and curate enduring places that encourage positive emotional engagements and enhance the human condition, is very valuable, whatever the generation of customer
Jaffe knew he needed a hands-on investor and operator of the casino, and found one in J. Kell Houssels Sr, Part-Owner of Downtown’s Las Vegas Club and El Cortez. Alongside his lawyer son, J. Kell Jr, they assumed the operating mantle of the Tropicana.
With an interest in entertainment, the Houssels made modifications, and the long-running Folies Bergère opened in late 1959, while the Tropicana Golf and Country Club in opened in 1961: perfect for the aspirational customer ‘The Trop’ sought to attract.
Las Vegas expanded considerably in this decade, with new amenities and high-rise guestroom towers, notably at The Sands, Dunes and Desert Inn and most impactfully, with the arrival of Jay Sarno’s Caesars Palace.
Unmistakably inspired by his many visits to the Fontainebleau in Miami, Sarno deliberately incorporated many of its distinctive features, including curved façade, designed by architect Melvin Grossman, a protégé of Lapidus.
The once-grand Trop could not compete with other properties that were the beneficiaries of large Teamster loans and Howard Hughes’ unlimited capital; and as the city built upward, the low-rise elegance of the Tropicana slowly lost relevance.
The Houssels sold their interest in 1968. After several owners came and went, Mitzi Stauffer Briggs added the Paradise/Tiffany tower to the low-rise structure in 1977, but she too fell victim to the ongoing criminal activity and malfeasance at the casino level and exited to hotel corporation Ramada, who built the second tower in 1986.
In 1989, the Ramada casino division was spun off as Aztar, which opened a second Tropicana casino in Atlantic City and bought Jaffe’s legacy land interest in Las Vegas. Aztar itself was acquired by hotel operators Columbia Sussex in 2006, who shortly after fell into bankruptcy.
The Tropicana casinos were separated, with Tropicana Las Vegas acquired by former MGM Executive, Alex Yemenidjian, and Onyx, while the others formed Tropicana Entertainment, a separate vehicle.
2015: Tropicana Las Vega acquired by Penn National
Elsewhere, in a complicated legacy brand merry-go-round, Tropicana Entertainment, now owned by investor Carl Icahn, was bought by both Eldorado Resorts and Gaming and Leisure Properties International (GLPI); a real estate investment trust (REIT) was set up by Penn, which included the Tropicana casinos outside Las Vegas.
In 2020, Eldorado then acquired Caesars Entertainment, in which Icahn had built a significant stake and was pivotal in engineering the trade. Caesars Entertainment operated many resorts, including Bally’s in both Las Vegas and Atlantic City.
Unlike the casino-centric template, The Tropicana was conceived as a resort foremost, and as such, the target customers were the same as those that would be found at The Fontainebleau
The East Coast Bally’s was sold to Twin River Worldwide Holdings, which renamed its company to Bally’s Corporation and in 2022 acquired the non-land assets of the Tropicana in Las Vegas from Penn, with the land assets being held by GLPI, having already been sold by Penn to the REIT.
At the end of 2022, Caesars Entertainment operated over 50 properties, including Bally’s in Las Vegas and the Tropicana Resorts outside of Las Vegas, while Bally’s operated 15 casinos, including The Tropicana in Las Vegas and Bally’s in Atlantic City, but not Bally’s in Las Vegas. The latter was rebranded as The Horseshoe in 2023, just to avoid confusion!
Return to Glory
Stephen Muss, one of the most influential real estate developers of the 20th Century, responsible for dozens of hotels and commercial developments, bought the near-bankrupt Fontainebleau from Novack in 1978, with the intent of breathing new life into the property.
By then, Miami Beach had become a shadow of its hey-day, now synonymous with drugs and crime. Muss’ nostalgia for the vibrancy of the area remained and, with other notable developers, set about reviving the fortunes of the resort location.
Under Muss, there were extensive renovations at the Fontainebleau, removing many of the now-dated original design features, modernising the resort to be fit for the 1980s, ready to compete with the Fontainebleau-inspired properties in Las Vegas and Atlantic City. After a long and successful run, which saw dramatic improvements in the area, Muss sold the property to The Soffer family in 2005; this was to be another new beginning for Miami’s crown jewel.
The operating company, Fontainebleau Resorts, led by Jeffrey Soffer, oversaw a complete renovation of the property, reimagining many of Lapidus’ famed design elements, but also curating a portfolio of experiences for the next generation of aspirational customers, many of whom had made Las Vegas’ luxury resorts their destination for pleasure.
With Fontainebleau Miami on track, Soffer, like Jaffe decades before, looked west, with the aim of creating a Fontainebleau-inspired luxury resort in the again-burgeoning town of Las Vegas.
