Home » VT News » Penn National Buys The New Tropicana of Las Vegas A DoubleTree By HIlton for $360m

Penn National Buys The New Tropicana of Las Vegas A DoubleTree By HIlton for $360m

By Chuckmonster on Wednesday, 29th April 2015 9:31am
  » filed under Mergers & Acquisitions  comments: 8


Penn National, owners of M Resort have entered into an agreement to purchase The New Tropicana Las Vegas A DoubleTree By Hilton from the partnership of Alex Yemenidjian and Onex Partners for $360m. Finally, Penn National has a property ON the Las Vegas Strip to call their very own. If you post a comment that M Resort is on The Strip, a virtual wedgie is yours.

Onex said at the outset that their partnership with Yemenidjian was created "to pursue opportunities in the currently [2008] out-of-favour gaming sector." A year later, the bought the Trop for a song.

Toronto, July 2, 2009 - Onex Corporation (TSX: OCX) today announced that it has, together with Alex Yemenidjian, acquired a majority equity stake in the Tropicana Las Vegas Hotel and Casino following the property’s emergence from bankruptcy protection on July 1, 2009. Under the terms of the plan of reorganization, all secured debt holders, of which Onex was the largest, received 100% of the equity in the resort property. Effective immediately, Mr. Yemenidjian, former President of MGM Mirage and Onex’ partner in the gaming sector, has been appointed Chairman and Chief Executive Officer of Tropicana Las Vegas.

Onex Partners & Yemenidjian bought the aging and dilapidated Tropicana in 2009 by taking over $440m debt defaulted on by previous owner Columbia-Sussex, who purchased it and other Tropicana Entertainment holdings from long time owner Aztar Corp for $2.1B (yes, billion) dollars after a massive bidding war with Pinnacle Entertainment. Onex purchased 61% of the property at a cost of $137m with Yemenidjian (and others stakeholders) getting the other 39% at a cost valuation of ~$87m. Together, Onex and Yemenidijian invested $160m to renovate the entire property to "restore its former glory." The end result was a sparklingly clean summer white South Beach theme. Another $100m thrown in to finish the pool, nightclubs, the Tiffany Theater and other projects shortly thereafter.

The initial reaction to the rebranded and renovated Tropicana were positive, with Tropicana garnering mostly good reviews and even capturing a handful of 2010 Trippies readers poll awards.

That new casino smell didn't fully translate to door busting business. Tropicana's attempts to break into the night/day club business proved fruitless with three operators trying and failing to transform a great pool into an insane one. Second and third tier headliners have come and gone over the years with little fanfare or remote whiff of staying power enjoyed by Trop's legendary production show Folies Bergere (hint). Some vanished into ether before laughter at their announcement subsided.

Tropicana's marketing has been fraught with weirdness for the last few years - offering holiday deals every March and annual elongations of their name in the age of social brevity.

The New Tropicana Las Vegas a DoubleTree By Hilton.

This acquisition leaves the proposed Phase III plans, particularly the stunning retail expansion in doubt.

VT superfriend JohnD called it in a comment posted on October 30, 2012:

"Maybe Yemenidjian is looking to bail."

Buy low, sell.... uhm... higher?

Tagged: sayonara   tropicana   alex yemenidjian   onex   penn national   


Comments & Discussion:

Any news on if it will remain a Hilton property?

Penn has a rolodex, they don't need Hilton to fill the joint. I'll guess the deal stays in play until the end of the contract and won't be renewed.

So, the Trop can be Penn's mass-market strip property, and the M Resort can be the more upscale one then... Seems like a reasonable level of differentiation, and they can revert to the old "Tropicana" branding without the ultra long name.

Plus, a new company on the Strip = intensified competition.

Anyone else think someone like Sammy Haggar would be a great headliner for the New New Trop?

When I first started coming to Vegas I couldn't wait to walk thru the Trop because it was dingy. The place got sold, cleaned up and I took a shot at staying there and found that liked it. The dining options sucked and the many attempts to make it a club destination seemed like the new owners didn't have a clue on what their clientele was. It is a clean, non expensive place to stay at. The elongated name should be the first thing to go and the retail plan may still happen but I will say that the place came back to life once new owners came in.

My guess is Penn will do fine with the property, it really shouldn't be hard. Utilize their player base to fill the rooms, ensure there are 2-3 solid restaurant offerings, casual, upscale, and mid tier and upgrade the slot floor and then just market the heck out of it as a plus mid-tier property. I.e the 201x's version of the 90's Flamingo Hilton.

The old, old Trop was my first Vegas hotel. They say you never forget your first, and how could I, when the rooms still had those low, mirrored ceilings?

I went back in 2011 after the renovations and loved the new room(s), standard pool, upgraded sports book, and accessibly-sized gaming floor. With all that, I could overlook the lack of foot traffic or energy on site.

But Trop was among the first to charge resort fees (which, at the time, I successfully got reversed because the post-renovations gym, part of the pool, and other features weren't yet complete). And I was miffed that Trop ditched its poker room (that said: other poker rooms closed or shrunk soon after). And I didn't get the sense Trop catered to gamblers, or at least me and my low-rolling ways.

I still don't know why not one, not two, but three day/nightlife companies failed when they were (and are) so popular everywhere else in Vegas.

Anyway, I hope Penn can inject some life into it. You never forget your first.

Since I stayed there back in March of 2011, the only times I've set foot on the property was to access the pedestrian bridges when going between the MGM Grand and Luxor. The room was nice, but I ended up across the street at MGM Grand, and the dining options were lacking. A few trips since then, I have looked at staying there again, but ended up at a nicer property at a cheaper price.

While Penn National does have plenty of experience running casinos across the country, a casino on the Strip is an entirely different animal. M Resort has been a good way to dip their toes into the Vegas market, as it skews more towards the locals crowd than the Strip properties. I fully expect a revamp of the restaurant options, and hopefully some additional options.

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