Like Wagner, Resorts International isn't a household name in Las Vegas. Resorts is a new holding company created by Los Angeles-based private investment firm Colony Capital LLC. Colony created the affiliate to own and operate its six casinos, including Resorts Atlantic City, Las Vegas Hilton, Atlantic City Hilton, Resorts East Chicago, Resorts Tunica and Bally's Tunica. Colony purchased the latter four properties for $1.2 billion from Harrah's Entertainment and Caesars Entertainment this year prior to Harrah's buyout of Caesars. Colony bought the Las Vegas Hilton, the corporate headquarters for Resorts, from Caesars last year for $280 million.

You competed against Harrah's Entertainment when you worked for Jack Binion's Horseshoe Gaming company. Now you work for a company that bought some casinos from Harrah's. As an outside observer, how effective is Harrah's -- now the world's largest casino company -- at marketing and cultivating customers?

I loved competing against Harrah's when I worked for Jack (Binion). Our personal relationships, our odds, our limits, the way we did business, our liberal dispensing of comps in a very personal way, it was very easy to kick their butts in the three markets where we operated. I never gave their Total Rewards card much credit for competing against the Horseshoe as one property competing against another.

Not until I came to work for this company did I see the power of the Total Rewards card and how it can distribute business from one location to another, by design, by incentives calculated by mathemeticians. I saw how they moved business from the properties they had owned and sold to us.

It also demonstrated to me that if Harrah's decides to sell future assets... the next buyers have got to look at our model and say we can't pay that kind of multiple. Because the Total Rewards card fed in 20 to 30 percent of the business. When we buy that asset from Harrah's, we've got to pay a lot less money because (the property) doesn't have a total database of its own. An awful lot of it is force fed. This is going to be a real impediment for Harrah's when they want to sell off underperforming or unwanted assets in the future.

Does that mean Colony overpaid for the Harrah's casinos?

(Colony) probably underestimated the effects of Total Rewards on their ability to distribute business to and from their casinos. And now with 50 (casinos) instead of 28 or so that they had before, it should be even more effective. It's a distribution system.

Harrah's service is not near what it used to be back when Bill Harrah was around. It's become, in my opinion, a very canned kind of company, but it works fine for them. When you have a great big company like that you have to have a system to monitor it. You can't run from property to property like Jack Binion did. He'd eat in his buffet in Chicago in the morning for breakfast and his buffet in Tunica in the afternoon. He was around his properties seven days a week and he was in each one of them at least a week each month.

When you have 50 properties you're lucky if you can get into each one of them once a year if you're the boss. You've got to operate them differently. That is where a little company like ours has an advantage in the long run, as did Horseshoe. We can be agile.

The Las Vegas Hilton has been a troubled property. It was involved in a well-publicized lawsuit filed by Silverton owner and potential buyer Ed Roski accusing Caesars of driving away high-rollers while it was up for sale. Has business improved at the Las Vegas Hilton since Resorts purchased it from Caesars Entertainment? What is Resorts doing differently?

Business has improved dramatically in the period of time that Resorts has owned it. It's a pretty well-known fact that (Caesars) shifted (customers) over to Paris and Caesars. On top of that it was for sale. It had been under contract to Roski, which fell through. And they did minimal maintenance on the place.

We've tripled cash flow since we bought it. Granted, it had a low base. It's getting its high roller base back. We have some work to do on our slot product. That's going to be enhanced when the floor is done. The new carpet is in place, the front door is completed. The sightlines in the casino will be much improved. You won't have to walk through a maze of slots to see the back of the casino. I think when the whole experience comes together, which will hopefully be around New Year's ... I think you're going to see customers respond to it very favorably.

The Hilton sits on a big site. Are you looking at future developments here?

This was the buy of the century. I wanted Jack Binion to consider buying it when the Roski deal fell apart. Unfortunately for Jack, (Resorts International Chief Executive) Nick Ribis and (Colony Capital Chief Executive) Tom Barrack ran in and snapped it up in the vacuum.

You couldn't replace this building for a billion dollars. The value of the land we sit on in this screwy marketplace right now, where properties are going for $15 to $20 million per acre for some of these Strip frontages. We have 50-some acres of undeveloped land (and a total of 59 acres). We're currently working with Colony Capital to master plan the entire site to see what can be put on vacant land, should we demolish some of the stuff we have and put something else there? We've got a lot of convention facilities that adjoin the convention center. That's good and bad. While it's a great adjunct, it's a great big wall between the people that are over there and getting over here (to the casino).

