The next big thing
As the opening for the world’s tallest climbing wall approaches, developer Fernando Leal discusses his other plans for CommRow
There has been a lot of talk about CommRow and its 164-foot outdoor climbing wall, which is slated to open Oct. 1. Fernando Leal, whose company L3 Development rehabbed the Golden Phoenix into the Montage, has also generated a lot of discussion, with opinions about him ranging from blowhard impresario to Reno’s newest “savior.”
In this interview, Leal, 45, talks about plans for the old Fitzgeralds Casino-Hotel that have not garnered the headlines. Leal envisions an operation that will attract both tourists and locals with restaurants, indoor climbing and bouldering, music venues and bars—but gambling will have no place within the business.
Much ink has been generated regarding the climbing wall, but people really don’t know much about what’s going on inside. What is your strategy for the interior amenities?
Really the strategy was to aggregate everything that I was attempting to do in downtown Reno prior to the recession. I worked extensively on ReTrac, and I was involved in the design of the covers and making sure that there was infrastructure installed to put 30,000 square foot of outdoor retail on those two blocks. As you probably read at the time, I had a signed lease with [restaurateur] Ruth Chris, and we had a deal with Lucky Strike Entertainment to convert the Fitzgeralds into a Lucky Strike Hotel. So what CommRow is, basically, is it’s aggregating all of those concepts, but sort of looking at this as post-enduring the great recession and continuing to move our vision forward. So the shops that were on the ReTrac are now inside on the first floor and the second floor. There’s going to be four food vendors, there’ll be food that I describe as “we’re going vertical within vertical markets.” So if we have Mexican food, it’s a very specific Mexican dish, so it’s a specialty. We’re not trying to go toe-to-toe with all the great Mexican restaurants in Reno and offer a full, broad-based Mexican menu. We’re not doing that with sushi, we’re not doing that with any of our offerings. Our idea is for you to come in, and have as many circuses—which means you are there for the environment, the energy, the vibe—and the breads just happen to be kick-ass, as well. And the food is right up to par. You’ll go “Wow.” The food is designed to be short menus; I won’t use tapas, and I won’t use small plates because they’ll be full portions. But all the menus have been designed to be four or five items, all will be priced approximately under $10, so that you can get a full meal, and something where we can do a lot of volume. You can get in and have a little of this and a little of that, without it being a food court. The biggest challenge initially is anytime you have too many food venues based on the size and also how close they are to one another, everybody wants to label it a food court. This is not a food court. Each place will have its own identity, its own menu, its own servers, its own culture. It will be as though you and I are walking down a busy street in L.A., Chicago, and we saw some great street food, and we looked to the left, looked to the right, and we saw a great little shop, a little store, a little bar and said, “Hey, we’ve got to go there tonight.” That’s what the concept is.
What types of food?
We’re going to be doing a Mexican theme. We’re also going to be doing a Grecian, Mediterranean theme. We’re going to do a Chicago Italian beef stand—which I’ve wanted to do since I arrived here—and we’re going to do a place called Tartar Bar, which is going to specialize in four or five different tartars. Just kick-ass presentation, great wontons, or you can serve it in a handroll. I’m very much into the presentation side, and making sure everything is very clean and the customer service is absolutely top-notch.
What other amenities inside? Bars? Nightclubs?
When we say “nightclub,” we view them as … First of all, going back to the strategy. Strategy for me is I believe in development that really helps to self-govern an area, and help with gentrification. The more people, the safer an area becomes. My goal here—and somebody in another article finally hit on it—but CommRow, yes, it’s Commercial Row, but it’s really about Community Row. So we wanted to cast a very wide demographic net so that we can bridge the three areas in Reno that we think have yet to be bridged: The university, the locals, who don’t participate in any activity downtown, which I describe as the people who live south of Plumb [Lane], and the tourists, because I don’t think we can disrespect the tourists and what they do for this economy. On the first floor, we have two specialty bars; one will be a tequila bar with over a hundred different tequilas. One bar will be a whiskey bar, sort of speakeasy that’s going to pay homage to old Reno of the ’60s. You know, Fitzgeralds and the history of it. A real sort of nostalgic honor to what this property in this area stood for. The first floor we also have a sweet treats that will be serving ice cream, all kinds of popcorn with many types of flavorings. It’s really designed so that when you come in, you’re going [to see] all kinds of stuff. I tease the staff; I tell them we’re creating a melting spot. I want it to be as diverse as Reno is. The first floor is really designed for that, there will be places that are sort of designed for girls’ night out, but they’re all sort of viewed to have their own energy and freedom of expression. That’s certainly what attracts me to Reno, the eclectic nature of our populace.
