What’s up, guys!
Welcome to Abandoned Explained, my name is Jonah Stahl, and I’ll be your host today!
Here on Abandoned Explained, we provide urban explorers with an entertaining overview of
the most unique abandoned locations, that you won’t hear about anywhere else.
In today’s video, we are going to be talking about the largest resort on the Las Vegas
Strip that you cannot visit, the FontaineBleau Resort.
The Fontainebleau is an unfinished, 68 Story Casino Resort located on the Las Vegas Strip.
This immaculate resort would have featured thousands of rooms, around 1,000 condominiums,
a 3,300 seat performing arts theater, numerous nightclubs, 24 restaurants, a giant casino
floor, and indoor/outdoor conference areas.
This resort would have been a slice of Miami Beach on the Las Vegas Strip.
The resort is located on the Struggling North Side of the Strip.
So if it would have opened it surely would have dominated this portion of the Strip.
So what happened?
What caused this resort that would have surely been unrivaled to fail?
The FontaineBleau Las Vegas was intended to be the sister hotel to the immensely popular
1950’s era resort on Miami Beach in Florida, also named the FontaineBleau.
As you can tell, they were quite creative when it came to coming up with the name for
the Las Vegas Resort.
Developers hoped that the popularity of the original resort would translate over to the
Las Vegas Resort.
The Miami Beach Resort gets much of its popularity from having been in many famous films such
as James Bond Goldfinger, Police Academy 5, and Scarface.
The Floridian Resort is arguably the most luxurious resort in Miami Beach, so the Las
Vegas Resort would have had a lot to live up to.
This was a task that developers were willing to take.
In 2005, Turnberry Associates (God I hope I said that right) bought the Florida Hotel
for 165 million dollars.
After purchasing the Hotel, Jeff Soffer, CEO and Majority owner of Turnberry Associates
opened another company known as FontaineBleau Resorts LLC.
I assume he did this so he could operate the hotel under the company brand.
Jeff Soffer had major plans for the FontaineBleau Resort Name which included an expansion of
the brand to the Las Vegas Strip.
You see, Turnberry Associates always wanted to get in on the gold mine that is the Las
Vegas Strip.
In May of 2000, they purchased a former Las Vegas Casino, the El Rancho Hotel, for 45
million dollars.
Jeff decided to purchase the failing casino due to the amount of land that would come
with the property, a total of 21 acres.
This deal was a steal for Turnberry since after their initial acquisition, land value
dramatically increased.
After their purchase, developers imploded the failing casino to make way for a London
Themed Resort that ultimately never materialized due to the September Eleventh attacks which
caused major issues for Travel and Tourism Industry.
Although this plan did not pan out the way they were hoping it would, Jeff Soffer had
new and better plans for the property.
In March of 2005, Turnberry Associates purchased 3.7 acres of land south of the El Rancho property
for 97 million dollars.
The company now had Twenty Five Acres of land on which they could build on.
Later that year in May, plans were announced to expand the FontaineBleau Brand to the Las
Vegas Strip.
Turnberry Associates stated that they were going to build an immense Casino Resort that
would include nearly four thousand hotel rooms.
(This number was eventually downsized however).
The company expected construction to begin by March of 2006, and that the resort would
be opened by 2008.
At the time, many thought the resort would be wildly successful since it was going to
be located on the north side of the Las Vegas Strip, where many of the oldest and tackiest
hotels are located.
Many thought this would be a golden opportunity to bring some life back into the struggling
north side since tourism was booming at the time.
Shortly after announcing their plans to the public, FontaineBleau Resorts LLC made the
decision to hire the former president of the Mandalay Resort Group, Glenn Schaeffer.
Glenn was brought onto the project due to his executive gaming experience, as well as
his major influence in the Las Vegas Gaming Industry.
His main role in the project would be to oversee the new project as the president and chief
executive officer of Fontainebleau Resorts LLC.
FontaineBleau Resorts hoped that by bringing him onto the project, he would be able to
cut construction costs as well as secure the much needed funding for the resort.
At this point things were beginning to come together for developers.
The following year (2006) in August, plans for the 735-feet hotel tower with nearly 3
thousand hotel rooms and almost 1,000 condominiums were approved by the county.
The company experienced a small delay however.