The Soffer family was familiar with the city, having successfully built Turnberry Place and Towers, and Signature Towers at The MGM Grand. The Algiers and El Rancho/Thunderbird land had been acquired and the cranes on the rising Fontainebleau Las Vegas joined those of Encore, Palazzo, Echelon, Cosmopolitan, Caesars Palace and City Center in the skyline.
When construction began in 2007, Las Vegas had just completed a record year. Visitation was at nearly 39 million people, gaming revenue breached $10bn for the first time and occupancy levels were at a near high at over 89%.
The casino market had proved a good bet with ready capital for development and M&A activity. MGM had raised funds for the Mirage and Mandalay Resorts acquisitions of the previous decade and was pushing boundaries in Project CityCenter.
Apollo and TPG took Caesars Entertainment private for $27.8bn and even Carl Icahn took the cash, exiting his Nevada casinos to Goldman Sachs for $1.3bn.
When Fontainebleau topped out on 14 November, 2008, the economy had already crashed, the banks were bust, saved just by emergency legislation and, within days the US was formally in recession. The project was 70% complete. The banks controversially pulled their funding.
The building stopped. Those involved in Las Vegas’ development still recoil when remembering those times. Some projects crawled to completion, others failed, but none were so advanced and left uncompleted as the blue-glassed tower dominating the skyline.
By learning the lessons of the Miami namesake, with a clearly defined customer, strong brand equity, clarity of design, proven programming and an experienced opening team, this new resort has been 70 years in the making
Ironically, it was Icahn who acquired the resort from bankruptcy in 2010. He was one of the few that could afford to play the long game, believing that Las Vegas’ fortunes would return.
Icahn is usually right and after the project was eyed by many; it was sold to developer Stephen Witkoff for a reported $600m, banking Icahn around $500m.
Under Witkoff, the resort was renamed the Drew, and using the existing shell, he sought to re-conceive the opportunity. Witkoff brought in several of those associated with MGM’s CityCenter, as construction recommenced. And then the Covid-19 pandemic came to town.
With construction stalled again and the immediate future of the city in jeopardy, Witkoff exited to Jeffrey Soffer and Koch Industries. After two decades of planning, construction, bankruptcy, different owners, financial crises and a pandemic, The Fontainebleau Las Vegas restarted work in 2022 and with Soffer’s vision and confidence, there is palpable excitement in the industry over what is to come.
As one door closes, another opens
Unlike Miami, Las Vegas is unrecognisable from the 2000s, never mind the 1950s. It has evolved from a gambling town to a global, multi-faceted tourist destination with resorts, conventions, entertainment and sports.
The Golden Knights started the puck moving and the Raiders accelerated. But, at time of writing and based on evidence thus far, certainties are far from certain. The Oakland Athletics’ proposed new Las Vegas stadium is placed squarely on Ben Jaffe’s land parcel where the Tropicana presently exists.
Bally’s, the current operator of the Tropicana, has indicated that it plans to implode the property, leaving only The Flamingo and The Sahara, which have both been extended and renovated beyond recognition from the original resorts on the 1950s Strip.
It is likely to be closed within a year. Although GLPI, the landowner, has allocated nine acres for the new arena, the Athletics’ initial drawings show the stadium dominating a larger parcel and there is no doubt that Bally’s will have a new casino resort integrated into the plans.
In 2024, when the doors close after 67 years, the story of the Tropicana in Las Vegas will end. It is unlikely that the name will feature in the city again, joining Hacienda and Desert Inn as key artery roads, demarking former properties on The Strip without their namesakes present.
The openings of Tropicana in 1957 and Fontainebleau in 2023 are similar; both opened into a heavily competitive marketplace and both with the Miami Fontainebleau as inspiration. The original Tropicana set the scene and elevated the market. The Fontainebleau Las Vegas intends to do the same.
Fontainebleau Las Vegas has a clear customer in mind, with its teaser video addressing, “sophisticated travelers in search of the spectacular;” it announced a portfolio of market-leading amenities and a classic design aesthetic, to meet its expectations.
The brand alone has generations of equity, denoting elegance, luxury and aspiration, exactly what appealed to visitors back in 1954.
But it is more than just this, that Ben Jaffe, Morris Lapidus and Ben Novack captured in Miami Beach. Although times change, locations differ and offerings adapt, the fundamentals of customer psychology do not.
The ability to create and curate enduring places that encourage positive emotional engagements and enhance the human condition, is very valuable, whatever the generation of customer.
It was this ability that was originally sourced, distilled, bottled and served at the Fontainebleau in Miami Beach. It was consumed, refined and replicated by Meyer Lansky, Stephen Muss, Jay Sarno and Steve Wynn.
If any new resort has all the ingredients to succeed, it is the Fontainebleau. By learning the lessons of the Miami namesake, with a clearly defined customer, strong brand equity, clarity of design, proven programming and an experienced opening team, this new resort has been 70 years in the making.