Now, you said there is a nightclub.
Yes, there’s two. I wouldn’t describe it necessarily as a nightclub. The first floor is going to have a live music venue that’s going to serve as a lobby bar. One of the things that we’re going to be doing—understanding that Reno has a very, very long winter, as it relates to occupancy of the neighboring hotels, and tourism overall—what we’ve done is we’ve created a business model where on the first floor we may close some of the venues two days a week, basically to keep overhead down. But then we’ll use the first-floor live music venue, which has capacity for about 150 people, as sort of a lobby bar, a place where you can still get the food that you would normally get, and really serve as a showcase of local musical talent. We’re talking to people who are everything from people from within the Reno Philharmonic to local, regional and national singer-songwriters, local bands, but we really want to make it a place to showcase local musical talent and also introduce some consistent regular programming. One of the things we’re thinking about is Sunday Reggae Night. And sticking with it and knowing that Sunday night—the name of that facility is Centric—Centric’s got great reggae. Buy into a concept, and stick to it long enough to gain traction.
What other amenities inside haven’t people heard about?
The focus has been on the climbing wall. Quite frankly, that’s given us a tremendous amount of cover and limited our distractions to do what we want to do inside. I always view the climbing facility as the anchor. I needed to figure out a way to make a strong statement that this building was departing from the traditional business model of casinos. So the climbing wall was my statement to say, “This is no joke.” But the climbing wall is only one component, and I think that given all of the programming that we have evolved internally, with the live music venues, with the marketing strategy, and with what we plan on offering at the hotel as an aggregator of all things outdoor and all things good of Reno, I think that the climbing facility—I don’t want to say it will fall in the background, it will always be our anchor—but I think less emphasis will be put on it when people walk through our doors on October 1.
You’re not going to have any gambling at all?
What is your out-of-market marketing strategy for the world’s highest climbing wall? Do you talk to people in Europe, just the West?
I think that one of the things that people focus on because it is the low-hanging fruit is the height of the wall. I have now spoken to many of the top climbers in the world. What intrigues climbers is not that it’s the tallest wall. Climbing is a very sophisticated sport that’s been around for a long time, and there are many different types of disciplines. What they like about the climbing wall: The height of it is really cool, the fact that it’s in an urban environment allows everyone to be Spiderman Dan without being arrested. They love all that. But when they get down to the hardcore climbers, they look at this, and they say, “There are so many disciplines that can be practiced on this wall.” So this wall will have multi-pitch climbing—which means you can climb to one level, traverse to another level, climb to a higher level, traverse to another level and keep going. That is unheard of in a climbing facility with a climbing wall. The other is because of all the different disciplines of climbing; we will have a speed wall. I always describe it as analogous to skiing. Saying that all skiing is the same would a real disrespect to skiers who are telemarkers or if they practice downhill or if they practice freestyle. So this wall is really designed by experts for experts, with the ability to modify it to accommodate people who have never climbed. But it is also designed to accommodate climbers of all disciplines. Right now, we’re going to be working with Mark Wellman to try to put an adaptive program. He’s the famous paraplegic climber who did El Capitan. This is designed to really facilitate usage, and welcome usage, from the entire climbing community. And the fact that it’s in downtown Reno, and the fact that it’s in an urban environment, and the fact that this thing has lights to light it up at night so people can climb at night. That’s all massive pluses to them. But that’s what really excites them—the word that I kept hearing is, “This is truly ‘Legit.’”
