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Atlantic City: The New Las Vegas?

Jonathan Kandell
From the Print Edition:
Rudy Giuliani, Nov/Dec 01

(continued from page 2)

But Wynn is no longer a problem. Last year, his Mirage Resorts Inc. fell victim to a takeover by Kirk Kerkorian's MGM Grand Inc. hotel-and-casino empire. The merged company, MGM Mirage, which is trying to digest its $6.4 billion acquisition, decided to suspend Wynn's Atlantic City project and instead assume Mirage Resorts' responsibility in its joint venture with Boyd Gaming to develop, manage and operate The Borgata, a deal entered into in 1996. Nowadays, Trump sounds unconcerned by the prospect of new competition. "The Borgata is a plus for us because new people will come down to Atlantic City," he says, in an interview at his Fifth Avenue headquarters overlooking New York's Central Park. "Then those people will look around for a place they really like. So, I think everybody will be hurt initially, but our properties are so spectacular that we'll end up having more business than ever."

Until now, Trump has used his charisma to gain a business edge over competitors. The other casino operators are anonymous executives who are more comfortable making pitches to institutional investors than glad-handing high rollers. Only Trump has the public profile and chutzpah to put his name on his casinos and his face on billboards. When prospective premium clients refuse to take cold calls from Tom Fiore, the Taj player development executive, he can prevail on Trump to phone them personally and invite them down to his Mar-a-Lago estate in Palm Beach for a weekend. "We had maybe the biggest blackjack player in the country here last night -- he came all the way from California," says Fiore. "And Donald called three times just to make sure he was having a good time." The guy, who lost an undisclosed amount, left behind $81,000 in tips, according to Fiore.

Of course, Trump, who also has a sizable real estate development business to run back in New York, doesn't have the time to call more than a few players. But Fiore has methods of his own to attract premium players. He has enticed several of Harry's high-roller friends over to the Taj, including a real estate developer who will put up to $200,000 in play in a single evening. On the edge of the baccarat pit, Fiore points out a middle-aged New Yorker in a cream and gray outfit. "He's been coming to Atlantic City for years, and I finally got him over here for the first time tonight," says Fiore. "He's a $40,000-a-night player. I say, forget the million-dollar guys and go for 100 like him who will play 10 straight hours." Given time, the house always wins.

At a blackjack table, Fiore greets another player, whose pile of chips is undergoing a serious meltdown. The man complains that the suite he had taken for his father and himself hadn't been cleaned when they showed up that afternoon. Fiore promises to investigate, and then does a double take when he notices the guy has a dirty fork sticking out of his shirt pocket. "Gamblers can be hard to figure," he says as he walks toward the craps tables. "I mean, they'll put all this money in play and yet they wouldn't consider shelling out $500 for a good suit." He greets Harry, who is $31,000 down. To cheer him up, he gives him a baseball autographed by Derek Jeter.

 

Last year, Atlantic City took in $4.3 billion in gambling revenues, and the Taj led all casinos with $552 million. This explains why the Trump people are a lot less keen about transforming Atlantic City than the other casino operators, most of whom own properties in Las Vegas as well. "We do very well -- we crush some of the casinos in Las Vegas," says Brown, the Trump Hotel and Casino Resorts CEO. "People go to Las Vegas with a different mindset than here. They're on a three-, four-day vacation. Most people come to Atlantic City for a few hours; they gamble, eat and then go home. I'm not sure we should change to be more like Vegas. We should be ourselves."

This is the sort of smugness that Batistatos, the convention boss, finds annoying. "We're not nearly as far along as we should be as a destination resort because for years we suffered from a lack of leadership," he says. "There was a perception that all we had to do was build the casinos and the rest would fall into place. Nobody stood up and said, 'That's not enough.'" Batistatos reels out a vision of Atlantic City as a "smaller, friendlier, more ethnically rich version of Las Vegas," where people will rediscover the Boardwalk and the beaches, appreciate a history that includes the Miss America Pageant and the early careers of Frank Sinatra and Dean Martin, and take advantage of deep-sea fishing, sailing and nearby golf courses.

But Batistatos's vision seems a bit of a mirage when one considers the insurmountable obstacles posed by limited plane connections and the acute shortage of hotel rooms. Atlantic City's airport may have one of the longest runways in the world, as its boosters always claim. But aside from a few flights from Florida and the Midwest, the latter route just started this year, there is no regularly scheduled air service, and major airlines refuse to consider making Atlantic City a destination unless the casinos guarantee to buy blocks of seats. That's an idea whose time hasn't come. "We don't have 50 people from, say, Cleveland coming in every day," says Brown.

Then there's the problem of where the airborne newcomers would stay, anyway. In 1999, only 4.2 million hotel room nights were available in the Atlantic City casinos for their 37 million visitors. By comparison, approximately 32.8 million room nights were available on the Las Vegas Strip for 33.8 million visitors. Atlantic City hopes to increase its 16,000 hotel rooms to about 20,000 in the next four years. But that won't be nearly enough to turn the place into an overnight destination. Favored customers -- that is, heavy gamblers -- account for the 94 percent occupancy rates at the Atlantic City casino hotels. That ratio isn't likely to change. Even The Borgata's 2,000-plus rooms will be mostly turned over to what Boughner calls "enthusiastic players."

An increasing emphasis on identifying and courting the loyalty of heavy gamblers -- known as "avid experience players" or AEPs, in the anodyne business language of the casino world -- is marking the emergence of a "new" Atlantic City more so than plans for new hotel rooms and scheduled flights. In terms of zeroing in on such high rollers, no casino does a better job than Harrah's. Five or six years ago, Harrah's became concerned about slowing revenue growth among its 22 casinos spread across the country. Management decided that ways had to be found to pry more dollars from the avid experience players -- those 20 percent of gamblers who account for 80 percent of revenues. A computerized database was set up to track the 19 million people who have bet in a Harrah's casino. "Now we know our customers' preferences: what kind of games they like, what food they prefer, what shows they want," says Tim Wilmott, the eastern division president of Harrah's Entertainment. "And based on this player preference information, we drive all our marketing." So, a decision was made to end all busing to Harrah's Atlantic City casino because lower-income day-trippers like Dotty and Mary Lou were taking up too much time on the slots.


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