UPDATE 2-Sands' Palazzo resort to open on Las Vegas Strip

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By Deena Beasley

LAS VEGAS, Jan 16 (Reuters) - The Las Vegas Strip adds its first new resort in nearly three years with this week's grand opening of the $1.9 billion Palazzo, the second Italian-themed property from Las Vegas Sands Corp (LVS.N).

Despite a slowing U.S. economy, casinos are betting that high rollers and vacationers will keep flooding into the gambling center, especially as a weak dollar draws foreign travelers and keeps Americans from leaving the country.

The 50-story Palazzo marks another step in the Strip's progression from glitzy resorts with pyramids and flaming volcanoes toward sleeker upscale architecture.

The property, with its two-story-high waterfall, adjoins the Venetian Casino Resort, which Sands opened in 1999 at a cost of $1.5 billion. They form the world's largest hotel and convention complex.

"I like that the casino floor is very open and elegant. Everything is new and the slot machines are top notch," said David Salfiti, a gambler visiting from San Francisco.

The Palazzo is the first new casino on the Las Vegas Strip since April 2005, when Steve Wynn opened his eponymous resort just north of the Sands' properties.

The Palazzo has more than 3,000 hotel suites, a casino floor covered by gigantic glass domes and celebrity chef restaurants as well as its own Canyon Ranch spa.

Most of the rooms and about a third of the high-end retail stores, including an 85,000-square-foot Barneys New York, are open for business, but workers are still putting the finishing touches on a few discreetly curtained public areas.

The resort has been welcoming gamblers since the New Year holiday, but the grand opening takes place this week with events including a concert with Diana Ross and Seal.

"It's a very luxurious resort. I would say it's more Italian-influenced than a literal theme like the Venetian," said David Schwartz, director for gaming research at the University of Nevada, Las Vegas.

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The changing face of the Strip will become more apparent with the expected late 2009 opening of CityCenter, the more than $7 billion, mixed-use project being developed by MGM Mirage (MGM.N) with award-winning architects like Cesar Pelli.

Also in 2009, Wynn Resorts Ltd (WYNN.O) is slated to open its $2.2 billion Encore hotel-casino adjacent to Wynn Las Vegas and the $2.9 billion Miami Modern-style Fontainebleau will open across the street.

A little further north, Boyd Gaming Corp's (BYD.N) $4.8 billion Echelon complex is set to open in 2010, and developer Elad Group plans to complete in 2011 an $8 billion hotel-casino modeled on its New York Plaza hotel.