So, as far as marketing to faraway places … to attract these people. Is this big enough that it’s going to be word of mouth?
Having just returned from the Outdoor Retailers show in Utah, there was an incredible buzz throughout the whole facility about CommRow in Reno. I eavesdropped on many conversations where people didn’t know who I was, or that I was affiliated with it. A lot of it was initially incredulous, like, “Is this really gonna happen?” It was followed up by, “Dude, it’s happening; look at their website, look at the pictures, look at what they’ve got posted on Facebook.” So I think word of mouth is going to be tremendous, but I’ve already started meeting with national associations. Next year, we hope to hold three national championships—not only in CommRow, but in downtown Reno on the ReTrac plaza with participation from the casinos. And combine bouldering with slacklining, what I call the “new urban gymnastic of hard-core.” We’re designing this, and I’m meeting with people that understand that climbing needs to be viewed as entertainment. We will be hosting shows as early as next year, and probably announcing something as early as November that will be three national competitions in downtown Reno.
What are your plans for the parking garage?
The parking garage is being painted as we speak. My goal is to first honor my commitment of getting the garage open, and so we will have the garage open by October 1st. Prior to Fitzgeralds closing down, when we lost our tenant, we had invested a tremendous amount in the parking garage with proper lighting, we made a lot of improvements, and we plan on continuing it, but what we hope to do is announce a phase two of CommRow, which will put a one-acre urban adventure park on the top of the parking garage.
And what will that entail?
All of this will be contingent on us getting the support of the Planning Commission. We will be going before them with a proposal for a special use permit probably in November, but our goal for the rooftop is to take the one-acre pallet that has unobstructed, beautiful views of downtown Reno, and because of the railroad corridors of the mountains, and to basically put a seasonal restaurant in the northeast corner overlooking the climbing facility. Put a small music venue up there, an outdoor bouldering facility that will complement what we’re doing with our anchor here at CommRow, but what we’re really excited about is to put an urban skatepark and also a BMX park up there with grandstands and viewing area—parentally supervised without cramping the kids’ style. A place where kids feel safe and parents feel that their kids are safe. Supervised so that there is that freedom of expression without intimidation. Without releasing any names, because I haven’t signed contracts with them, but we have some of the top designers of those types of parks in the world working on those plans. That’s on the rooftop. We’ve been approached for occupying the floor below by a group of retired Navy SEALs that are looking to put in urban airsoft. Urban airsoft is sort of the new paintball without the mess. We have been receiving offers to convert one of the parking floors. We’re looking to do stuff that complements what we want to do on the rooftop. My wishlist is also to have ziplines that will come off of the roof onto the ReTrac that can be removed as needed. But again, this is about fun. This is about really drawing a different type of audience who will go, “This is really cool.” To really make a statement.
You’re opening the first phase in October. What kind of timeline are we talking for really starting Phase 2.
Hopefully we’ll go in front of the Planning Commission sometime in November. If all goes well, hopefully, we’ll be announcing next spring to initiating Phase 2 of the parking garage. Again, a lot of that is contingent on how we do with CommRow and the traction that we have and making sure that we’re achieving all of our goals with the environment we want to provide, and the customer service, the product quality, everything. That we honor our commitments to the community and to CommRow and to our clientele that we want to establish, before we spread ourselves and move on to the next venture.
I think this has been talked about in other media, but what are your plans for the hotel rooms?