Construction was delayed until the following year due to concerns of residents’ of Turnberry
Place (an apartment complex located east of the planned resort) about the increase in
traffic caused by the new resort.
Eventually, these concerns were addressed and a new construction date was set for February
of 2007.
Nearly a year past the projected start date, construction began on the resort in February
of 2007.
The Construction was to be completed by Turnberry Construction.
A few months later in April, Publishing and Broadcasting Limited, Australia’s largest
gaming operator, purchased 19.6 percent of Fontainebleau Resorts for $250 million.
The project was expected to cost around 2.8 billion USD to complete, so this purchase
provided the resort with the funding to continue construction on the property.
While this deal took place, preparation work was already being performed on the property.
It was also at this point that the hotel was downsized from 68 stories to 63 stories.
Why they did this?
I really have no idea since they still planned on having nearly 3,000 hotel rooms and 1,000
condo units.
By June of 2007, FontaineBleau LLC.
secured 4 billion dollars from a variety of financial institutions like Bank of America.
(They come into play later so remember that Bank of America was a major part of this funding).
This money was to be used to pay off company debts as well as finish the Las Vegas Resort.
With the funding for construction secured, FontaineBleau LLC predicted that construction
on the project would be completed by 2009, only a year later than expected.
The company stated that when the resort was finished, less than one third of its revenue
would come from the casino.
I guess they thought the theater was gonna be a real big hit.
In October the project ran into trouble when plans were approved to increase the parking
garage from seven stories, to twenty three stories.
Why such a drastic change, the world may never know, but what we do know is that this plan
really pissed off residents of Turnberry Place.
They alleged that they were deceived by Turnberry Associates, stating that they were never informed
of the decision to increase the size of the parking garage.
Turnberry Residents stated that prospective buyers were told by Sales Representatives
that the garage would only be seven stories tall with two levels completely underground.
The residents most substantial claim however, was that the garage would violate Clark County
Ordinance, Title 30.
In simple terms, Title 30 states that for buildings next to residential properties,
for every one foot of building height, the building must be set back three feet from
the property line.
According to residents, the garage is only 36 feet away from Turnberry Place western
property line.
The biggest concerns for the residents was not their view being compromised, but the
fact that the garage would bring a lot of noise and pollutants right next to their homes.
In response to the claims by residents, Turnberry Associates CEO Jeff Soeffer said that Turnberry
did a “respectful” job of building the hotel tower away from residents.
He went on to say that nothing was ever promised to residents, and the property was zoned for
a hotel and casino, so residents knew something would eventually be built on this land.
In this case, I honestly have to agree with Soeffer.
While it sucks for residents that their view is gone, you cannot expect a company to buy
land on the Las Vegas Strip and leave it vacant.
I’m also not the only one who shares this view.
Turnberry Residents had a district judge rule on whether or not the Clark County Commision
should have approved the garage redesign, since it allegedly violated the county ordinance.
The district judge ruled in favor of the re-design stating it was legally approved.
In 2008, when the subprime mortgage crisis hit, no major city was more devastated than
Las Vegas.
Many Americans felt that the excessiveness of the Las Vegas Strip was just simply to
much, and casino revenues plummeted.
Unemployment skyrocketed and many homes went underwater.
(meaning that homeowners owed more on their home than it was worth)
In April of 2008, Fontainebleau Resorts stated that they would be continuing construction
despite other local projects experiencing extreme financial issues.
The company stated that the resort was fully funded and the recession should have no effect
on the completion of the resort.
At this time the resort had 2.4 billion dollars in debt and decided to try and downsize the
debt by putting the 1,018 condos on sale.
The company expected the presales from the condos to rack in between 700 to 900 million
dollars.
They hoped that these sales would enable them to get rid of a considerable amount of their
debt on the resort.
Unfortunately, these hopes never panned out due to the extremely poor economic conditions
at the time.
By November of 2008, the FontaineBleau Tower was topped out meaning that all they had left
to complete was the interior.
Even though things were not going well for the resort at this time, things took a turn
for the worst when 2009 rolled around.
A year after the planned opening date, Fontaine Resorts President and Chief executive Glenn
Schaeffer left without comment in May of 2009.
