CasinoCityTimes.com

Gurus
News
Newsletter
Author Home Author Archives Search Articles Subscribe
Stay informed with the
NEW Casino City Times newsletter!
Newsletter Signup
Stay informed with the
NEW Casino City Times newsletter!
Related Links
Related News
Recent Articles
Best of Liz Benston

Gaming Guru

Liz Benston
 

Borgata's Success Spurs Hopes of Revival for Atlantic City Hotels

6 June 2005

ATLANTIC CITY -- It's midnight on Tuesday and every last blackjack, roulette and craps table at the Borgata is bustling. It's a similar scene in a downstairs poker room and off-track betting parlor, where most of the available seats are taken.

Among them is Michael Massa.

"It's like the Las Vegas of New Jersey," said Massa, 29. "There is a whole different vibe here."

Massa, who is from a nearby town, said he no longer plays poker in the Tropicana's casino. It's "full of old people" and "stinky with smoke," he said.

"They've got the best poker room in town and the prettiest women," said Geno Basso, 21, of the Borgata.

While the major crowds have long left Atlantic City after the Memorial Day holiday, the Borgata resort -- the most luxurious casino hotel in town and its newest in 13 years -- is still busy.

New visitors are still coming to the property nearly two years after the Borgata's July 2003 opening -- a rarity for this faded seaside town.

Every day, roughly 600 new people will sign up for the property's gambler loyalty program.

Younger customers also are flocking to the Borgata and helping to redefine Atlantic City from a slot-spot favored by the "blue hair" crowd to a hip hangout for young professionals.

More than half of the Borgata's customers are less than 55 years old as compared with about 30 to 40 percent at other Atlantic City properties, executives say. Many in the coveted 25 to 39 age group are newer visitors who are gravitating to the Borgata from New York and Philadelphia, they say.

The strategy of courting a younger and wealthier clientele is nothing new for Las Vegas, which is still in the midst of a building boom in luxury hotel rooms and other attractions such as nightclubs and lounges.

But before Borgata that was unheard of in Atlantic City, where hotel owners Boyd Gaming Corp. and MGM Mirage were newcomers.

Their Las Vegas resort influence is everywhere in the Borgata, from its 13 blown-glass chandeliers designed by renowned artist Dale Chihuly to its 50,000 square-foot luxury spa and the casual elegance of its restaurants, which have access to some 14,000 different wines stored on the property. One of the restaurants transforms into a nightclub in the later hours, where celebrities and other big spenders have been known to spend $1,000 to rent a private table with bottle service.

"Who would have thought you'd have bottle service in Atlantic City?" said Susan Ricciardi, a spokeswoman for the Atlantic City Convention and Visitors Authority. "We've had Cameron Diaz and Bruce Willis. It's just mindboggling."

About 25 million people -- a third of the U.S. population -- lives within a two-hour drive of Atlantic City. The vast majority of gamblers are slot players arriving by bus with comp cards in hand. Since the Borgata's debut, the average number of buses coming to town daily has decreased from more than 1,000 to about 750, replaced in part by wealthier customers paying cash for rooms and services.

"I'd like to be able to say that (the Borgata's success) is because of our stable regulatory and tax structure," added Linda Kassekert, chair of the New Jersey Casino Control Commission. "But they just have some really smart marketing people over there."

Competition

With Atlantic City's average occupancy rate over 90 percent, the hope is that the Borgata will encourage even more hotel growth on the few parcels of land that are still available for casinos, she said.

Other properties have announced several million dollars' worth of new expansions and attractions in response to the Borgata, which has spurred a Vegas-like rush of investment in a town where nothing major had been built for 13 years.

They include a themed retail and restaurant area at the Atlantic City Tropicana that opened last fall and a planned remodeling of Trump's Marina, Plaza and Taj Mahal properties, which just emerged from bankruptcy.

To attract a younger crowd, casinos along Atlantic City's famed boardwalk are building bars across from their casinos on the beach, fashioning them as miniature tropical escapes.

