Gulf Coast wants to replace Atlantic City as No. 2 hot spot

David Strow

Wednesday, Aug. 18, 1999 | 10:48 a.m.

Can the beaches of Biloxi replace the Boardwalk as America's second favorite gaming destination?

The Gulf Coast, together with Mississippi's riverfront casino business, is trying to make that happen. And over the past 18 months -- thanks in large part to Las Vegas dollars -- it has made considerable progress in catching up to its Northeastern rival.

"I think there will be a day when you see (Mississippi pass New Jersey)," said Andy Bourland, director of public affairs at Mirage Resorts Inc.'s Beau Rivage resort in Biloxi, Miss.

With 16,000 hotel rooms, the Gulf Coast's hotel inventory is already the equal of Atlantic City or Reno. That's soon expected to rise to 20,000 to 25,000 rooms, surpassing both Atlantic City and Reno -- and even nearby New Orleans.

"We are a pleasure destination with gaming," said Stephen Richer, executive director of the Mississippi Gulf Coast Covention and Visitors Bureau, located in Gulfport, Miss. "Until recently, the only destination that was (a pleasure destination) was Las Vegas. Our model is to become the second major pleasure destination with gaming.

"Atlantic City, just by the mere fact of where they're located, will always get a lot of play, and I don't think that'll stop. But that's not what we're trying to be. This is about a vacation."

Gaming win figures show Mississippi is quickly catching up with Atlantic City in its eighth year of legalized gaming.

In 1998, Mississippi's 30 casinos reported a win of $2.17 billion, a 9.6 percent increase. The Gulf Coast's win was $813.7 million. Atlantic City, by comparison, had a win of $4.03 billion, up 3.2 percent. Nevada's win was $8 billion, a 3.4 percent rise.

But Mississippi's real growth has come in 1999, growth that's occurring largely on the Gulf Coast. Over the first six months of this year, Mississippi has posted a $1.25 billion win, compared to Atlantic City's $2.01 billion win. Mississippi's win is up 15.4 percent, compared to 3.2 percent growth in New Jersey.

The Gulf Coast is the biggest catalyst. With $506.8 million in win so far in 1999, the coast's revenues are up 22.9 percent.

But gaming only accounts for about 25 percent of total tourist revenues on the Gulf Coast. That's still the largest piece, but is followed closely by food and drink, with 23 percent, and retail sales, with 19 percent. The area has moved to boost its retail business as well, adding 2.5 million square feet of retail space in the last five years.

"You have this whole mix of things most gaming destinations don't have," Richer said.

That's apparently drawing from markets that used to be the exclusive domain of Las Vegas or Atlantic City. Over the first two weeks of July, Richer's bureau received 5,100 inquiry calls. The second-leading state of callers was New York. No. 6 was California, and No. 9 was New Jersey.

The Gulf Coast is relying heavily on Las Vegas dollars. Las Vegas companies operate half of the 16,000 rooms along the Gulf Coast.

Beau Rivage is the most dominant example. Ever since the $650 million, 1,750-room resort opened in Biloxi in March, gaming revenues along the coast have been experiencing double-digit percentage growth every month.

"We had the same discussion on the Gulf Coast as occurred in Las Vegas in 1989" when the Mirage first opened, Richer said. "Everybody was getting ready to lose market share to Mirage, but everyone grew. We're doing it by growing the market, instead of fighting for existing market share."

Much larger new projects, funded by Las Vegas companies, are on the Atlantic City drawing board, however. Boyd Gaming Inc., together with partner Mirage, hopes to open Italian village-themed Borgata in 2002. The $750 million hotel would have 1,500 rooms.

Two even larger projects are planned for Atlantic City, though it's unclear when they'll become reality. Mirage has plans for Le Jardin, a $2 billion, 4,000-room hotel-casino, but won't say when it will open, or what theme it will have. And MGM Grand is planning an $800 million to $1 billion, 2,000-room hotel, but has been held up by difficulties in acquiring the necessary land.

The only project with a similar scope still planned on the Gulf Coast is the President Casino expansion, a 12-hotel, $2 billion project. That project would be split among multiple operators, however, and no one has been lined up yet. A group of local investors is planning the $400 million Acropolis, while plans have been announced for a $250 million, 350-room Hard Rock hotel-casino.

Bourland said Mirage was drawn to Mississippi by two elements: a regulatory and tax environment quite similar to Nevada's and a potential market of 42 million people living within two hours of the area by plane.

"(The Gulf Coast) rivaled any resort area we could think of," Bourland said.

To ensure that the Beau Rivage could draw from across the country, Mirage struck a deal with AirTran. Terms of the deal weren't disclosed, but as a result, AirTran established air service between the coast and seven cities just as the resort opened in March.

Just four months after opening, Beau Rivage occupancy is running "well above 90 percent," Bourland said.

"We're extremely pleased with hotel occupancy," he said.

Mississippi also is relying on the substantial international market contacts of Mirage and Park Place Entertainment to boost international business, Richer said.

Richer sees Central and South American tourists as the key to Mississippi's international marketing. Just as Las Vegas draws on the Asian market, the Biloxi area hopes to draw on Latin America.

One way to make that happen is cruise lines. At this time, the Port of Gulfport serves primarily as the main gateway for Central American bananas making their way into the United States. But Gulfport elected officials have begun discussions with a number of cruise lines to start docking along the Gulf Coast.

"The ports around Florida and the Caribbean are starting to fill up," Richie said. "We could become the first place where cruise lines are coming into a casino destination."

Growth may have to slow down soon, for the eastern tip of the Biloxi beachfront is almost full. That is where most of the new growth in the area has occurred, and is the home of the Beau Rivage and the Imperial Palace. But Bourland thinks that space crunch will force new developers to focus on putting up high-quality products along the coast.

"It's important for the Gulf Coast community to take a step back, look at the growth they've experienced and determine where they want to go in the future," Bourland said.