marrandino conversation

Don Marrandino, departing eastern division president of Caesars Entertainment.

Anthony Smedile

Don Marrandino was born in Atlantic City and grew up on Madison Avenue before his parents moved the family to neighboring Brigantine.

Now 51, he entered the casino business 30 years ago, making $5 an hour as a hotel reservations clerk at Bally’s Atlantic City.

His rise in the gaming industry included 20 years as a top executive at Las Vegas casinos. He returned to Atlantic City in late 2009 to become eastern division president of Caesars Entertainment, taking charge of Bally’s, Caesars, Harrah’s Resort and Showboat casinos.

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In the latest "A conversation with ...," Marrandino talks about his views of Atlantic City and the casino market.

Q. What lessons did you learn in Las Vegas that can be applied here?

A. I think what we have tried to do here for the last two years has been a lot of the Las Vegas-style stuff. When I came back here, I was very vocal and said we have to utilize Boardwalk Hall more.

I think the last two years have been the busiest years and certainly with the most variety — the sports, the boxing. We have three big boxing matches coming up, plus ice skating and hockey. We've been very involved with that. And concerts. So I guess what I'm saying is, we need to have that kind of entertainment that people are going to come to that's not in Pennsylvania.

Q: The governor and the Legislature have created the new state-run Tourism District to make the city safer and cleaner. From your standpoint, what progress has been made so far with the Tourism District?

A: I've seen a lot of progress with the Tourism District. Especially on the Boardwalk, I can see a heck of an improvement in the homelessness and I certainly see an improvement in the cleanliness with the Special Improvement District now reporting to the Casino Reinvestment Development Authority. But the thing I can say at the end of the day is, it's better than it's been, and I think they are trying to make it better. So I see cleanliness improving, I see the cleanliness of the beach improving, I see not as many (homeless) people on the Boardwalk with cups.

So I think that the image of the city has been better.

Now, from a functional standpoint in marketing, we are forming the Atlantic City Alliance and in that we are mandated to spend $30 million a year in advertising and marketing of the city. That will start this year with a $5 million spend in the next six months or so. That will start marketing and advertising the city. I think marketing is one of the biggest things. We now spend about $5 million a year telling everyone about Atlantic City. Other destinations -- Chicago, Orlando, Las Vegas -- spend 10 times that amount of money. This year, instead of subsidizing the horseracing industry, we're going to shift that money to tell people about what a great destination Atlantic City has become.

Q: We have heard a number of casino operators, city officials and state officials, particularly the governor, talk about the importance of conventions in Atlantic City. What efforts are there to draw more conventions here, particularly during the slower midweek periods, when you often see hotel rooms go vacant?

A: Unfortunately, we've had a six-year decline in convention business, although this year we've seen a little bit of an uptick so far. But the most important thing that is going on here right now is improving the convention business in the town. So obviously image is paramount.

We are perceived as a second-tier convention destination, although I would argue with our amenities that we are not second tier. But when you compare Atlantic City to Chicago, Orlando and Las Vegas, we are not in that first tier, just by the design and size of our hotel inventory. But we charge first-tier rates for the convention business here. That is unacceptable and needs to change quickly. Not hotel rooms, but to put on a convention here or an event at Boardwalk Hall is way too expensive. Too many people's success and employment depend on those two venues to be booming. And they are very expensive to operate.

Q: Why are they so expensive?

A: There's a myriad of reasons. One is the labor is extremely expensive and as costly as a first-tier city. You know, when we put on the Devils hockey, they came in here to negotiate for next year and they said it is cheaper for them to play in Newark or Madison Square Garden than it is in Atlantic City. That is not a good thing to have. So we need to have more cooperation.

When the Boardwalk Hall is busy, the Boardwalk is busy, and obviously because of our (casinos') proximity to the Boardwalk Hall, the more stuff the better. But it impacts the entire city, not just us. It drives room rates up. In an NHL hockey game this past year, there had to be 2,000 people from Hershey who were staying in town on a Friday night. That drove the room rate up for the entire city, which is a great thing. But conventions are paramount to our success.

Q: The Atlantic City airport is a hub for local travelers to fly to Florida and other destinations, but overall, though, it hasn't contributed as expected to bringing tourists here, particularly high-rolling casino customers. What can the city and the casinos do to boost airport capacity and draw more tourists?

A: Well, here at Caesars, we fly in about 50 flights a month. It's almost like a small airport here. We go to about 100 cities in the Northeast and central part of the country and bring in thousands upon thousands of gamblers to Atlantic City, so we essentially operate our own airline. The scheduled service that we have here through Spirit and AirTran has been improving. We have good customer support from Atlanta. The Boston runs this summer have been extremely full. Chicago and Detroit have been good.

But it's not just Atlantic City; (other areas) need to recognize what a great experience the Atlantic City airport is. If you fly to Philadelphia, you are on the tarmac an average of 37 minutes. If you fly at the Atlantic City airport, you can get there 15 minutes before the flight, you can go through security and you are on the tarmac an average of six minutes.

Q: With all those advantages that you just described, why aren't more airlines rushing to provide more service at Atlantic City International?

A: Well, we don't have enough hotel rooms yet. And I think we need to do a better job at getting investment in here. I've been encouraged lately. A lot of the smaller hotels have invested capital and they are starting to get better product into the market, which I think will help us.

Q: You oversee four casinos that collectively control about 40 percent of the Atlantic City market. What types of projects will be done in the future to make Bally's, Caesars, Harrah's Resort and Showboat even better?

A: From a capital perspective at Caesars Entertainment, we have been very bullish, even the last several years when people haven't been spending a lot of money. We have been bullish on keeping up the cycle of renovating our hotel rooms. So in the past year and a half, we have renovated 60 percent of the Claridge rooms and absolutely cleaned the outside of that gorgeous building up. We spent $10 million to fix the brick to bring it back to its original exterior, painted it, and fixed all of the lighting at the top of the place.

