Here's a bit of a diversion. I wrote this article about 3 years ago after many a trip to Vegas where i marveled at the once again changing complexion of the city. This article is about some of the people i met in Vegas, many of which are still good friends of mine. These few people basically invented what is the current state of the Vegas party scene: the battle between pool parties and nightclubs. Fast forward a few years and they are still making waves.
Mike Myers - after Body English closed on NYE 2009, he, Cory and a few others opened Vanity which is the current au fait club in Vegas.
Adam Nixon - after a stint at Red Rocks, he (and some of the Las Vegas Hard Rock crew) ended up taking over the Hard Rock in San Diego. Slowly but surely they are pulling out all the same tricks and making San Diego a venerable destination for the day and night party traveller.
DJ Vice (Eric) - with his face plastered all over billboards in Vegas, he's become one of the most in-demand club DJs across the United States and beyond.
Rehab - now a legend in its own time, Rehab is on to its 6th season with a massively expanded pool and lineup. About 6 other pools have opened to compete with the simple idea that Chad Pallas started as a way to avoid having to drive out to Lake Mead on the weekend.
Club Hosting - probably the biggest change since the story was written is that Casinos now actually cater to the people the article talks about. They can get rooms, they get aggressively courted by different hotels, and generally get the run of the place whether they gamble a dime or not.
Read on to hear the whole story about how it started..
The New Whales
On Sunday morning in Vegas only one person gets more requests than God. It’s fitting too, as Adam Nixon spends most of the morning hunched over his Treo in what looks like contemplative prayer. It’s 8:00am and I’m sitting with Adam in the Peacock Lounge at the Hard Rock. In his signature cargo shorts and popped-collar polo shirt he’s deftly orchestrating the last few details of the season’s final Rehab, the single biggest weekly party in Vegas. He doesn’t even look up from his screen,
“I’m gonna put LeBron and Carmello together at 38 next to K-Fed on 39 [a notable cabana which includes a private hot tub].” I look skeptical about K-Fed.
“You know I have to say that kid is absolutely the most polite guy you’ll ever meet. And he always racks up a huge tab.”
He tilts the Treo forward to me as if questioning the authenticity of a few versus in the bible. “Who the hell is this..”, the tip of his thumb points to a name in a text message. Surprised, I tell him it’s one third of an extremely famous rap trio from the 90’s – a household name I thought.
“Never heard of him.” Adam looks dubious. “His manager wants 2 comped rooms, a cabana and 3 bottles to have him come here. Fuck that!” He thumbs something back into the Treo. He looks up at me and smiles, “Watch this...”
I can hear the flurry of text message negotiation going back and forth from the constant dinging of incoming messages. I feel like I’m standing on the stock market trading floor a few minutes before the opening bell.
“That’s right bitch.” he leans the Treo once more in my direction. I can see the text message he’s about to send before he taps the send button.
“No room, no bottles, and a $2500 minimum on 9 [not a good location]”. For a second there is actually silence. And then one final ding, shortly followed by an infamous grin. “He’ll be here at noon.”
Maybe not quite God, but Adam is surely a minor deity on Vegas’ new Mount Olympus.
* * *
Rehab, the Sunday pool party at the Hard Rock Hotel, has become an icon for the next phase of transformation that is occurring in Las Vegas. And with it, a new generation of players is emerging as well. In a city that is constantly growing, innovation is the thing that is most rewarded; especially innovation that extracts money from untapped sources otherwise unwilling to open their wallets to the existing panoply of Vegas attractions.
Rehab was first launched 5 years ago as the brain child of Chad Pallas. Chad looks and plays the role of creative father bear. Hiding out mostly in the second floor executive offices of the Hard Rock, he’s constantly thinking how to innovate around a core idea that he knows might have the same shelf life as most clubs in LA.
“Frankly, the original idea was self serving. I got tired of hiking it out to the lake Mead every Sunday and decided to bring the party to me. At first, the Hard Rock was skeptical.” Chad’s not one to point fingers directly, “The pool had always been a sanctuary for hotel guests and the Hard Rock’s bigger gamblers. You know, get them to relax during the day and recuperate for another round at the tables that night.”
However, after some cajoling Chad finally convinced the Hard Rock to give him some freedom to experiment. As a Vegas veteran, Chad knew that any successful party in Vegas always has two strata. Much like the design of the Hard Rock pool itself, he needed to fill both the massive main pool area as well as the crescent moon of high roller cabanas surrounding it. With the size of the pool he was looking at, he knew the only way to fill it would be with locals.
“I decided to put the party on Sunday which is a classic service industry day. That way we could cater to locals and fill the pool.”
But how to fill the cabanas on a day when most high rollers had already tapped out from the weekend and were ready to slink back to their private jets, tails firmly tucked between their legs? At first he turned to the casino hosts.
