Las Vegas has a long history of building giant hotels and then destroying them to make way for even larger megaresorts. Wynn Resorts' (NASDAQ:WYNN) Wynn Las Vegas sits where the Desert Inn once sat, Las Vegas Sands' (NYSE:LVS) The Venetian and Palazzo Las Vegas was built where Sands Hotel was, and even MGM Resorts' (NYSE:MGM) Bellagio replaced the old Dunes Hotel. Land on the Las Vegas Strip is so valuable that it usually makes more sense to destroy an old hotel to make way for a new one than to build off-Strip on undeveloped land.

But it's been years since the last resort was demolished, and construction came to a halt once the Great Recession hit in 2008. Now the city is in the midst of a recovery, and it's only a matter of time before the demolition crews are back again. But which casino will be blown up next?

Las Vegas Strip Image

Las Vegas' skyline is constantly changing and it's only a matter of time before another casino comes down. Image is in public domain. 

The Las Vegas Strip's most valuable property

When looking at blowing up a Las Vegas casino, the only thing that matters is money. Potential profits from a new casino have to be larger than the cash flows of an existing casino. MGM Resorts, for example, isn't going to blow up the Bellagio with its $1.25 billion in revenue and $409 million in EBITDA -- a proxy for cash flow -- to build a resort that would cost billions of dollars and only generate a small amount of cash flow growth. From a financial perspective, the upside just doesn't exist.

But across the street from the Bellagio sits a group of properties that would make a great site for Las Vegas' next megaresort. Flamingo, The Cromwell, The LINQ Hotel, and Harrah's Las Vegas are on the Strip's premier corner at Flamingo Road and Las Vegas Boulevard, and they're some of the worst performing properties in the area.

Through a dizzying configuration of subsidiaries, Caesars Entertainment's (NASDAQ:CZR) owns these properties and holds the key to their potential development. But finding out how much money these properties make -- or lose -- is harder than it seems. 

The Caesars Entertainment Resort Properties subsidiary, known as CERP, owns Flamingo, Harrah's, Paris, and Rio All-Suites in Las Vegas, and Harrah's in Atlantic City and Laughlin. Another subsidiary called Caesars Growth Partners, or CGP, owns The Cromwell and The LINQ. While none of these companies breaks out the performance of each resort individually, you can see below that as a group these subsidiaries aren't very profitable, if at all. We can presume that Flamingo and Harrah's are probably losing money given the performance of CERP as a whole.  

 

Q3 2014 Revenue

Q3 2014 Income from Operations

Caesars CERP

$535.7 million

($49.3 million)

Caesars CGP

$485.8 million

$80.7 million

Source: Caesars Entertainment SEC filings.

This terrible financial performance combined with the central location on The Las Vegas Strip makes these prime candidates to be the site of the newest Las Vegas megaresort. But instead of Caesars doing the work itself, something it definitely couldn't afford, a new buyer would likely have to come in. Genting Group, who owns one of two gaming licenses in Singapore, recently bought a property on the north end of The Strip, and Melco Crown could eventually target Las Vegas for expansion. Maybe they'll be the ones to implode a few of Las Vegas' icons. 

MGM Grand could demolish some Las Vegas icons

Another plausible scenario is the implosion of Excalibur on the south end of the Las Vegas Strip. It sits across from MGM Grand's New York-New York and catercorner from its flagship MGM Grand resort. In the last twelve months, it's generated just $66.6 million in EBITDA, making it one of the least profitable properties on The Strip.

If razed, it would provide a clean slate for development, and potentially boost the results of Luxor, New York-New York, and MGM Grand.  

Boyd Gaming Echelon Construction Image

Stardust Resort & Casino was imploded to make way for Echelon Las Vegas, but the project was abandoned and is now owned by Genting Group, which is restarting construction. Image source: Bobak Ha'Eri via Wikimedia Commons

One challenge is that MGM Resorts has had mixed results in Las Vegas of late. It has struggled just to make the $7 billion CityCenter project profitable, yet MGM Grand has recovered well on the back of a burgeoning party scene. With that backdrop, it may be a decade before MGM Resorts is ready to build another megaresort.  

Abandoned buildings may not be brought down for years

I may be speculating when the next resort will be leveled, but on the north end of The Strip sits an abandoned project called Fontainebleau. Billionaire Carl Icahn owns the resort and may demolish it piece by piece for scraps.  

We may not know exactly which casino will be imploded next, but Las Vegas' ever changing skyline won't stay stable for long. It's only a matter of time before blast crews are back in Sin City getting ready to bring one of the city's icons down again.

Travis Hoium manages an account that owns shares of Wynn Resorts, Limited. The Motley Fool is short Caesars Entertainment. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.