Schaeffer's departure came a week after the company had began layoffs in the corporate
offices and a month after construction on the project slowed down.
(3,300 construction workers were downsized to 250 workers)
Schaeffer’s departure was a bad sign for the already bleak future of the resort since
he was the designated casino operator with industry experience and was a previous Gaming
Control Board licensee.
Schaeffer’s departure left FontaineBleau Resorts LLC scrambling to find someone else
to take control of the multibillion dollar project.
This task was made harder since not only were profits on the Strip extremely low at this
time but the new resort would take years to make profit.
Keep in mind, Schaeffer was responsible for securing over 3 billion dollars in funding
for the project, so finding someone to fill his shoes would not be an easy task.
During the construction phase, the project had gone 375 million dollars over their revised
budget.
This prompted one of the primary lenders, Bank of America, to terminate their loan commitment
which would have provided future funding for the project.
Bank of America was supposed to provide the project with nearly 800 million dollars in
funding.
This event unfolded shortly after Schaeffer's departure from the company.
With a loss of their CEO and primary lender, the Fontainebleau Las Vegas was in a serious
predicament.
The company would now have to not only find a new leader for the project, but also secure
nearly a billion dollars in funding to fill the void Bank of America left.
At this point, FontaineBleau Resorts was in some serious hot water.
According to financial analysts who were following the project, it would cost nearly 3.5 billion
dollars to finish construction on the resort, nearly double the projected cost.
This debt would go on top of the well over 2 billion dollars of debt that company had
already invested into the project.
Due to this, along with Bank of America refusing to provide future funding, the company was
left with no choice but to file for Chapter 11 Bankruptcy protection in June of 2009.
Fontainebleau LLC hoped that by filing for Chapter 11 Bankruptcy Protection they would
be able to finish construction since the project was 70 percent complete at this point.
Following their filing for Chapter 11, Fontainebleau LLC filed a 3 billion dollar litigation suit
against Bank of America claiming they wrongfully withheld funds from the project.
But, in 2012 the case was resolved in favor of Bank of America.
Honestly, I find this lawsuit to have been a desperate grab for cash by Fontainebleau
LLC.
While it was wrong for Bank of America to withdraw funding that was previously agreed
upon,it was not unreasonable for them to withdraw the funding.
Bank of America did this to prevent them from losing even more money.
Many financial analysts believed it would take years for the project to become profitable,
meaning it would take quite a long time for the Bank to break even on the deal.
I believe Fontainebleau LLC sued them in order to secure cash to not only finish the resort,
but pay off the debts associated with the construction of the resort.
IF they would have won the suit they would have been able to not only finish construction,
but they could have opened the resort and possibly have made profit during the first
year of operation.
In the companies last, desperate attempt to secure funding for the resort, Fontainebleau’s
Owner sued himself in the form of the general contractor suing the hotel ownership company,
Turnberry Associates.
Keep in mind, both of these companies are owned by the same person, Jeff Soffer.
This was a terrible attempt to force creditors to supply funding for the completion of the
resort.
Unfortunately, suing themselves did absolutely nothing to secure funding and the resort would
remain unfinished.By July of 2009, Construction work was completely halted on the resort.
Among the uncompleted portions of the resort were many restaurants, along with some of
the hotel rooms.
According to Steve Duncan, a Urban Historian who snuck into the unfinished resort, many
of the rooms were complete but stripped down.
Later that same month, the resort sought permission in bankruptcy court to cancel events that
were to unfold in 2010.
Some of these events included numerous meetings, and conventions.
They also sought to cancel employment contracts and default on a lease for office space which
would have been used for Fontainebleau’s employee recruitment center.
So what’s next for the resort?
Well, on February 18 of 2010, Billionaire Carl Icahn purchased the resort for $150 Million
Dollars.
Following his purchase, Icahn auctioned off the furnishing previously intended for the
resort.
In November of 2015, Icahn listed the resort for sale for the asking price of 650 million
dollars.
The hotel was listed through CBRE Group who stated that it would cost around 1.2 billion
dollars to finish the resort, which means it would cost less than 2 billion dollars
for a buyer to enter the Strip Market.
This meant that it would cost around 500,000 dollars per room, half of the one million
dollars per room it cost to build new.
