Resorts Casino Hotel, the grand dame of the Boardwalk, is going to “turn a lot of heads” next summer after an extensive face-lift that will feature a Margaritaville-themed project as the centerpiece, the casino’s new operator said Thursday.
Connecticut-based Mohegan Sun, which has taken charge of Resorts in a new management deal, said some of the upgrades to Atlantic City’s oldest casino have already been completed, including a new high-limit slots area. Two new VIP lounges are scheduled to open on New Year’s Eve. Work will soon begin on a new food court connected to the casino floor.
Construction has started on the main part of Resorts’ renovation, a $35.5 million Margaritaville makeover that will include a restaurant and bar on the beachfront where the old Steeplechase Pier once stood. The Margaritaville theme will also dominate Resorts’ refurbished Boardwalk facade. Once customers step inside Resorts, they will see more Margaritaville attractions, including a tropical-themed section of the casino floor.
“I firmly believe this property is going to turn a lot of heads in Atlantic City this summer, with all of the new amenities and a redone casino floor. It’s going to be quite beautiful,” Mitchell Etess, Mohegan Sun’s chief executive officer, said during a conference call.
Etess said despite some delays caused by Hurricane Sandy, plans still call for completing the Margaritaville improvements by Memorial Day weekend, the traditional start of the peak summer tourist season.
“Although we’re enduring the lasting effects of Sandy along with the rest of the city, we’re making significant progress at the property,” Etess said.
The Margaritaville brand, owned by singer-songwriter Jimmy Buffett, is key to revitalizing one of Atlantic City’s weaker casinos. Month to month, Resorts languishes near the bottom of the pack in gambling revenue among the city’s 12 casino hotels. Resorts has suffered a gross operating loss of $2.5 million through the first nine months of 2012, although it has eked out small profits in the last two quarters.
In addition to taking over Resorts’ management, Mohegan Sun has become a 10 percent owner of the casino and has an option to increase its stake to 25 percent. New York real estate magnate Morris Bailey remains the principal owner.
The two Indian-owned Mohegan Sun casinos in Connecticut and Pennsylvania are now partners with Resorts in a marketing program that allows customers to use their rewards points for hotel stays, dining and entertainment at all three properties.
Getting customers to visit Atlantic City remains a challenge. Etess noted that business remains slower in Sandy’s aftermath. The casinos closed down between five and seven days because of the hurricane and have struggled to return to normal levels since reopening.
“I don’t think volumes are back to pre-Sandy levels yet,” Etess told casino analysts during the conference call.
Resorts and other Atlantic City casinos have also been hurt by the fragile economy and competition from gambling markets in surrounding states. The Mohegan Sun casinos in Connecticut and Pennsylvania have also been pressured by competition and the weak economy, putting a strain on their profits.
Parent company Mohegan Tribal Gaming Authority reported Thursday a nearly 11 percent drop in gross operating profits and a 6 percent decline in net revenue in the fiscal fourth quarter for the combined operations of the Connecticut and Pennsylvania casinos. Gross operating profits were $81 million, while net revenue came in at $351.8 million.
“Mohegan Sun in Connecticut continues to bear the brunt of increased gaming competition in the Northeast, particularly from Resorts World at Aqueduct in Queens, New York,” casino analyst John Kempf, of RBC Capital Markets, wrote in a note to investors.
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