“The problem with casino hosts is that their focus, obviously, is on getting the gamblers into the casino to play. Many times those gamblers aren’t interested in going out or simply want to gamble all night.”
He decided to enlist the help of Jack Lafluer. Jack is one of the softest spoken people you’ll ever meet. An avid motocross fanatic, Jack grew up as a DJ in the Las Vegas club scene. Not only did he bring his public persona to the mix (Jack’s abs were the center piece of most of the first few years of billboard advertising), he brought with him an experience in throwing night club style parties. Jack and Chad had a successful but modest start. Chad calculates there were about 800 people that came to the first Rehab.
Under Jack’s guidance, Rehab morphed into a full on nightclub style party with headline DJs like Tiesto and Paul Oakenfold as well as performances by Akon, Too Short, and Snoop Dogg. Along the way Jack brought Adam Nixon into the mix.
Adam landed in Vegas on a weekend trip from New York and like many before him threw caution and his return ticket to wind and decided to stay. After a chance encounter just a few days after Adam arrived, Jack quickly realized that Adam was unusually skilled in getting to know the big spenders and befriending them. Three years later and with the most coveted database of contacts in Vegas, Adam, Jack and Chad saw last year’s Memorial Day usher over 5000 people through the door and bank over half a million dollars in just under 8 hours. For a smaller casino like the Hard Rock, half a million dollars is a significant part of the hotel’s profits on any given day.
“That guy started some internet company - he’s at $23,000
already. He’s been here three weekends in a row and I don’t think he’s gambled
“That guy started some internet company - he’s at $23,000 already. He’s been here three weekends in a row and I don’t think he’s gambled a penny.”
By this time we’ve descended the final steps to the dance floor. A seething mass of drunken revelers are lost in the ever changing music. Out of the blue from the balcony comes a spray of bills into the crowd, 100s of dollars at a time,
“No idea who that guy is. He’s Cory’s guy [another host at Body English]. I think he’s at $32,000”.
DJ Vice, Hard Rock’s incomparable, Patron guzzling resident, cuts to the PA and over the music gives a shout out to the guy who’s making it rain for the crowd.
Myers looks at me in summation, “And there you have it.”
* * *
After an unsuccessful family-friendly marketing approach in the late 90s, Vegas started to embrace the changes that were going on in the city. Part of the transformation that’s happening is due to a perfect storm of events. A major one is that Vegas, for all its allure, is being challenged as the destination of choice for non-US visitors. The massive build out of Dubai (where gambling still does not exist but other debaucheries can be found) and Macau, a tiny island just off the coast of China near Hong Kong has siphoned off a considerable number of high rollers from the Asia Pacific. In fact, the Venetian and the Wynn already have their own hotels in Macau. The change is also been driven by the constant drumbeat of club-centric, tabloid worthy, LA celebrity exploits. By many accounts, Vegas has become a distant suburb of Los Angeles, a quick hop on Southwest from LAX being the equivalent of a cab ride to the valley. And with it has come the club hopping party scene that constantly graces the covers of most weekly rags.
Fueled by this infusion, many casinos in Vegas have started to cater directly to this clientele; a clientele who will fly in for a night or two, drop tens of thousands of dollars at a night club, recover at the pool all day, and never gamble a penny. It’s not just celebrities driving this change. In fact, much like the high rolling gambler set, it’s mostly people you’ve never heard of. Boom and bust real estate moguls, sub-30 hedge fund guys, currency traders from the UK, and a sprinkling of Internet entrepreneurs who, for the price of a few bottles of champagne, can trade in their inner-geek for a shinny new party-guy persona. These are the new Vegas whales.
Nor surprisingly, the market has adjusted accordingly. Like increasing table minimums in the high roller room, when Body English opened three years ago, a bottle of Cristal cost $925 - now it will run you a cool $1200. And as tastes change (driven heavily by rapper’s lyrical promotion), Cristal, the sobriquet of conspicuous consumption has been replaced by Patron Platinum. For a cool $1000 at Body English you get the best tequila money can buy. Demand, meet supply.
For the most part, the casinos don’t quite know what to make of this new breed yet. That said they don’t mind the easy money. Between Rehab and Body English, it’s not uncommon for one of these new whales to spend $50,000 in a weekend. While the gambling action varies significantly between smaller casinos like the Hard Rock and high end mega-complexes like the Wynn, the average high roller at the Hard Rock maybe goes up or down $25,000 in a weekend. Of course there are exceptions - those gamblers who lay down $75,000 a hand in the most private rooms at the Bellagio and the Wynn – for a smaller casino like the Hard Rock it can be a significant part of their non-hotel revenue for the weekend.
