The Fontainebleau in Las Vegas is having a difficult time finding solid ground. The project was initially begun 14 years ago before taking a break due to the economic crash in 2008 and 2009, which led to its bankruptcy. It was then picked up again and resold a couple of times before ending up in the hands of Fontainebleau Development this past February. The project, when finally ready, was expected to count on the support of Marriott International, but that is apparently no longer going to happen, either.
Marriott Walks Away from Vegas Resort
Marriott had reportedly agreed to work with the property’s then-owner in 2018 to develop the resort. It was going to put up $50 million in exchange for a stake in the ownership of the property, which was, at the time, expected to over a massive, 3,800-key hotel, a large convention area, a huge gaming floor and retail spaces.
According to the Las Vegas Review-Journal (LVRJ), Marriott has decided it will no longer be involved. The property was sold to Fontainebleau Development earlier this year, but it isn’t clear if that has anything to do with the decision. Fontainebleau is indirectly involved in Florida’s contentious sports betting and casino expansion debate, the outcome of which is still completely unknown.
A statement from Fontainebleau seems to indicate that it decided to cut ties with Marriott, not the other way around. The firm told the LVRJ that the resort’s hotel “will be managed and operated by Fontainebleau Development.” It added, “Having come full circle and taken ownership of the site in Las Vegas, we intend to fulfill our original vision and deliver the same extraordinary hospitality experience that our guests have come to expect from Fontainebleau Development.”
Fontainebleau Can’t Find Traction
At the time, in 2005, the Fontainebleau was going to be the next big casino resort to come to Vegas. Two years later, Jeffrey Soffer, the founder of Fontainebleau Development, and former casino executive Glenn Schaeffer started laying the foundation for the new property. Two years later, though, it was bankrupt due to the economic recession, and the property was sold the following year to billionaire Carl Icahn for $150 billion.
Fast-forward seven years, and Icahn made a nice return on his investment when he sold the property for $600 million to real estate firm New Valley and an established real estate developer, Steve Witkoff. That led to a deal between the firm and Marriott, in 2018, to partner on what would eventually be a reincarnation of the Fontainebleau as The Drew Las Vegas. At the time, the resort was expected to open in 2020.
That launch had to be pushed back to next year as financing for the project was secured. Witkoff was on the hunt for $2 billion in financing for construction, which he asserted at the time was almost secured. Enter COVID-19 and the project was once again halted.
That led to a lot of unpaid bills and upset employees, some of whom went after Witkoff in court over breaches of contracts. Soffer was then able to purchase the property once again this past February, in conjunction with Koch Industries, at which time Marriott indicated that it was still going to be involved. In the past eight months, something seems to have occurred that caused everyone to approach the resort differently moving forward.