We are looking at all kinds of ways to stick our front door closer to where people are wandering around. Whether that means we'll build a boutique hotel right next to the convention center by the end of the property and knock something down I don't know. We haven't made any decisions there. We've got all kinds of opportunities here. We could put a special destination of some kind here. Do we put a World Market Center of some kind here to complement the new downtown commercial market and convention center? There's a variety of things we're looking at.

Lots of casinos are looking at building condo towers to generate more business, higher profit margins and to make more efficient use of their land. Is that something you might consider?

I don't know that we are that interested in condos. The first guy in made all the money on condos. I believe we are going to see a lot of these condo projects founder. (Barrack) has shifted a lot of his money in real estate out of the United States into foreign countries and believes there could very well be a condo bubble burst, especially at the high end. There's only so many high end people. So much of what we're seeing in Vegas right now we believe is fantasy. Some of the ones coming out of the ground are selling to investors who think they can spin these things off. The cost of labor and construction and the cost of goods, especially with the Katrina problem now, is going to put these developers in a position where what they sold them for today will not cover what it will cost to build them three years from now when they have to deliver the product. I t's going to be real problem for a bunch of them. Probably less than a third of them will ever get built.

How has the monorail affected business at the Las Vegas Hilton? Do you support efforts to bring the monorail downtown?

We've attempted to measure the value of customers coming in off the monorail. A lot of these people are tourists who don't like to get a player rating card. They're here for one trip. The ones we have been able to determine, who get off the monorail and do gamble, tend to be pretty much the same as the ones who come here for the first time and wander around. Most of these people are in town for one trip and you don't see them in town for another year or so.

As the traffic gets worse I think the monorail will be a very viable mover of people. When it is extended to the airport I think it will probably give a lot of stress to cab owners. We have the only (monorail stop) that's in the front of the hotel near the front desk. We're also the only non-Strip property with a monorail stop. The only way you're going to make downtown viable as a casino destination for masses that are coming here from afar is the monorail. It's not cheap to go downtown in a cab. Nobody wants to take the bus downtown if you're a visitor. I don't know that downtown will ever be a locals joint again. It's a matter of geography. People are relatively lazy. They are not going to go miles when they can go blocks to a casino to feed their desire to gamble.

Has Colony been looking at the Strip or elsewhere in Las Vegas for future development? Or do you think land has become too expensive for companies to justify building new properties?

The multiples have been going crazy. Colony paid eight times (the casinos' annual operating cash flow) for the recent four acquisitions and that is proving to be a bargain. Some of these deals are now going for ten times. I don't know where it stops. Jack was able to sell his facilities for eight times to Harrah's when three years prior to that he probably would have taken six-and-a-half times. I don't think he ever envisioned selling his company but he never envisioned Harrah's coming in and offering him eight times for it.

At some point prices may drop. We're in a position, with our affiliation with Colony that has billions of dollars in funds available, to take advantage of what Jack used to call a bird's nest on the ground. This may not be the best place for the next opportunity. There may be a spinoff we would rather buy from somebody in another location. The great thing about Nevada is, first, the growth is there, the dependency on gaming in relation to the total cost of doing business is less, the organic growth for a mature market is ... about 7 to 9 percent. (Developers are) counting rooftops that are going to be built that aren't there today. If you look at the multiples and project what the business will be like three to four years from now, maybe you can justify the price.

Who is the typical Las Vegas Hilton customer? Where do they come from and why do they come to the Hilton?

We've always had a great base of convention customers just because we're next door to the (Las Vegas) Convention Center. Rooms, food beverage, retail make up close to 60 percent of our revenue. We get less street traffic because of our location. We have a new player development initiative where we are seeking out international play, particularly from Latin America such as Argentina, Venezuela, Brazil. We're balancing that in with high-end domestic play as well.

We have a suite product in this tower that is as good as anybody's and is voluminous. We have a lot of suites. Even some of the suites that aren't as new as some of the stuff up at the top, there's nothing I'd be embarrassed to put somebody in. Once we get our 900 rooms renovated we'll be able to get our average daily rate up by $30 to $40. It will make a big difference.

How has the Star Trek attraction helped the property? Do you expect to continue indefinitely or does it have a shelf life?

