A GLOBAL GAMING BUSINESS PUBLICATION 2013
Doing More With Less
BY ROGER GROS
A few changes to this year ’ s Casino Design magazine got me to thinking about how much investment projects are attracting today .
First , the changes : We ’ ve moved the printing of Casino Design to later in the year , which allows us to focus on the G2E Casino Design Awards , a program that we began 12 years ago in conjunction with a conference on casino design we were running at the time . When we sold the conference to Reed Exhibitions , G2E took over the awards program . So a move to the November-December time frame allows us to recognize the winners , particularly the Sarno Award for Lifetime Achievement , the ultimate honor for anyone involved in this field .
What got me to thinking about investment were the winners of this year ’ s competition compared to those in previous years . The winners of the previous two awards for the large properties were the Cosmopolitan and Revel . The total investment on each was around $ 4.5 billion and $ 2 billion , respectively . This year , the winner was Margaritaville Bossier City , with a total investment of just over $ 200 million . And the Native American winner was Twin Arrows ( our cover story ), which also came in around $ 200 million .
Yes , that ’ s a big difference , but what was not so different was the appeal of those properties in their markets .
Certainly , the three markets are completely different . The Cosmopolitan opened in the midst of the recession when visitation , as well as gaming revenue , was significantly down in Las Vegas . Compounding its problem was a focus on non-gaming amenities , to the point where gaming was virtually ignored . The same was true for Revel in Atlantic City , but competition from surrounding jurisdictions made the situation even worse . In Bossier City , Margaritaville was the first new property to open in more than a dozen years , but also in a market that had been hard hit by competition from Oklahoma Indian casinos poaching its principal Dallas market . Twin Arrows opened in a somewhat remote location east of Flagstaff , Arizona , but competition is many miles away , giving the tribe access to locals and travelers along I-40 alike .
The difference in all these properties was that Margaritaville was conceived and planned after the economic downturn , and the property was designed for the realities of the market .
That wasn ’ t true in either Atlantic City or Las Vegas . Cosmopolitan and Revel pushed forward even when it became evident that business conditions would be markedly different when they opened than when they were conceived . As a result , both properties have lost barrel loads of money since opening , even if their design was deemed to be superior .
The lesson we learn from this is that some very substantial research must be done before building to determine the size of the market , the surrounding competition , and the projected revenue flow . And while both Cosmopolitan and Revel were designed to capture the nongaming market , the assumption that they ’ d get their fair share of gaming revenue was plain wrong — particularly when you have no plan in place to aggressively win that share of gaming revenue , a factor present in each case .
Margaritaville , on the other hand , looked at a market that was being served by properties that hadn ’ t been updated in years — or in some cases even properly maintained . Revenues were flat or declining , with little reason for new customers to consider the Shreveport / Bossier City market . Margaritaville has changed that . And its location adjacent to the outlet mall , the Louisiana Boardwalk , gives Margaritaville a non-gaming appeal as well .
With Twin Arrows , financing by the tribe , not by Wall Street , made the decision to configure the property realistically an easy one . But in each case , Margaritaville and Twin Arrows developed top-flight facilities that are as impressive as Cosmopolitan and Revel were in their markets , and probably more profitable .
Now we do have some billion-dollar-plus properties on the horizon . Baha Mar in the Bahamas will open late next year , with a price tag north of that figure . But we ’ ll also have SLS Las Vegas , the Sam Nazarian property that will expend much less than $ 500 million .
So maybe the jury is still out . But the bottom line has to be that owners must conduct a complete feasibility study that looks at the market from every angle , makes all the assumptions in a wide range of results , and considers all economic conditions at the time of the casino ’ s opening . This may mean building in phases , which is not always the best way to do things , but in this case , the most responsible .
Roger Gros , Publisher | rgros @ ggbmagazine . com Frank Legato , Editor | flegato @ ggbmagazine . com
Robert Rossiello , Art Director | rross @ casinoconnection . com
David Coheen , North American Sales & Marketing Director dcoheen @ ggbmagazine . com
Floyd Sembler , Business Development Manager fsembler @ ggbmagazine . com
Becky Kingman-Gros , Director of Operations bkingros @ ggbmagazine . com
CONTRIBUTING EDITORS Dave Bontempo | Julie Brinkerhoff-Jacobs Pamela Jones | Jane Lee | Marjorie Preston Patrick Roberts | David Schwartz | Klaus Steinke
EDITORIAL ADVISORY BOARD
Mark Birtha , Vice President and General Manager , Fiesta Henderson Casino Hotel
• Geoff Freeman , President & CEO , American Gaming Association
• Julie Brinkerhoff-Jacobs , President Lifescapes International
• Nicholas Casiello Jr ., Shareholder Fox Rothschild
• Jeffrey Compton , Publisher , CDC E-Reports
• Dean Macomber , President , Macomber International , Inc .
• Michael Johnson , Industry Vice President , Global Gaming Expo , Reed Exhibitions
• Stephen Martino , Director , Maryland Lottery and Gaming Control Agency
• Jim Rafferty , President , Rafferty & Associates
• Thomas Reilly , General Manager , ACSC Product Group Eastern Region Vice President , Bally Systems
• Steven M . Rittvo , President , The Innovation Group
• Katherine Spilde , Executive Director , Sycuan Gaming Institute , San Diego State University
• Ernie Stevens , Jr . Chairman , National Indian Gaming Association
• Roy Student , President , Applied Management Strategies
• David D . Waddell , Partner , Regulatory Management Counselors PC
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The views and opinions expressed by the writers and columnists of CASINO DESIGN are not necessarily the views of the publisher or editor .
Copyright 2013 Global Gaming Business LLC ., Las Vegas , NV 89118 CASINO DESIGN is published annually by Casino Connection International , LLC . Printed in Nevada , USA .
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