These are the types of stories that I drool over, because it demonstrates that even when things look bleak – there is still opportunity everywhere, especially in America.

In yesterday’s Wall Street Journal (Subscription Required), it was reported that the “W Hotels Division” of Starwood Hotels, the Related Companies and an unnamed casino operator are looking to provide the financing needed to purchase the Cosmopolitan Resort in Las Vegas, a $3.9 billion Casino, Hotel, Residential project currently under construction. For all who have not been keeping track of Las Vegas news – the Cosmopolitan’s creditor – Deutsch Bank – sent a letter of default to it’s owner, Bruce Eichner in January. Since then, Hyatt, which was supposed to manage and run the hospitality portion of the Cosmopolitan as the Hyatt Las Vegas tried to come in and offer refinancing for the project, unfortunately Deutsch Bank did not accept Hyatt’s financing offer and initiated foreclosure on the property.

So enter Steven Ross’s The Related Companies, and W Hotels. This is a great combination of two companies who both want one thing – to gain an entry to Las Vegas, something both firms have made major attempts to do, yet have not been able to do. Does anyone remember Las Rambles? The huge condo/casino/retail project “backed” by George Clooney? Well, actually the project was being developed by the Related Companies and its size was almost going to rival MGM City Center, but in June 2006 the project was cancelled, and the land was sold to Edge Resorts – who was building the W Las Vegas right next door. Initially Edge intended on using the newly purchased land to expand their W Las Vegas development, but in May 2007, W dropped out of the project, and thus it was cancelled. At the time it was abundantly clear that W Hotels wanted to be in Las Vegas, but the timing was just not right. I didn’t expect that W Hotels would be making an appearance in Las Vegas until work started on Starwood’s Westgate property in a number of years, but due to the market conditions – it sounds as though W might be here a lot faster – perhaps as soon as early 2009.

If this purchase goes through – it’s an unbelievable coup for Starwood & W Hotels compared to the original W Las Vegas’s Harmon Road location. W Hotels gets PRIME positioning on what will be an even busier Las Vegas Strip (the Cosmopolitan Resort is wedged in between between The Bellagio & MGM’s City Center).  Not only that, but it’s a partially completed project – (I believe steel has already been raised approximately 10 floors), with a number of its condos already sold, giving W a quick, yet still stylish entry into Las Vegas, while simultaneously giving Hyatt yet another let down in getting access to Las Vegas. For what it’s worth – I always thought the Cosmopolitan was too stylish and contemporary for the Hyatt brand – maybe not Andaz but there was never any word on the project being an Andaz.

Due to the project being under foreclosure there is an urgency for a deal to be consummated soon. I’m sure we’ll hear in the next few weeks (if not this week) that a deal has been reached. This is a project that I know Starwood & W Hotel’s wants, I hope they can seal the deal.

andrew@alconic-inc.com