Issue 281
January 30, 2006 - February 1, 2006
Volume 6
page 1
 

This Issue

Gaming News

How long will old resorts last?

Construction Manager for The Venetian Tapped to Build Proposed Pocono Manor Resort & Casino

Atlantic City's youth movement

Better Hide the One-Armed Bandit

Mobile gaming studied

Show Time Roseanne will be at the Stardust Theater.

Column When Does the RNG Start? by John Robison

Check out our entertainment highlights & upcoming tournaments

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How long will old resorts last?

As Reported by Business Press

LAS VEGAS, Nevada - There has been a flurry of news reports, but so far everything is status quo. With Boyd Gaming's announcement of its $4 billion Echelon Place project set to break ground in 2007, the trend toward five-star, multibillion-dollar, condominium-hotel megaresorts continues its inexorable march north along the Las Vegas Strip.

Outposts of old-school Vegas that have recently fallen to the condo-hotel blitzkrieg include the clown-festooned Boardwalk Hotel & Casino, the Westward Ho Casino and its little sister, The Ho. This spring, Harrah's Entertainment is expected to announce redevelopment at the Strip-Flamingo intersection, one that could agglomerate Harrah's Las Vegas, the Imperial Palace, the Flamingo Hilton, O'Shea's, the defunct Bourbon Street Hotel & Casino and even Bally's-Las Vegas into one super megaresort.

Does this onslaught of capital-intensive development exert pressure on pre-Mirage casino-hotels to reinvent themselves? The Hotel San Remo is receiving a facelift and augmentation, reopening on Super Bowl weekend under the Hooters banner, while Tropicana Resort & Casino has -- again -- stopped taking room reservations, leading some Vegas observers to believe that owner Aztar Corp. is serious about redeveloping the site. Maybe.

New Frontier Hotel & Casino owner Phil Ruffin's $150 million sale of a Bahamas resort last April was taken as a harbinger that a re-do of the New Frontier was imminent, but nothing has been announced.

Likewise, all is quiet at the Sahara Hotel & Casino, but Riviera Holdings Corp. took a stand-pat approach to its signature Strip property last November. A possible takeover by a group of real estate and gaming executives may change all that (see story on page 3).

As for that other clown-themed casino, Circus Circus, MGM Mirage CEO Terrence Lanni has stated that the sprawling hotel/motel/RV park complex makes inefficient use of its acreage. However, a consensus of industry observers agrees that MGM Mirage is unlikely to do anything with Jay Sarno's aging clown palace so long as it has Project CityCenter on its plate.

Echoing previous comments by Lanni, MGM Mirage spokesman Alan Feldman says the Circus Circus site has 27 acres of open-air parking and low-rise buildings "that are not efficient at all." But he says the aforementioned consensus is correct and "that question (of redevelopment) is, at a minimum, five years away. Currently, the market is served extremely well at all ends," Feldman said, and Lanni has gone on record, saying that one of the attractions of the Mandalay Resort Group portfolio was that it gives MGM Mirage a presence in all price niches of the Strip market.

CB Richard Ellis analyst Carlton Geer isn't quite buying MGM Mirage's official stance. "They've have a lot of plans that none of us is privy to," he said.

"It's still a good earner for them," Curtis said of Circus Circus. "Right next to them might be the last real bargain bastion, Slots A Fun," he chuckled.

Dave Schwartz, director of the Center for Gaming Research at UNLV, speculates that "MGM might have their hands tied because they may have agreed not to knock (casinos like Circus Circus and Excalibur) all down and build them all upscale." (Feldman flatly denies that there is any such agreement.)

"I think they want to adhere to Steve Wynn's vision of being the General Motors of the Strip," Schwartz said, "where you've got rooms in every price point."

Down at the New Frontier, "we're seeing a significant amount of [residential] investment by (Donald) Trump on that site," reported Brian Gordon of Las Vegas-based Applied Analysis. "We have yet to see any definitive plans out of Ruffin."

"If the residential portion wouldn't work out," added Los Angeles-based stock analyst Saul Leonard, "that project would be very, very suspect."

'TOO MUCH SMOKE'

Geer is more sanguine, saying that Ruffin will do something; it's merely a question of when. "There's been too much smoke not for there to be a little fire," is Las Vegas Advisor Publisher Anthony Curtis' summary of the consensus. While he doesn't go as far as "Doug" on the ratevegas.com blog, who wrote, "The Frontier will look like a trailer park surrounded by luxury if something isn't done," Curtis allows, "I can't see (leveling) a Frontier and putting up a Frontier-style property" in its place.

Although Aztar Corp. filed redevelopment schematics for the Tropicana with Clark County last July, earlier this month it was reported that the company had retained noted casino designer-developer Tony Marnell to come up with a plan of his own. Aztar would neither confirm nor deny the arrangement.

"In the current environment, having a particular contractor on board -- particularly one of (Marnell's) magnitude -- indicates some redevelopment plans are in place," Gordon said. However, Leonard couldn't disagree more. "Just because they signed Tony doesn't mean anything. A lot of things still have to come to fruition."

