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Best of Liz Benston

Gaming Guru

Liz Benston
 

Survey: Casinos Shifting to Younger Designs

6 October 2004

Future casinos will be designed primarily with a younger audience in mind rather than for older, more affluent customers, according to an annual survey of design and construction professionals released Tuesday by the American Gaming Association.

Customers can also expect to see fewer themes but hipper features such as high-speed Internet access and flat-screen TVs, the survey said.

In the survey, 71 percent of respondents said the casino industry is witnessing a permanent shift toward "younger" designs appealing to 25 to 39-year-olds.

Such designs also appeal to older customers who want to act young, said Terry Dougall, president and chief executive of Dougall Design Associates of Los Angeles.

"We're not going to grow old without kicking and screaming," said Dougall, who spoke as part of a panel discussion on the survey at the Global Gaming Expo in Las Vegas Tuesday.

While good design is critical to a casino's success, cost remains an overriding limitation on what can actually get built, the survey found. In the survey, 44 percent said cost is a bigger constraint on builders and designers than ever before, while another 44 percent said they operate under the same cost constraints as before. Only 13 percent said designers have more freedom to finance their vision than ever.

Deciding how much a casino will cost often depends on myriad factors including whether gaming will be legalized nearby or whether an Indian tribe will surface with a competing casino in the years to come, said Dan Lee, chief executive of Pinnacle Entertainment Inc. in Las Vegas. Lee was Steve Wynn's former chief financial officer at Mirage Resorts Inc.

Effective casino design makes customers feel comfortable and is also financially efficient, Lee said.

The Monte Carlo in Las Vegas is one of the best-designed casinos anywhere because it looks much more expensive than the $225 million it cost to build and earns $90 million a year, he said. By contrast, the cost of the Aladdin is about the same as the Bellagio but the two resorts' designs are drastically different, he said.

Bank of America Managing Director Bill Newby said the Monte Carlo is probably "one of the best returning assets on the Strip" because it was designed within a budget.

Bank of America looked at the blueprints for the Aladdin and passed on financing the project because it was a design mess, Newby said.

The financial markets were increasingly receptive to casino deals at the time but investors "should have spent more time with the blueprints," he said.

The bankruptcy of the Aladdin a year after the property opened can be attributed to flaws including requiring vehicles to enter the property's parking garage from the rear and placing the front entrance above the Strip rather than at street level, panelists said.

A good design doesn't always mean financing will be easy, Newby said.

The Borgata resort in Atlantic City was difficult to get financed because banks were wary about entering an aging market where a major casino hadn't been built in 13 years, he said. Likewise, the Foxwoods tribal casino in Connecticut was a tough sell on Wall Street because it was the first major deal of its kind at the time. Now banks are investing millions of their own money in tribal deals because they are lucrative and banks understand the dynamics behind them, he said.

Lee said casinos will continue to add non-gambling amenities to build their reputations as resort attractions and to steal business from traditional hotels that don't have the benefit of profit centers like gambling.

"The casino industry is the hotel industry with an edge," he said.

Tribal casinos rather than commercial casinos or racetrack casinos would constitute the bulk of new projects in the years to come, panelists said.

Perini Building Co., the largest construction company in the casino and hotel industry nationwide, estimates that about half of its $1.2 billion in building revenue this year will come from tribal casino projects. About half of its building revenue over the next three to five years also will come from tribal casinos, Chairman Richard Rizzo said.

"There are more opportunities than there are resources," he said. "We can be selective."

Other results from the AGA survey:

31 percent of those polled said the Borgata resort in Atlantic City was the best-designed casino they had ever visited. Mandalay Bay was No. 2 on the list with 19 percent and Bellagio and Mirage tied for 13 percent.

71 percent said casinos would move somewhat away from themes, while 29 percent said casinos would continue to rely on property themes to the extent they do today.

76 percent said signature attractions such as the volcano at the Mirage and the Eiffel Tower replica at Paris Las Vegas will remain an important part of the future of casino design while 24 percent said it would fall by the wayside.

53 percent said shows and headliners will become less important profit streams for casinos as hip nightclubs take over while 47 percent said shows will always be a "vital non-gaming amenity" and called trendy nightclubs a "fad."

82 percent said high-speed Internet access is becoming a top room amenity for guests while 47 percent said the same for flat screen TVs. Another 29 percent said the same for Jacuzzi bathtubs as well as small sitting areas attached to rooms.

75 percent said the flood of condominium towers proposed along the Las Vegas Strip would not pose much competition to casino resorts for revenue but 25 percent said the condos present a "real challenge" to resorts' revenue.

39 percent said they are witnessing greater diversity in casino design while 28 percent said designs are becoming more homogeneous. Another 33 percent said the diversity of designs is about the same as in years past.