What we’ve done with the hotel rooms—and it’s funny, I just made reference to an editorial that you had, and you made reference to something, and you hit the nail on the head. What we’ve done as it relates to housing, we will start upgrading rooms on floors five through eight, immediately after completing the opening of CommRow, the first three floors. What we’re looking to do is basically introduce a no-frills chic, a people- friendly hotel. “Of course, your dog is welcome, are you well-behaved?” That’s sort of the running mantra internally. In some places, dogs and pets humanize people. We want this to be a place where people come here, not because of how much we spent on the wallpaper. We want to offer really kick-ass bedding, great towels and clean bathrooms. We’ll probably have the oldest, most dated wallpaper in Reno. But that’s not why they’re staying here. They’re staying here because of the vibe, the energy, the feel. Really, we think is a model that’s been successful all throughout Europe and is spreading all throughout the country, and especially in a place like Reno. People shouldn’t be in hotel rooms. People should use that as a place to lay their heads, but they should be out exploring. What we want to do is provide something that is a great place to sleep, very reasonably priced in a non-gaming, non-smoking, non-whining environment. Totally welcoming four-legged family members.
And is there a Phase 2 to that?
We’re going to initially start by opening up four floors of the hotel. We’ve modified the mechanical system in the hotel tower to enable us, without affecting any of the life-safety issues, like fire sprinklers, to pretty much shut down the top half of the tower, but to be able to reopen it on a needed basis. We all know there are weekends where Reno is sold out, like Hot August Nights; we’ll have the ability to open those up. But what we’re exploring is, we’re exploring student housing, we’re exploring for the winter seasons, we’re talking to several ski resorts about housing their seasonal workers who are coming from all parts of the country. We’re investigating that because we want it to become a very young, youthful environment, without it becoming sort of an “animal house.” And that’s a very fine line that we have not invested the time to determine whether it’s feasible. But we really think there is a need for affordable, studio-type housing, whether it be for students, non-students, seasonal workers in an environment—you know what we’re hearing over and over is they work at these resorts, and it starts to become like The Shining because they spend so much time there, with so much snow, and it’s so difficult for them to basically acclimate. And that affects everything. It affects employee satisfaction; it affects customer service, which affects retention rate, which affects costs of retraining. We are very excited about the opportunities. We think 351 hotel rooms for a property is too many. But we think there is a nice hybrid that will still allow us to offer a hotel component but explore other interesting housing opportunities.
How many positions are you hiring for, and what kind of jobs are you looking at?
We’re pretty much hiring the full spectrum of jobs in food and beverage—from servers to sous chefs to bartenders to hosts to you name it. We’re hiring the whole gamut. We’re hiring some administration assistants, accountants, valet personnel, security personnel, everything that you would expect in a full service hotel.
How many positions?
We think that the total amount will be somewhere between—it’ll fluctuate with seasonality—but it will be about 100-plus positions.
Do you think that this urban adventure concept will be something that the rest of Reno can kind of piggyback on as an idea? Kind of like Ashland has its Shakespeare festival. Many cities have a personality. Do you think this is the one for Reno?
Wow. Without sounding too self-serving; I think it’s a natural. I can tell you that speaking with some of the owners of the largest properties in Reno, all of whom have expressed tremendous support and, more importantly, interest in talking about how we can do something together. And that’s not just limited to the adjacent properties. I think they’re very excited about it. Number 1, it’s one less competitor in the market for them—let’s be very candid about that, but Number 2, I think that everybody likes the freshness. The thing that I’ve heard that gives me real hope that this is making people reassess their offering and Reno’s position in the marketplace is “Us losing our clients to a facility like CommRow will help us basically diversify our offering and help us retain and get that customer back.”
It’s more of a partnership than a competition.
It’s more of a partnership. So I hear over and over, “We have so many guests who come in with kids who are not just adolescents, but kids that are too young to gamble or go to bars, and they’re very limited in what they can do. They view that CommRow gives them an ability to basically say, “Hey, here’s a ‘their’ place. You’ve got to go there. Go check out there.” And even if they’re staying at the other property, they feel that it will give them an overall retention rate.
