Fontainebleau Las Vegas Files for Bankruptcy

Having just returned from a vacation to Las Vegas, I'd have to say that there were plenty of people visiting this playground for adults.

On Tuesday, the still incomplete Fontainebleau Las Vegas filed for Chapter 11 bankruptcy. The 3,900 unit was unable to secure the financing to finish construction. This comes just after the completion of a 1 Billion dollar renovation to their world famous Miami Beach location.

The lenders claimed the Fontainebleau was in default. However, according to developers of the resort, the company did not default on its contracts. Fontainebleau is currently suing its lenders in the U.S. Bankruptcy Court in the Southern District of Florida, Miami, where it has filed for bankruptcy.

According to the owners of the Fontainebleau Las Vegas project, eleven lenders had promised $800 million in revolving credit, but were not providing access to the money. Their claims include that Deutsche Bank, one of their lenders, may be protecting another resort property that the bank may own, scheduled to open in 2010.

With some areas of Vegas reporting real estate declines as high as 64%, the strip is not exactly feeling the pinch as hard as some suburbs. Reports of people struggling to make ends meet being all the rage, some believe that trips to Sin City are out of the question.

Having just returned from a vacation to Las Vegas, I’d have to say that there were plenty of people visiting this playground for adults. There were a few obvious signs of decline, for example the days of Vegas attracting the family for vacation is over. Honestly, there are cards of nude women all over the streets of Las Vegas, so how can one truly consider this a family destination? If you have never been, these women are peddled, mostly by Hispanic men in the street, tapping the cards that are slightly larger than a business card and handing one of these “hot babes for hire” advertisements to everyone that walks within reach. These cards wind up all over the tourist traveled sidewalks along the strip.

Ballys and Paris were constantly abuzz with action and people, the VooDoo Lounge even with its $20.00 cover charge still had a waiting line to get in and I heard many people say the Venetian was so crowded it was difficult to get around. Four of our friends went to catch a show at the Bellagio and it was so crowded they couldn’t find a quick place to grab dinner.

The best buffet deal we found was a two-for-one coupon at the Monte Carlo, but sadly yes, this casino and hotel was dead. We also walked through the Mirage and many of their tables and slot machines were roped off or closed.

So when times get tough, it is time to offer up some deals and some outstanding customer service. Though we received a great rate at Paris, the customer service at the check in counter was horrible! And with no coffee pot in the room, the local Walgreen’s likely has trouble keeping them in stock. I have no complaints about our room and housekeeping was outstanding.

Is Vegas a prime real estate investment opportunity? Perhaps if you want to invest in a vacation home or condo it just may be the time to buy. Many of the hotels are converting dedicated floors to condos and the time share pushers are pests when you walk through the shops or on the strip. We were aggressively harassed when trying to grab a bite to eat at Fat Boys.

There was a very interesting resort being constructed in the middle of the strip with contemporary buildings of glass and many unusual angles that was absolutely huge! One can only wonder where that money is coming from!

So if the banks have simply shut off their lines of credit to the Fontainebleau, how different is that from casual consumers having their credit card limits arbitrarily reduced? Those of us that want to enjoy a vacation out of town are finding great deals, and you don’t have to look very hard to find them.