The problem with the grand opening of the Siena Hotel Spa Casino on July 31, 2001, was the slumping tourism industry that went into a free fall less than two months later with the Sept. 11 terrorist attacks.
This time, the new owners who bought the bankrupt property for $3.9 million at a courthouse auction this past week believe they are getting in just as the market is poised for a turnaround.
Jerry Meilstrup, one of five investors who make up Grand Siena LLC, said they plan to turn the 214-room hotel into a five-star property catering to "high-demand customers" willing to pay high-end prices.
"The spa is great. The restaurant is extraordinary. We have great potential," Meilstrup said.
"You can't miss on any detail, but if you provide a quality experience, people are more than willing to pay for it," he told the Reno Gazette-Journal.
David Colvin, another of the investors, calmly made the bidding in U.S. Bankruptcy Court in Reno on Wednesday as the price approached $4 million and two other well-established competitors dropped out.
Colvin, 58, is an inventor and owner of z4 Technologies, which recently won a $158 million verdict against Microsoft Corp. — one of the biggest patent-infringement awards in the country.
The judgment has survived the appeals process, leaving Colvin with the financial wherewithal to invest in a downtown Reno casino with a Tuscan motif that had accrued about $50 million in debt before going bankrupt and closing its doors in October.
And given the Siena's size, history and location, their plan just might work, according to Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.
"Reno has three-star business hotels, but there is a market for high quality," he said. "As a hotel, it's a pretty nice infrastructure."
"The Reno business environment is still relatively healthy," he said. "It may not be a bad idea to be positioning for a high-end property that aims at that market niche."
Colvin, Meilstrup and another investor, Bruce Merati, formed Grand Siena LLC just days before Wednesday's auction. Their group was one of three interested in the bankrupt property, and Colvin actively upped the bids each time he was topped.
Both Colvin and Meilstrup declined to say how high they were willing to go, but they said they were pleased that they won with a final price of $3.9 million.
"Bruce commented afterward that there are condos in San Diego that sell for more," Meilstrup said.
Eadington agreed they got a deal.
"That's a bargain-basement price," he said.
Colvin, a former Michigan resident who now lives in Las Vegas, said he decided to invest in the company for several reasons. For one, he's drawn to the gaming industry. For another, he wants to make a positive impact on the economy.
"I've always liked gaming," he said. "But one of the things that really troubles me is the unemployment rate. I hate to see properties go out of business. This was a great way to keep people working."
Colvin, who has licensed about 30 patents and has agreements with a list of companies including Adobe and Symantec, will oversee the investor group, while Meilstrup and Merati manage the property.
Meilstrup is the former president of GameTech International, a Reno-based company that sells electric handheld bingo games. He also has some experience in the casino industry. He helped develop and set up the Casino Niagara in Ontario, Canada, before moving to Reno with his wife.
The group of investors initially looked at the Grand Sierra Resort and Casino, but decided it was too large for their plans, Meilstrup said. The Siena, he said, was much more manageable.
"David embraced the idea that this town needs a four-star, top-of-the-line casino hotel," Meilstrup said. "We're planning on extensive improvements. Our goal is to bring a four-to-five-star hotel back to the area."