Those may include whether Aztar can definitely commit to the project after years of public vacillation. "They've been doing it so long that I have a hard time getting any kind of read on them," said Curtis. "I'm almost bored to sleep by that property. They never seem to pull the trigger over there."

Geer believes Aztar eventually will. Meanwhile, he thinks it's missing a business opportunity but capital availability might be an issue. "(Aztar) is not the type of company that moves precipitously, so they're going to continue to evaluate it," Leonard agreed. He noted that Aztar's pursuit of a casino license in Pennsylvania could lower the priority of the Tropicana still further.

Gordon expects a joint-venture development on the site, while Schwartz goes still further, observing that the strong performance of Aztar's Atlantic City Tropicana could make the company an attractive takeover target. MGM Mirage and Harrah's are possibilities, he said, but their hands are already full. Instead, he thinks a non-Vegas operator like Ameristar Casinos might enter the fray, especially since "the real value is with the land and the location."

The bottom line, for Curtis, is that the price of prime real estate is driving the redevelopment bus. "What's pushing these (mid-tier) places out is land values. They can't stand up to an offer that maximizes their return more than anything they can do." He cites the Imperial Palace, one of the last of the mavericks on the Strip. "They couldn't turn their back on what they were able to get from a buyout."


Construction Manager for The Venetian Tapped to Build Proposed Pocono Manor Resort & Casino

Press Release

POCONO MANOR, Pennsylvania -- Bovis Lend Lease LMB, Inc. adds unparalleled resort construction management experience to Matzel's team of industry leaders. The construction management company for The Venetian Resort, Hotel & Casino and New York's Time Warner Center has joined the all-star team of partners and consultants working on bringing a world-class resort and casino to the Poconos. Greg Matzel, President of Matzel Development, today announced that Bovis Lend Lease LMB, Inc. has been retained to handle the preconstruction services and construction management of the $1.2 billion Pocono Manor Resort & Casino proposed in Tobyhanna Township, Pennsylvania.

"We have worked very hard to amass an 'all-star' team of professionals on this project," said Matzel. "Bovis Lend Lease is universally respected as the premier construction management company in the country. Our proposed Pocono Manor Resort & Casino is a complicated project due to the scale and our vision for a luxury destination resort designed over 370 acres. We needed a company that has the experience with building world-class projects - we found that in Bovis Lend Lease."

Bovis Lend Lease is the second largest construction manager in the United States. In addition to The Venetian Resort, Hotel & Casino in Las Vegas and the Time Warner Center in New York City, former projects include the Four Seasons Hotel and Tower in Miami, the Ritz-Carlton Hotel & Residences in Downtown New York City, the Wyndham Palace Hotel in Lake Buena Vista, Florida and multiple assignments for Foxwoods Casino in Connecticut.

"Having been involved in the gaming industry for more than 35 years, I can think of no other construction manager better suited to help us create an unparalleled visitor experience," said Dennis Gomes, whose company, Gomes Gaming Management, LLC is the operator of Pocono Manor Resort & Casino. Prior to partnering with the Matzel team, Gomes was president of both the Tropicana Casino & Resort and Trump Taj Mahal Hotel & Casino in Atlantic City and president of the Golden Nugget Hotel & Casino in Las Vegas, among other senior management posts at well-known resorts and casinos.

"I have been very impressed with Greg, Dennis and the rest of the development team on this project," said Colin E. Parkes, Senior Vice President, Director of Technical Services for Bovis Lend Lease. "The team at Bovis Lend Lease is genuinely excited about adding Pocono Manor Resort & Casino, a spectacular development in such a beautiful part of the world, to our roster of clients."

Based upon recent economic studies and current projections, Pocono Manor Resort & Casino will create up to 5,300 construction jobs with an annual construction payroll of $189 million generating increased income tax revenues for the region's municipalities and school districts.

Matzel Development has submitted an application for a Pennsylvania Category 2 Slots License from the Pennsylvania Gaming Control Board. Pocono Manor Resort & Casino could be up and running with a temporary facility within 9 months of being awarded a license. The balance of the resort would take anywhere from 18 to 20 months after being awarded a license to complete.

Matzel's plans for a new resort and casino initially include a 1-million- square-foot hotel and casino complex housing 750 rooms and a 100,000-square- foot casino consisting of up to 5,000 slots as well as a full-service spa, two 18-hole championship golf courses, a 12-acre lake, indoor and outdoor pools and grotto, 100,000 square feet of meeting and convention space, an 1,800-seat theater, a 100,000-square-foot village green, a 300,000-square-foot retail village, a tennis center, equestrian facility, shooting ranges, miles of wooded trails, a large selection of dining options and an inter-resort gondola transit system.

Pocono Manor Inn & Golf Resort dwells on approximately 3,000 acres (5.5 square miles) in Tobyhanna and Pocono Townships as well as the Borough of Mt. Pocono. Residing in its own zip code, the resort consists of a nine-story, 257-room inn and conference center, a golf facility with two 18-hole courses, an equestrian facility, indoor and outdoor tennis courts, shooting ranges and miles of trails used for hiking, cross country skiing, horseback riding and snowmobiling.

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