Can I talk to you about how we’re marketing? Because this is really important. Our marketing strategy is going to be heavily skewed on investing on people, groups and organizations that are investing their sweat equity and their dollars into making Reno the type of community that we all want it to be. In Chicago, there’s a sport called “16-inch softball.” Everybody in the spring plays, every park is filled with teams playing 16-inch softball. And every one of those teams is sponsored by a local bar, restaurant, whatever. They even fight to sponsor the teams. We want to be that place that sponsors all of the different groups and associations. Whether they be athletic, whether they be eco-friendly, whether they be tourism-based, it doesn’t matter. We’re doing this because we want to convert this to their community center. We want them to keep us in their thoughts when they’re looking to meet, eat, play or stay. Our marketing strategy is going to be dependent upon investing in the community where we see organizations that have volunteers. For a town the size of Reno, I’m amazed at the amount of groups and organizations, from the Holland Project to the SPCA and the Wounded Warriors and all of the different organizations—we want to be the go-to sort of partner.
What is your plan for the mercantile building?
My plan is to salvage that building at all costs. We hired an individual to do an historical background on that property. That property dates back to the 1860s. It is, in fact, the oldest building in Reno. Unfortunately, it has been vacant for decades and it is in dire need of some significant structural work. Our goal is basically to put that building back in service, but really with taking very careful detail to try to preserve it and restore it to what it was back in the 1860s.
What we talked about last time was, I think, you were going to take out Old Reno—that building is going to be gone?
No. Since the announcement of CommRow, we’ve been contacted by people interested in leasing all of our surrounding property. What we envision as a great use for the Old Reno is that somebody would lease the old Mercantile from us, take the Old Reno from us, open up the west wall of the Old Reno, which would give access to the Mercantile building that could provide a great indoor/outdoor/patio/live music venue. We’ve had people that ran the gamut. We really view those two properties, from a developer’s point of view, we really think that those two will need to be developed in unison to complement one another.
The last time we talked, it was about primarily saving the fascia on Commercial Row and Sierra. Is the building now going to remain structurally sound—four walls and rooms? We talked about a beer garden, as I recall.
Exactly, an indoor-outdoor facility. The first thing that needs to be done is to address all the life-safety issues. To make sure that building is safe to occupy in any capacity, that’s first and foremost. But then what we would look to do to restore that building is if you look at the old photographs, there are very beautiful window openings. Also if you take a close look at that building, there were slats that come off where there was a large deck, and there were hitching posts. And what we would hope to do, hopefully with the support of all the preservationists in Reno that have expressed their support in doing anything to assist in the preservation of that building, is to basically restore that, and build that upper deck and build those hitching posts and reopening up those windows and take out that masonry. Really what is of historical value of that property is in fact the façade.
So are you still thinking beer garden? If you lease the two then you have the choice.
And beer garden I think is really an oversimplification. We have had people—and I don’t want to breach anyone’s confidence—but we have had ideas ranging from a theater, a very small live music venue. It’s run the gamut from an art gallery to sort of a museum theme with artwork from Reno but with a for-profit type venue be it a restaurant or bar. It runs the gamut. Having so much experience in development and construction, I really believe that when it’s all said and done, that the person that we’re looking for, the type of tenant that we’re looking for the Old Reno, and the people that we’ve spoken to, view it as an extension of their dining facility where they want to offer all of those things in conjunction with their anchor that would be at the Old Reno.
That sounds like a Silver Peak-type situation or a Great Basin Brewing operation.
To even be put in the same sort of description as those great places, that’s exactly right. And that’s the type of people … Those properties have been vacant, and we’ve been sucking wind on those being vacant for so long that now that we’re getting a tremendous amount of interest, we’re being incredibly selective about the tenant. We want to make sure it’s somebody who understands our community, that’s committed to the community, that really understands the overall goal of what we’re trying to do to contribute to downtown Reno.
I haven’t heard a word about that. You say there’s a lot of interest, but I haven’t seen a word about it. That’s why I think it’s so cool.
You don’t see any signs up there. I’ll show you something right now. [Shows a private email.] This is the kind of stuff I get every day.
I wrote an editorial about three weeks ago asking our readers what the next big thing would be. I specifically mentioned movie screens and festivals.
I was going to ask you a little earlier if any of your venues would fit into that.