In August of 2017, nearly 8 years since construction was halted on the infamous
resort, Wilkoff Group, and New Valley LLC purchased the resort for 600 million dollars.
Immediately after their purchase, the new owners set forth plans for a major redesign
of the property, as well as plans to waterproof the project.
Project Blue, as it was known to the new developers, would have a second shot at life.
Construction is now expected to resume sometime during 2018.
The new owners of the property have partnered with JW Marriot to open and rename the project
“The Drew”.
The Drew will feature nearly 4,000 hotel rooms, and 500,000 square feet of convention and
meeting space.
The Drew will also feature two Marriott Brand Hotels, The EDITION, and JW Marriott Hotels,
making this the first Marriott Hotel to open on the Strip.
A new completion date has been set for late 2020, and the hotel will be connected to the
expansion of the Las Vegas Convention Center, meaning that it’s main focus will be visitors
attending conventions there.
If the project is completed it will create 5,000 construction jobs, and 6,000 jobs upon
opening.
Now that we have covered the downfall, and what’s to come for the project, this is
the part of the video where I am going to give my opinion on what caused the resort
to fail, as well as if I think the new resort will be successful.
I personally think the Fontainebleau was a victim of horrible timing.
When developers decided to start construction at the beginning of the Financial Crisis of
2007-2008, they were fighting an uphill battle.
What I mean by this is when an economic crisis hits, the first thing people stop spending
money on is traveling.
When you are barely able to afford your house, people are not going to want to go and spend
money on going somewhere exorbitant.
This is especially true for Las Vegas since Vegas’s tourism economy is practically built
on blowing money.
When you think of Las Vegas the first thing to come to most people's mind is gambling,
expensive shows and dinners, and so on.
Jeff Soeffer should have realized that since your average Joe’s bank account wasn’t
looking to hot, it probably was not the best time to build a CASINO Resort.
If they had waited a couple more years, things might have worked out for them.
Now do I think things will work out for the Drew?
The short answer is yes I do.
Wilkoff Group and New Valley LLC got an amazing deal on the property.
According to CBRE Group, a real estate company in the Las Vegas Valley, they said "It will
cost about $1.2 billion to finish Fontainebleau.
Combined with a purchase price of $650 million, it would take less than $2 billion for a buyer
to enter or expand on the Strip market.
That's about $500,000 per room, just half of the $1 million or more per room to build
new."
What they mean by this is the new owners are going to pay half of what the original owners
would have payed to open the resort.
This means they will have considerably less debt, thus making it easier for the owners
to make a profit short term.
The Drew is also located on the North Side of the Las Vegas Strip.
For those of you who don’t live in Vegas, or have never visited the Las Vegas Strip,
the North side of the Strip is quite sketchy to say the least.
Many of the Casinos on this portion of the Strip are run down and honestly quite disgusting.
The Drew should dominate this portion of the Strip since it will be considerably newer,
more modern, and hopefully a lot cleaner.
Another key factor in the success of the Drew is how much they end up catering to Convention
Center Visitors.
If they connect the resort to the expansion of the Las Vegas Convention Center this will
be a game changer for them.
Many people who visit Las Vegas to attend conventions stay in either AirBNB’s near
the Center or hotels within walking distance.
The reason many people do this is since Uber, or Taxi rides on the Strip are ridiculously
expensive.
The closer people stay to the Convention Center, the less they will have to pay to get there.
If the Drew goes through with their plans to connect their Resort with the expansion
of the Convention Center, they should dominate the tourism market for the Vegas Convention
Center.
Tourists won’t have to pay for rides to the center, or pay for rides to get food since
the resort will have restaurants.
In my opinion, they should see massive profits from this since the market for the Convention
Center is only getting bigger, and many of the big resorts on the Strip don’t focus
much on convention attendees.
Construction has already begun on the resort, and only time will tell if things pan out
for the new owners.
I truly do hope things work out since I’ve always been quite interested in what the resort
looks like on the inside, and if they open I’ll finally be able to see the interior.
Anyways, this is going to be the end of the video.
I hope you all enjoyed this video since I really enjoy making this kind of content.
If you have any places you want me to make a video on, let me know down below and I’ll
probably end up making a video on it.
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Thanks for watching and I’ll see you all next video, Peace!