Here at Caesars Atlantic City, we've renovated our suite product and hotel rooms over the year. In fact, the rest of this year we will finish the remainder of rooms that haven't been touched in the last five or six years from a rehabilitation standpoint. So we're proud of our room product.

At Harrah's, in the last several years we have added The Pool and the hotel tower. The rooms are gorgeous. They are like a Four Seasons. We are planning to go through and work on more of the rooms in the towers.

At Bally's, we've taken an aggressive stance. It's a big part of our convention business. We have 50,000 square feet, and last year we renovated our entire convention facility and continue to work on the room product.

At Showboat, we've just introduced a new restaurant, Scarduzio's with Chris Scarduzio, and really rehabbed that place. I think it's going to work hand in hand with the House of Blues venue that we have, and I think it's been great. So we have continued to spend money even in this tough economy.

Q: Will parent company Caesars Entertainment look to sell any of its Atlantic City casinos?

A: I have not heard any of those comments from anyone. We continue to operate in Atlantic City. We believe in Atlantic City. We have been very supportive of the governor and Legislature's initiatives to make this better. Obviously, we have a big investment in this town, and we are working very hard to continue to be profitable and hopefully start to be able to grow jobs and invest more capital in the community.

Q: Atlantic City will see the Revel casino open next May and possibly a Hard Rock casino open in the spring of 2014. What will those casinos do for the market?

A: Well, Revel is a beautiful building. From what I understand, they are going to be focused on convention business and retail business, which I think is what the city absolutely needs. Being in Vegas for 20 years and going through at least 10 megaresorts opening over my tenure there, every time there was a great facility, it was, "Oh my God, you've got to see it," and the town benefited. Every time there was a "Me, too" addition to the city, it was ho-hum and it was drag.

So I'm hoping that Revel is not a ho-hum and it's a must-see and it has great restaurants and clubs and entertainment. I'm hoping it books convention business. As I said earlier, this town is a whole different town when there are a lot of conventions in town.

Q: What about the Hard Rock?

A: I am as big a fan of the Hard Rock brand as anybody. I was chief operating officer for the Hard Rock company in Las Vegas out west. I believe in the brand. I believe the brand is young, innovative and edgy. So if they are going to build this property here, I hope they are true to the brand. I think it would draw an element or clientele that is not necessarily coming to Atlantic City. In the short term, it will help grow construction jobs over the next several months, which really helps the local economy here.

Q: The casinos have contract negotiations coming up with Local 54 in September. How do you see these negotiations shaping up?

A: I've enjoyed a great relationship with (union president) Bob McDevitt and the Local 54 members. We've created jobs in the past year -- I think 225 or 250 additional restaurant jobs in newly renovated spaces that we have. I can tell you we will be fair in negotiations, like we've always been. And we will be in a partnership. Obviously, Atlantic City has been in a tough time, but they have been a great partner to us, and I anticipate gentlemanly negotiations.

Q: So you wouldn't anticipate a strike happening?

A: I think a strike would not be a great thing for the city. Hopefully, we can get something done.

Q: We've seen the Atlantic City market in a slump for 4 1/2 years. What are the keys for revitalizing the market?

A: If we stick to the same business model, with the ridiculously high property taxes that we all pay, it becomes more and more difficult to do what we do. But our hotel occupancy has been terrific -- 97, 98 percent -- all summer long and with great rates. Our convention business is up 40 percent over last year. Our food and beverage revenue, where we have added new restaurants, has increased significantly. Our entertainment counts have been terrific this summer.

I am very pleased with the amount of visitation we've had here. So if we keep doing the same thing, we are going to keep doing the same results, and I think we are poised to take over.

The one thing we have to work on is the image here. We have to have positive stories from Atlantic City, not just that gaming's down. I think there are a lot of success stories that need to be brought to light to say, "Hey, did you know that one of the best acts in the country was here or some of the best boxing?"

Q: Analysts have been predicting that in the next year or two Pennsylvania may overtake Atlantic City for casino revenue. Just how strong do you see Pennsylvania becoming and what does Atlantic City have to do to fend off this competition?

A: Well, Atlantic City is in a position that it competes for people who now have options in close proximity to their home. So if we continue to do the same casino-centric marketing, where we've seen bus traffic fall by 60 percent, you know we are going to have bad results. But we don't choose to do that. We choose to say that the entertainment options in Atlantic City are as good as anywhere in the country, maybe besides New York and Las Vegas. Some weekends, we are better than both of those cities when you see all those places out there with great entertainment. We have some of the best restaurants, both in the hotels and outside of the hotels, in the city. It reminds me of neighborhood New York restaurants. I am a frequenter of a lot of them and enjoy them.

Our convention business is something that we have to focus on to drive business here. We have 17,000 casino hotel rooms. By last count, I think there are less than 500 in Pennsylvania. Yes, there are daytrip opportunities, but we need to extend the stay of our customers here.

I feel that we have to continue to be more diversified in our offerings. I think in the future, if we all stick together, work together, advertise, clean up the Boardwalk, clean up Pacific Avenue, help fix the city's image, I think things could be a heck of a lot better in the coming years.

Q: Are you able to estimate at this point how much business Pennsylvania is stealing from Atlantic City, revenue-wise, especially now that table games have started in Pennsylvania?

A: To qualify it, you look at what the revenue counts were pre-Pennsylvania and what they are now. It's probably 80 percent of the decline. ... So 80 percent of the decline probably went to Pennsylvania over the past four years.

Contact Donald Wittkowski: 609-272-7258

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