Ritz-Carlton's Lake Las Vegas Closes Because... It's Not Las Vegas

The Ritz-Carlton Lake Las Vegas will close May 2, its owners announced, blaming the economy rather than their own inability to carve out an identity for their hotel in a saturated market.

"Our owners, Village Hospitality, decided they could no longer fund the hotel," Ritz-Carlton spokeswoman Vivian Deuschl told the Las Vegas Sun. "As a result of that, we can no longer operate the hotel without adequate funding."

Lake Las Vegas was a synthetic dream created in the suburbs of Las Vegas -- to be exact, in Henderson, Nev., about 20 miles from the Las Vegas Strip. Transcontinental Corp. started the 3,600-acre project with a man-made lake to create upscale homes, shops, golf courses and a small casino for residents rather than tourists. Transcontinental has since declared Chap. 11 bankruptcy, owing around $728 million in liabilities.
It's hard to say why developers thought the idea of high-end hotels at Lake Las Vegas would take off. There are scores of luxury desert resorts with pretty vistas, golf courses and man-made lakes in California and Arizona, so visitors generally come to Las Vegas for a much more lively vacation.

Henderson is not Las Vegas, despite the name. Having been at the resort for a couple of nights, I can say that the area basically seems like one more anonymous suburb. Henderson has a population of about 240,000 people, about a third that of Las Vegas (counting North Las Vegas.) Lake Las Vegas's nightlife is also fairly quiet, so those looking for shows, gambling and excitement would never confuse the area with the Strip.

Although I'm sure developers did some market research, mot likely focused on baby boomers retiring and traveling, I'm not sure what the unique draw of Lake Las Vegas was going to be for visitors. Neither did its new owners, apparently.

The Ritz-Carlton was bought last year by Village Hospitality, a branch of Deutsche Bank, when its prior owners attempted to halt a foreclosure on its $103 million mortgage. The 15-acre, 349-room property opened in 2003 and its rates range from $219 to $449 per night.

Certainly other properties around the country are being closed because of the economy, but this is the first for the Ritz-Carlton brand. As previously mentioned on BNET, there have been hints of financial problems at Ritz-Carlton properties before, but the problems seemed to be resolved. (Although Ritz-Carlton, part of Marriott International, operates hotels, it does not own them.)

Two hotels, the neighboring Loews Lake Las Vegas and the MonteLago Village Resort will remain open, but Henderson's mayor told the Las Vegas Sun that meetings with representatives from both hotels told him that the hotels were struggling. Loews also fought off foreclosure last year.
It's not the death knell for the hotel, as more investors are looking to buy hotels on the cheap. However, investors could decide to hold onto the property and wait for the economy to improve rather than risk more money in a soft market. That could mean months or years before the hotel would reopen.

And until Lake Las Vegas can compete with the bright lights of Las Vegas or create a lucrative niche within the industry, it will always be a bigger risk for both investors and guests.

Photo courtesy of the Ritz-Carlton Lake Las Vegas