One hundred percent. We think that the third floor is a wonderful place to have an independent film festival, small, boutique, short films, local. Sky Tavern just did one very successfully two weeks ago, and we’re in talks with them about possibly doing it here next year. But we think that that venue is a great place to do that. But this is the type of stuff I get. So I called her up and told her about the issues, and she’s, “I’ll bring my architect, I’ll bring my contractor.” So that’s what she’s doing. So now they’re coming. We’re always willing to take a look, but keep in mind it needs a considerable amount of structural work—throw out that disclaimer—but now she’s coming back and bringing her architects and engineers and everybody tomorrow. So I get that all the time, but I’m very selective because I get a lot of people who say, “I’ve never been in business before; I want to be next to CommRow. My grandmother loaned me $50,000, and I say, “God bless, and I love your entrepreneurial spirit, but I want to be very careful about that.”
Nothing can fail. Anything that fails becomes a dark spot, and it can’t be.
No. It can’t be. I’d much rather have the right tenant, even though the economics might not be as aggressive as I would like them to be, but I’ll have a much better credit risk, and more importantly, there’s no reason to have a hiccup. It’s been vacant, now everybody wants to be adjacent to CommRow, and we’re in talks on the other properties, and I’m just saying, “Whoa, slow down. Let’s do this right.” Let’s get our doors open. There’s no reason to believe our own bullshit and start signing this and going off half-cocked. Why? I don’t want to do that. The interest level has been tremendous. We don’t even have a sign out there. Now we’re going to start putting signs and stuff out there, but we think there’ll be a big interest in it.
I’ve been interested in it since ’84. The idea that the oldest building in Reno was painted a butt-ugly color of off-white just to hide it. I believe Fitzgerald’s plan was always to tear it down, but he couldn’t so he painted it white so people would forget. So you came from Chicago. Give me the quick bio.
My business partner and I sold some of our real estate portfolio in Chicago in 2005. We were looking to diversify. We specialized in adaptive reuse, which was taking a structure that was built for one purpose and converting to a higher and better use. I call it the extreme sport of developing because you can come up with the Montage—I’m talking aesthetically, not financially; financially it was a disaster because of the economy—but it’s a very high risk, very technical type of development. If I would have walked you through the Golden Phoenix and said, “In three years, this is what it’s going to look like,” you would have thought, like 99 percent of the population, I was nuts. So I came out here at the urging of our bankers, because they were doing other deals in the area, and they viewed Reno as an area with long-term growth potential. Our goal was always to come here and to really invest in this community over a 10-15 year period. Our plan was never to invest in the Montage and move on. We definitely experienced a delay, as did the rest of the economy with the recession, but this to us is a continuation. And I fell in love with the community. I didn’t move to Reno because I had to move here to oversee the project. I moved here because, man, I drank my own Kool-Aid. I love Reno. I do more here in one weekend than most of my friends in Chicago—they have to plan a two-week vacation. When I long for the things of a big city, I’m three-and-a-half hours away by car, three-and-a-half hours away by plane to Chicago. I am truly committed to this community long-term. Everybody thought after the Montage, “Oh, he’s gone, he’s moving.” That never even entered my mind. This is my home; this is where I’m going to raise my kids. And this is where I want to contribute to what I believe is the beginning of a lot of great things to come.
Let’s go back to a little further than that. Before you came to Reno. Where’d you go to college?
Didn’t go to college. I started at a very young age as an entrepreneur. I started working as a waiter at El Jardin Restaurant, a very famous restaurant in Chicago near Wrigley Field. Started working there when I was 14 years old. When I was 17 years old, I was written up in the Chicago Tribune by a food critic, naming me Waiter of the Year in Chicago. I always had a love of people and I always understood that people went out to have a good time, and I lived by the simple philosophy of live how I wanted to be treated. I was always very entrepreneurial. I was making a lot of money as a kid going to high school. I bought my first sports car when I 16 years old. I got ripped off by my first foreign auto repair shop about a month after buying my first sports car. I went back full of testosterone and threatened the person’s life. He fixed my car, and it ran like new. I went back and said, “Why didn’t you fix it that way the first time?” And he basically told me that that’s how the industry worked. When I went back to the restaurant, people started asking me, “What are you going to do, Fernando, when you get out of school?” I said I’m going to start an honest repair facility. October 21st, 1985, at the age of 19, I bought E&J Foreign Car. I was 100 percent owner of E&J Foreign Car, and it’s still in existence today. It’s a thriving, one of the most respected auto repair facilities, but went there and was known as one of the top Porsche repair facilities in Chicago. If you bought a Porche, most of the time it came with Fernando. Not that I was some expert mechanic, I was all thumbs, but we had honesty and integrity. We weren’t the cheapest place, but we weren’t going to jack you around, and my business model was “the place that you’d want to send your wife.” It was clean and good-natured. From the money I made there, I met wonderful people. I met my future business partner, who is my business partner today.