Resorts just opened Nikki Beach, a recreation of the South Beach hangout complete with beds, tiki torches and fresh sushi. Caesars has the Sand Box, Bally's is opening the Bikini Beach Bar and Trump Plaza will debut Liquid, a bar looking out on the boardwalk.

The number of beach bars has grown from two or three around the opening of the Borgata to about eight this summer.

"We're finally taking advantage of our beach," Riccardi said. "This is something Las Vegas doesn't have."

Other properties' additions aren't likely to steal much business from Borgata, the resort's Chief Executive Officer Bob Boughner said.

"They're playing catchup," he said.

The new attractions are small and inexpensive by Las Vegas standards but still mark a dramatic shift in strategy for Atlantic City. In the late 1990s and early 2000s, operators pulled out table games, bars and restaurants to install more slot machines and boost what had become their core business from small-spending slot players. Restaurants had grown outdated, serving mainly to feed slot customers.

"There was a fair amount of complacence among the casino operators," said Larry Mullin, executive vice president and chief operating officer. "The opportunity (to build something new) would have required significant capital investment and they were satisfied with nominal capital investment and moderate growth."

Harrah's Entertainment Inc., which owns two properties in Atlantic City, was spending money elsewhere and focused on expanding into new jurisdictions, said Mullin, a former executive with Trump Marina. Other operators were carrying too much debt to pursue major projects, he said.

Success story

Casino operators had grown "arrogant," while some even laughed at the Borgata's prospects, Mullin said.

"They said (the Borgata) won't be able to grow the table game business and we certainly weren't going to take their slot customers," he said. "They had a false sense of security."

Borgata had the last laugh.

The resort generated some $78 million for Boyd Gaming in 2004 on $330.5 million the company invested in the project that year.

So far through April, the Borgata has generated $224.2 million in gambling revenue, a 14 percent increase from the first four months of 2004 and higher than any other resort in town. That compares with a 2 percent increase from the city's 12 casinos. While 37 percent of the Borgata's gambling revenue came from table games during that period, only 27 percent of the entire market's gambling revenue came from tables.

The property's return on capital has been the highest of any major casino resort in the United States in the last decade, including top performers Mandalay Bay and Paris in Las Vegas. While the Venetian and Bellagio resorts earn more than the Borgata, the Atlantic City property has generated more profit on investment in a shorter amount of time. After just a year of operations, Borgata officials announced a $200 million casino expansion and the addition of new restaurants, nightclubs and other attractions will open next year. Last fall, officials detailed a hotel expansion that will debut by the end of 2007.

The resort ultimately hopes to transition its Borgata customers into Las Vegas visitors.

"A lot of these younger people have not been to Las Vegas," Mullin said.

The resort has a program in which gamblers can accumulate comp dollars that they can "spend" gambling or staying at Boyd and MGM Mirage resorts in Las Vegas.

Several times a year, the Borgata flies its best customers to Las Vegas, pampering players at the MGM Grand or arranging a slot tournament for them at Sam's Town, a Boyd property.

While relatively few Las Vegas regulars have visited the Borgata, the resort has become a prototype of sorts for Boyd Gaming, which is working on redevelopment plans for its aging Stardust property on the Strip.

"We've learned a lot about the preferences and tastes of the public and we intend to put those skills to the test again," Boughner said. Company officials haven't revealed a timeline for the future resort, which would not use the Borgata name.

Like many newer Las Vegas properties, the Borgata doesn't have a theme but is instead defined through touches such as modern art and marble walkways. Its 2,000 rooms feature floor to ceiling views, flat-screen televisions and high-quality linens, while elevators show feature-length movies on screens embedded in the walls.

Designers were asked to keep to a look that was a combination of "energetic, intellectual and sensual," said Michael Facenda, the resort's director of marketing.

"We're aspirational yet accessible," Facenda said. We're like a Movado watch or a Lexus."

Table games

Attracting table games players has become a key part of the Borgata's plan to attract new visitors and younger gamblers to Atlantic City.