I think its shelf life is burning like one of those stars that goes out. We have a few years left on the contract with Paramount (Pictures), where they come back with a rejuvinated idea for the future. We haven't had discussions yet. We're satisfied with what it's doing right now. We're not at capacity with our slot machines. The traffic coming through there is mostly fed right now by the monorail. I think it would make a great nightclub. But there's no decisions on that yet.

Signing Barry Manilow was a major move. The property has also hosted some major concerts. How important is entertainment to the property's success?

Barry is a huge marquee value for us around the country right now. This property being off the Strip needed something to use as a destination marketing device. He's been just great. The community is talking about Barry Manilow in the same vein as Celine Dion. I think entertainment has to be a mainstay for the Hilton out here for as long as we want to be in the entertainment business. Do we come up with some more resident entertainers? Hopefully we have a long relationship with Barry Manilow and it continues to not wear out. I think we have opportunities for lounge acts. We've been experimenting with some stuff there that's kind of unique. One man off-Broadway shows and things like that. We have a good list of entertainers that want to play the room ... when Barry is off.

Colony is a private investment company known for buying underperforming properties and then selling them for a profit. Does the company view gaming as a short-term or a long-term growth strategy? What are the primary factors that would trigger a decision by Colony to buy a gaming property?

I've been with them long enough to have gotten into Nick Ribis' and Tom Barrack's heads on what drove them to buy these (casinos). Everything's for sale. But the long term goals as I see it right now is to develop a larger gaming company. That's not to say that if somebody wanted an asset, and would be willing to pay a premium for it, or wanted to buy the company outright and pay a huge premium for it, that the owners wouldn't sell. I wouldn't be able to tell you if they would or wouldn't.

Are there advantages to being a private company?

We don't have to take an offer to shareholders or study it. We also don't have to worry about our quarterly earnings. If we want to do something that's disruptive that we think will help us in the long term we can do that without retribution from the stock price. Some of the things like we're doing, like the renovation at the Hilton, point to that exactly. Being private and being small and being decentralized allows us to do some of this stuff.

That was the great thing about working for Jack Binion. We bought the Empress in Chicagoland. We took a $14 million reduction in profits the first year because we decided to clean it up, do a bunch of construction, spend millions on training that in the short run was kind of an odd move to make but in the long run was the right thing to do and is producing huge profits today. If you build a company and put great systems in place, they also become part of the value of the company. At this juncture we're not looking to sell the company, we're looking to build the company.

Colony didn't buy into the Reno market when there were properties available for sale, instead picking up properties in other markets outside Nevada. What's your take on the Northern Nevada market and where it's headed?

I think Reno's going to be a tough market for attracting business from outside. I think it's going to be a great market for Stations to put a locals casino in the right location in town. They will provide the amenities that local people like. The current casinos in Reno don't do that, with maybe (a few) exceptions. I think Reno is going to be lucky to hold its own. The Indians are continuing to build casinos that cut Oakland and Sacramento and San Francisco off.

Would the company be interested in operating a locals casino in Nevada, either in Las Vegas or Reno?

I'm not certain that we would want a locals casino. I think if we were interested in another casino in Nevada it would be in Las Vegas and would be one that would help us reward our customers in Chicago, Tunica and Atlantic City with trips out here in the way Harrah's does with their Total Rewards card.

I think when people want to come to town they want to be on the Strip or very close to the Strip. I don't think there's too many things available to buy right now that would fit the description of something that customers would want to go to. You could buy the Riviera at a very inflated price. They don't even have earnings and they want a gigantic amount of money for it. The assets that probably make a lot of sense that somebody might be interested in are MGM's. I can't see them wanting to sell any of them. I'm not sure anybody wants to give up any assets either, except at a gigantic price.

Is the company doing any cross-marketing with its properties in the Midwest, South and East Coast?

We're developing our cross company player card. We're going to roll that out in the beginning of the second quarter. It's going to be Resorts Destination Club. We're developing it a little bit differently from the cards that are out there now, like Total Rewards. We hope it will be effective for us. We will probably still have six properties at that time so we will distribute business regionally in Atlantic City between the two and likewise in Tunica where we have two properties. For the most part I see people developing a bank of points that they can redeem in Las Vegas at the Las Vegas Hilton.

Liz Benston covers gaming for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at (702) 259-4077 or by e-mail at benston@lasvegassun.com.