What’s his name?
Donald Wilson, DRW Trading. I can’t say enough about my business partner, the respect that I have for him. He’s created one of the largest proprietary trading firms in the world. Basically, I was always an entrepreneur at heart. Started investing in real estate when I was 20-21, ran everything in projects and invested in everything from affordable housing, low-income housing in Mexico—which was tremendously rewarding—to building some of the most high-end condominiums that were sold in Chicago at the Ambassador.
So that’s what you did from ’85 until you came here.
How old are you?
I am 45.
Is there anything we missed?
The thing I would like to share with you, I don’t know if it’s relevant. The other attraction we have, on the third floor of this property, what was being used as the all-you-can-eat buffet for the last 10 years of the Fitzgeralds, is now going to be a new 350-cap live music venue. It’s going to be a live music venue that has attracted a tremendous amount of interest from local promoters, regional promoters, national promoters because of the size of the menu. It appears, knowing a little about that industry, that it’s sort of hitting a sweet spot. It’s not as big as the Knitting Factory or the Grand Sierra, but it’s a little bit bigger than some of the smaller venues. What they also are very intrigued is we’re investing a significant amount of capitol, and really addressing what we understand are the biggest issues with many of the promoters, and a lot of the bands—the technical issues of sound quality. So we, as with the climbing wall, had it designed by the experts for the experts. We sort of took that same business model and philosophy to the music venue.
And that will be open October first?
You will be rockin’ there on October 1.
We also didn’t talk about your interior climbing.
Yes, oh my gosh. And the memberships. On the second floor of the Fitzgeralds that used to house over 350 slot machines and the keno lounge and a very small sports bar will now be over 3,500 square feet of climbable surface and indoor bouldering. The walls are designed very European style, so they’re geometric shapes that are done in beautiful wood with very colorful handholds. This bouldering facility is flanked by an alcohol serving bar that we’re calling V15. V15 is one of the hardest bouldering moves, and that bar will have tremendous views of Reno, and it will overlook what we hope will be 40 or 50 people climbing at any given time in that bouldering park. You’ll be able to have a cocktail, while watching people boulder, which is sort of Tai Chi on rocks. It’s very visually stimulating and engaging. That bar will also have access to a 90-foot outdoor balcony that overlooks ReTrac on Commercial Row.
And you’re going to have child-care facilities?
It’s a kids’ climbing gym. It’ll be for pre-K. Climbing is an incredible developmental tool. It teaches them problem-solving, and it teaches them trust, and critical thinking. It’ll be very handy so parents can drop their kids off and go climbing or go have dinner or breakfast. Or go take a class. Because that’s another element we’re going to have within Cargo, which is that third-floor entertainment venue in the evenings. During the days, we’re going to have a core-fitness program. The entire climbing facility is going to be called BaseCamp. We’re going to actually do memberships for the facility, so it will be unlimited access for both indoor and outdoor.
So that’s definitely for locals.
