A tale of two hotels

Gary Thompson

Wednesday, Jan. 22, 1997 | 11:59 a.m.

In this tale of two "cities," it truly is the best of times and the worst of times.

At New York-New York, business is booming. At The Orleans, it isn't.

It's too soon to tell if those trends will continue. But the initial results at Las Vegas' two newest resorts could well bolster the perception of a widening gap between the tourist and locals gaming markets.

Some securities analysts speculate New York-New York will touch off a new flurry of tourist growth, while The Orleans will struggle to compete for a share of the seemingly sated locals market.

New York-New York is barely two weeks old and, so far at least, exceeding all expectations. Analysts are scrambling to revise their cash-flow projections in light of the unexpected crush of customers. Some have issued new buy recommendations for the stock of its joint-venture owners, MGM Grand Inc. and Primadonna Resorts Inc.

The Orleans is just over a month old and, so far at least, performing under expectations. But no one's pushing the panic button yet.

"We've just completed the first two weeks of January, which are two of the three worst weeks of the year," says Harlan Braaten, president and chief operating officer of Orleans' owner Coast Resorts Inc.

"It would be premature to judge the success of this property in one of the two slowest months of the year," he says. "Right now, for us to say this is a home run is difficult. February will tell us how successful our operation will be."

That's when Orleans' first slot promotion gets under way, all the hotel's 840 rooms will be open and its new Italian restaurant, Vito's, debuts. In addition, Orleans will begin airing television commercials that had to await the showroom opening to be filmed.

"Occupancy rates will increase in February, and we'll be able to use the significantly increased head counts in the rooms," Braaten says. "New York-New York has an edge with walk-by traffic, and we don't."

Braaten says New York-New York "is probably going to have a smashing two weeks, like we had in December."

Caroline Coyle, advertising and public relations director for New York-New York, confirms Braaten's comment.

"In its first three days of operation, the Il Fornaio restaurant set companywide records," she says. "The Village Eateries did 3,000 pizzas in one day, and they sell it by the slice.

"The roller coaster did 9,000 rides the first day and 70,000 in the first week and a half. Occupancy rates have run in the high 90s, and we expect the same for February. And this is traditionally the slow time of year."

Acknowledging that the number of visitors surprised New York-New York officials, Coyle says, "Anticipation had a lot to do with it.

"People were eager to come in and see if we'd done as good a job on the interior as the exterior. There was great intrigue in the marketplace."

The Strip resort's slot club, the New York Slot Exchange, signed up 11,000 persons in the first three days. In a bright spot for Orleans, the off-Strip property's slot club already boasts 40,000 members, and Braaten expects that number to grow with the February promotion.

Slot players are a critical resource for Coast Resorts, and some analysts feared Orleans might draw customers away from its nearby sister resort, the Gold Coast.

"As we compare the Gold Coast numbers with prior years, the changes are minor," Braaten says. "In our view, Orleans hasn't impacted the Gold Coast that much."

The Coast Resorts executive says it's "too early" to make any changes in Orleans' marketing thrust, which is divided between the tourist and locals businesses.

"We'll be evaluating our slot-club list and the play in the casino, and focus on getting our name out by continuing to build on word of mouth," he says. "If people tell their friends, relatives and acquaintances they've had a pleasurable experience, they'll want to try us out."

Coyle expects New York-New York to continue to draw large crowds, "though the marketplace will stabilize after a period of time."

She downplays speculation the newest Strip resort may draw customers away from nearby competitors.

"Competition is a good thing because it raises the standards within the industry," Coyle says. "Our anticipation would be that the whole four corners of the Strip and Tropicana Avenue would definitely benefit from our opening."

Neither Braaten nor Coyle would provide information on the early financial performances of their respective properties. It's likely little data will be officially disclosed until April, when the parent companies will release earnings reports for the quarter ending March 31.