February 4, 2008 • Source: GlobeSt.com
By Brian K. Miller
LAS VEGAS – The Siegel Group Nevada Inc. has acquired the seven-story, 112-room Gold Spike Hotel and Casino here for $21 million. Combined with the adjacent 58-room Travel Inn it acquired in August for $5 million, the non-restricted gaming site gives the company 1.5 acres located one-half block off the Fremont Street Experience, the pedestrian-only, canopy-covered Downtown entertainment corridor that attracts some 20 million people annually. The properties also sit adjacent to a new downtown condominium tower, the soon-to-be-renovated Lady Luck Casino and Fremont East, the city’s burgeoning nightclub district.
The Siegel Group president Stephen Siegel tells GlobeSt.com that he is master planning the chunk of Downtown as a single hotel-casino. Short term plans include a complete renovation of the hotel-casino and the adjacent Travel Inn into a single resort. Siegel says he has $3.5 million in financing lined up for the first phase of the renovation. Longer term plans include additional structures that will expand the gaming, hospitality and retail components. The other half of the block is a parking garage owned by the City of Las Vegas.
“We are young guys that are very hands-on with tremendous energy and new ideas and we are 100% committed to transforming the Gold Spike into one of the hottest hotel-casinos in Downtown Vegas,” says Siegel, 37. “While our immediate focus is to operate the property while making much needed capital improvements, we are also focused on taking a lead role in the revitalization efforts that are occurring, helping to clean up the surrounding area and attract further investment.”
With offices in Las Vegas and Los Angeles, the Siegel Group has been buying up hotel and apartment properties in the region over the last couple of years and converting them into its Siegel Suites brand of flexible stay apartment properties. Its regional portfolio now totals well more than 2,500 units, Siegel executive Michael Crandall tells GlobeSt.com.
These last two acquisitions, however, are its entry into the gaming business, Crandall says. It partner in the gaming venture is John U. Tippins IV, who with partners like the Siegel Group is one of the largest landowners in Downtown Las Vegas. Tippins also is the owner of Northcap Commercial, a commercial brokerage company.
The same month the Siegel Group acquired the Travel Inn, developer Greg Covin tied up the Gold Spike, saying he would acquire the property for approximately $16 million and invest an additional $10 million in a renovation of the property. Instead, he acquired the asset and flipped it to Siegel and Tippins, who were willing to pay a $5-million premium in order to assemble the full half block, increasing the long-term value of both assets.
“We paid a lot of money but with the renovation and the renewed energy and what we will bring to the table in the way of marketing and promotion, we will create a lot of value,” Siegel says. “In the long run it’s worth it.”
Built in the 1980s, the Gold Spike had a very loyal clientele until the owner that preceded Covin made changes that included the removal of the table games, Crandall says. That combined with deferred maintenance prompted regulars to drift toward El Cortez, a similar budget-oriented hotel in Downtown that recently underwent a renovation.
“We want to win their business back,” he says.
The Gold Spike will be renovated over the next 12 months. At the top of the list is the casino area, which will get new flooring, a new bar, a stage for live music, a pizza place and more. The lobby area will include a new check-in area, remodeled bathrooms and a new promotions booth. The exterior will be fully refurbished, the surrounding sidewalks and parking areas will be improved and new signage will be added, including a large video board similar to the one recently added to the El Cortez. The hotel rooms also will be renovated with new windows, new paint and carpet, new fixtures, etc.
Unlike Covin’s plans, the property will remain open during the Siegel Group’s renovation with room rates ranging from $65 to $80 per night. A third-party will operate the Gold Spike casino until Siegel and Tippins can obtain a license to operate the casino on its own, a process that could take a year or more.