Totally. Very affordable. There are a couple things that I want to share with you, and you can decide if they’re useful. One of the things that people are missing is that the climbing wall, in and of itself, is a traffic generator, basically to create revenue for all the ancillary amenities. We don’t have to rely on very expensive memberships to fund our facility. Our facility is such that memberships are going to be very low as a price point to make it affordable. What we’re hoping is that this is the place where you eat, meet, play and stay. That is the diversification, and the multiple outlets enable us to give a very diverse offering without ever having to invest so deeply in one category because inevitably, some of these venues are not going to work. It’s just the law of averages. One or two or three or four of them not working, none of that inflicts a mortal wound. We can reposition it, we can listen to our clientele, we can listen to the community, and we can adjust accordingly. People are missing that whole perspective of business. The second thing about gaming. One of the things I hear over and over is, how could you possibly have a facility without gaming? OK. There is this horrific misconception about how profitable gaming is. The reason that the operators are sustaining and thriving in this market are doing so because these are incredibly well-heeled, well-disciplined operators. Gaming is one of the most regulated industries in the United States. The privilege of offering gaming brings along with it tremendous overhead that all results in higher room rates, higher administration costs, higher accounting costs, higher everything. By shedding those, it enables us to have lower built in daily costs for our room rates and our overall overhead. Everybody misses that. They assume gaming, and they assume gaming 1980. This is not gaming 1980. This is a highly competitive, highly regulated—we don’t have to have slot hosts, we don’t have to have special accounts, we don’t have state licensing and taxes. We don’t have to worry about the drop per day in the slot machines, we don’t have slot techs. What we’ve done is we’ve eliminated all that, we’ve streamlined, and basically created a very diverse model that we think will be more profitable than we could ever be as a gaming facility.
That makes sense to me. But it’s kind of related to gaming. They come to game, but they eat in the restaurants, go to shows.
Let’s talk about that. In the traditional gaming model, this is an absolute science. There is not enough time in my life to compete with the competitors in this market. I don’t underestimate them. It is very difficult to give a manager P&L responsibility when you have something called “comps.” So if Natasha is in charge of food and beverage, and you’re in charge of hotel, and I’m in charge of gaming, you have P&L responsibility for the hotel. What are all of your revpar, what are all of your occupancy rates, what’s your ADR? But at the end of the day, if I’ve got to comp people to come here and game, it makes it very difficult to manage departments. When this place was open as Fitzgeralds, there was millions and millions and millions of dollars attributed specifically —if I drew a line and said, “To offer gaming, here are all the expenses associated,” millions and millions and millions of dollars, well over $5 million and under $10, on an annualized basis. When you take that money and divide it through a 351-room property, at let’s say a 70 percent occupancy rate, it creates a built in cost of every unoccupied room of more than $60 a night. I don’t have that. People who are the gaming operators here, man, those people know what they’re doing. And you better be careful where you walk because that is an absolute science. We don’t have that. We don’t have any of that. The facilities are designed to be able to stand in a free market environment, and they sink or swim on their own. We’re not beholden to a gaming comp. Nobody gets that. They say, “How can a hotel without gaming exist?” I said, “There are several hundred thousand that exist throughout the world.” I would be very respectful in responding, but I think it’s a very myopic view, and it’s a total disrespect to our community to think that people only come here for that reason. That is wrong.
That has been the view since the ’40s. It’s like turning the Titanic. It’s not just the gamers, it’s the people who live here, who still see Reno as what it was.
Listen, I was shocked when I found out—and this only happened three years ago—that I’m not 6-foot-2 with a full head of hair. I was shocked. I just always assumed that everybody was 6’ 8’” or 6’ 9”. Reality sometimes sucks. We have to take off our toupee as a community, and embrace all the wonderful things that we are. That boils my blood, when people say, “How can it have success without gaming? How could you destroy such a thriving gaming landmark?” I get that all the time. I bought three casinos in the last five years. I know the economics of casinos, especially failing ones. How many have you bought? But everybody loves to take a look at the view, and think we’re sort of destroying. No, we’re not. This is a very logical sequence in the progression of a city that’s gentrifying. The strong are going to survive. This casino was not one of the strong, and we’re hoping to create a new category that will complement one another. But I hear that all the time. And I think to myself, “Boy, people have this illusion that we’re living in a time where gaming was truly highly profitable.”