In about a year, the Borgata will open a casino floor expansion that will replace its 34-table poker room with 85 tables -- the largest poker floor outside of California's card rooms. Poker is still enjoying a boom across the country fueled by televised tournaments and online poker rooms where newbies can learn to play for free.

Coaxing players from their computers into real poker rooms didn't prove to be much of a challenge, Boughner said.

"They enjoyed the ability to escape from the machine and enjoy the social atmosphere of six-on-one with a dealer," he said.

Boughner decided to use slightly bigger tables and have six instead of seven places for gamblers -- changes some say have made their experience more comfortable.

Other table games have limits that are typically higher than other casinos, attracting bigger gamblers. Blackjack games also use six decks instead of eight and avoid automatic shuffler machines -- two moves favorable to bettors that can attract savvy players.

Younger customers say they like the updated vibe.

Tim McGarrigan, 23, said he likes the Borgata because there's "young attractive people" around and "everyone comes well dressed."

"There's a Vegas atmosphere," said his friend Tom Jackson, 24. "No other casino can compete, crowd-wise."

"I'm more at home with people my own age," said Daniel Campbell, 21.

Campbell, just one spot away from winning a payout in that day's poker tournament, said he would soon return for more gambling action.

Whether the Borgata will give customers a hankering for Las Vegas remains to be seen.

Basso, who is from Atlantic City, said he's no more likely to visit Las Vegas now that Borgata is in town.

"Why travel so far when I can come here?" said Basso, who said he primarily gambles at the Borgata.

Even so, a lot of locals steer clear of the resort on weekends because the Borgata can be wall-to-wall people. Gamblers often wait several hours for a seat at a poker table, table game bets are raised and available tables in restaurants can be hard to find, Basso said.

Henderson Holder, of New Rochelle, New York, celebrated his 57th birthday at the Borgata Wednesday and said he'd probably return to the resort. But he still prefers Las Vegas because of its desert landscape, abundance of properties and nearby attractions such as the Grand Canyon.

"I just like to get away," Holder said. "It's not the same as getting on a plane and going to Vegas. I like the change of scenery."

For all of the Borgata's luxury, the property still lies in close proximity to a casino corridor that has seen better days, some said.

Alan Goldberg, who lives in Chicago and Palm Beach, Fla., typically visits Las Vegas more than once a year. He had avoided Atlantic City for years but decided to check out the Borgata on a drive up from Florida.

"Unfortunately, Atlantic City is still the way I remembered it," Goldberg said, referring to the seedy buildings that still surround many of the casinos.

"This is a very upscale and very lovely hotel," he said. "I'd still rather stay in Vegas."

Carolyn Lattuca, who lives near New York City, said she likes the Borgata because it "reminds her of Bellagio."

"Atlantic City needs more properties like this," she said.

The boardwalk resorts have done little to clean up the neighborhoods surrounding their properties and haven't reinvested in their own casinos as much as they should, she said.

"They've focused on making their profit but haven't really updated their properties," she said.

Borgata has the advantage that it is located apart from the boardwalk, where seedy bars, pawn shops and motels aren't far away, said Willi Young, a nearby resident who works in Borgata's customer service department.

"It's isolated from the seamy side of Atlantic City and the prostitutes, the homeless," she said.

People are visiting Borgata who wouldn't otherwise come to Atlantic City "because they feel safer there and know they will be catered to," said Young, who also is a babysitter for some of the Borgata's wealthier customers.

Neither casinos nor regulators can force private owners into remodeling their homes and businesses, Casino Control Commission spokesman Daniel Heneghan said. Some parcels of land are controlled by multiple owners with various plans for the future and others likely are holding out for higher prices once new projects get off the ground, he said.

Boughner said the new attractions going up here and there across town are nothing compared with what's to come.

Within the decade, Atlantic City will see at least one new resort open and witness the tearing down of at least one of its older properties, he said. Properties will likely add more convention space, he added.

"I think Atlantic City represents a tremendous growth opportunity," Boughner said. Outside of Las Vegas, the seaside town is "greater than other jurisdictions around the country for the major gaming companies," he said.