The current conundrum for the casinos lies in the history of how their clientele is cultivated, managed and comped. For 20 years, the comp system in Vegas has been based on what’s called theoretical play. The formula is quite simple, it’s how much you bet times how long you play times the house advantage on the game you’re playing. Take Blackjack for example. A blackjack table deals up about 60 hands an hour. If you’re betting $100 a hand, that’s $6000 and hour. The house’s advantage is about 2% on blackjack so the theoretical loss (expected amount of money you’ll go down over a large number of hands) is about $120. But the house doesn’t comp you on 100% of your theoretical – depending on the casino it’s more like 10% to 50%. So even at the high end of the comp scale, $60 dollars isn’t going to get you much more than a trip to the buffet.
On the flip side, the margin on alcohol is much clearer. A $1000 bottle of Cristal at the club likely costs the house about $170 at wholesale. Double that cost to pay all those hosts, bussers and waitresses, and they are still making around $650 every time a waitress lights a sparkler. To make matters more complicated for both the casinos and the clientele, the house won’t give big spenders at the club any comp credit for what they spend. Usually food and alcohol are what the casino comps a high roller, not the other way around. Its’ easier to gamble $500 a hand on blackjack for an hour and get a comped bottle at the club than it is to spend $5000 at the club and get your room comped.
While the casinos figure out how to rationalize this conundrum, they are depending on the new breed of party hosts to fill in the gap. Party hosts like Mike Myers and Adam Nixon know that clients who come for the nightlife go where they know people. They meticulously manage these relationships giving them the tables and cabanas they want, private stocking their favorite brands of alcohol, and making sure their favorite waitresses always appear at their table. For the last day of Rehab, the Hard Rock actually flew in an off duty waitress from Reno, just to work a cabana for a guest who especially liked her. And in many cases real friendships with these new whales emerge in a way that traditional casino hosts might never see.
“I just got back from spending a week in Europe with one of my best clients who is also a close friend now”, Myers explains before we kick back a $60 shot of Platinum at the bar. “And last month we paid for one of our best clients to come party with us at our staff outing in LA.”
* * *
The casinos are no fools; where there is change, there is opportunity. Once the purview of casinos like the Hard Rock and Palms who cater to a younger clientele, the large casinos are now getting into the pool and nightclub game.
The Venetian first stormed onto the high end club scene with Tao nightclub. Last year it parlayed this brand into the recently opened Tao Beach – a direct competitor to Rehab. The Mirage opened Bare, an elite (and topless) private pool party. Even MGM and the Luxor have gotten into the game with multi-million dollar build outs of Wet Republic and club LAX respectively.
And with this change has come a fierce battle over club hosts. People like Mike Myers and Adam, are constantly being raided to head up any one of the new clubs and pool parties that are popping up like spring flowers across the city.
In striking analogy, when the Palms opened, there was a fierce battle over casino hosts. Many of the top hosts from the Hard Rock and other casinos were enticed to the Palms not only for their charisma but primarily for their database of contacts. For both gamblers and nightlife clientele, they go where their hosts are and their loyalty is relatively fickle to the hotel/casino itself. And casinos take their hosts very seriously. One casino host I talked to who used to work at the Hard Rock put it pretty simply, “After I left, they won’t let me get within 100 feet of the place.” The same thing is happening with club hosts and even resident DJs, most notably LAX’s recent acquisition of DJ Vice from Body English.
“I’ve had offers from Tao Beach, the Palms pool and the Mirage”, Adam told me last year as we lounged at the Hard Rock pool after the final Rehab. “While I’m happy doing Rehab, you never know when the right opportunity might come along.”
* * *
Its 8:00am opening weekend of this year’s Rehab and I am
sitting again with Adam and Chad Pallas. This time however we’re at the Cherry
pool at Red Rocks. Apparently the right opportunity did come along.
Its 8:00am opening weekend of this year’s Rehab and I am sitting again with Adam and Chad Pallas. This time however we’re at the Cherry pool at Red Rocks. Apparently the right opportunity did come along.
Red Rocks is the latest multi-billion dollar bet being made by the Frittitas, the two most successful brothers in Vegas you’ve probably never heard of. For years the Frittitas have owned a constellation of off-strip casinos including all the Station casinos, Green Valley Ranch, and now their most ambitious project, the two million square foot Red Rocks. Strategically placing their properties near Vegas’ two main suburbs, Summerland and Harmon, the Frittatas made a successful bet they could corner the market on local gamblers. And now they’re making another one - that they can leverage the talents of Adam and Chad to bring in the big nightlife spenders to their properties and keep them “on campus”. Red Rocks has butler serviced suites, a movie theater, an in-house bowling alley, a club and a massive pool. As we look out over the sea of cabanas, Chad and Adam toss ideas back and forth about the next generation of Vegas day and nightlife they hope to usher in at Red Rocks.
“You might as well fill this pool with 100 dollar bills” says Chad about the potential of Red Rocks.
Adam looks up from his Treo. He’s busily trying to rebook a busload of 30 ASU girls he and Chad planned to bring to this year’s Rehab opening before the Frittitas wooed them to Red Rocks over the summer.
“You know, that’s not such a bad idea..”