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Atlantic City Development Boom

1 May 2002

ATLANTIC CITY, New Jersey – As reported by the Press of Atlantic City: "Harrah's Atlantic City will open a large hotel expansion this morning that marks the end of a $200 million project.

"In a broader sense, it also signals the start of an unprecedented citywide boom that figures to change the way casinos do business and change the image of a one-dimensional city.

"Over the next two years, Atlantic City will see $1.8 billion invested in 4,000 more casino hotel rooms, 18 acres of upscale retail centers, 12,000 more parking spaces and 5,300 more slot machines.

"…For the first time in Atlantic City's 24 years as a casino town, the investment thrust is toward nongaming facilities. Typifying the trend, Tropicana on Tuesday staged a ceremonial groundbreaking for 502 hotel rooms, a business-meeting center, a 200,000-square-foot themed retail village, 2,400 parking spaces and only 700 more slot machines.

"Showboat is not adding casino space in its 544-room hotel expansion. Nor will Caesars include slot machines in its redevelopment of the Shops on Ocean One mall. Resorts is including only a modest casino expansion in its 459-room addition. Harrah's new hotel tower has 452 hotel rooms and, for the time being, 450 slots.

"Even Borgata, the $1 billion casino resort rising in the Marina District, will have the fewest gaming spaces relative to its hotel size of any place in town. But it will sport a European spa, a 2,400-seat special-events center, a retail promenade and three other entertainment venues.

"…All of this is a big change for a city where slots and tables produce 93 cents of every dollar generated by the gaming industry. Wallace Barr, chief operating officer for Caesars parent Park Place Entertainment Corp., says Atlantic City can be more like the Las Vegas Strip, where casinos derive half their revenues from rooms, restaurants, shows and shops.

"…More hotel rooms are critical in supporting the fancy shops, restaurants and lounges being developed, since the casino hotel occupancy rate here last year was 93.3 percent. Only a third of those rooms were available for cash-paying customers, with the rest given free to favored gamblers.

"It's come to the point, casino executives say, that many would-be visitors don't even try to get a hotel room any more.

"`It all goes back to hotel rooms, hotel rooms, hotel rooms,' said Nicholas Ribis, Resorts' vice chairman. `That's the only way we're going to grow this market. They're the best investment you can make in this market. We know if we have the hotel rooms, we're going to get the cash flow.'

"…The scope of development itself is remarkable, but the timing of it all is especially sweet to casino operators. The casinos are on a five-month roll of surprisingly good revenue increases and first-quarter profits blew away the estimates of Wall Street analysts.

"…Industry executives throughout the city say they're concerned, but not worried, about the anticipated casinos in New York state, noting that Atlantic City's expansion boom alone will be bigger than the three casinos allowed in the Catskills…"

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