Boyd offering alternative to A.C. ‘riff-raff’

David Strow

Friday, July 2, 1999 | 11:31 a.m.

For Boyd Gaming Corp., the Borgata in Atlantic City represents a vast departure from anything it's done before.

The $750 million, 1,500-room Italian village-themed resort stands out for a company whose casino portfolio includes the Stardust, Main Street Station and the Fremont.

But Boyd is convinced its new hotel, set to open in 2002, could revolutionize the Atlantic City market -- and, perhaps, give East Coast high rollers an alternative to the Las Vegas scene.

"I don't know that one facility can transform a market, but it can act as a catalyst," said Robert Boughner, chief executive of the Borgata and chief operating officer of Boyd. "We don't worry about competing with anything there now."

Boughner spoke this week in Las Vegas at the Entertainment Real Estate Forum, an industry seminar.

The resort will not be a new concept for Mirage Resorts, Boyd's partner in the development. Both Boyd and Mirage are putting $150 million each into the development, which marks the first entry for both companies in Atlantic City. Groundbreaking is set for next year.

Boyd will contribute $150 million in funds, while Mirage is contributing $90 million in land and $60 million cash. The remaining funds, $450 million, will be raised from outside sources.

Mirage has planned a resort of its own on the property for at least four years. Known tentatively as "Le Jardin," the Mirage casino would cost $2 billion and have 4,000 rooms. A Mirage spokeswoman in Atlantic City said she had no further information on the plans for that resort, but Boughner indicated the Mirage resort would open within one year of the Borgata.

Such properties will instantly draw a new kind of client to Atlantic City, Boughner said -- a high-spending client who views the current Atlantic City casino too "cheap" for their tastes, repelled by the "riff-raff factor."

Boyd did extensive research into the Atlantic City market before announcing Borgata. One of the more extreme methods included walking down the Boardwalk with hidden microphones or video cameras, hoping to catch unadulterated opinions of the Atlantic City market.

What it found was that most Atlantic City customers weren't satisfied with the experience, but had no alternative. Many also expressed frustration with the lack of activities for non-gambling travelers.

"Atlantic City is great if you go without any expectations," one Atlantic City customer told Boyd researchers during their market studies.

That isn't to say the Atlantic City market isn't sizable. Boughner noted that Atlantic City's 12 licensees took in $4.1 billion in 1998, more than the 40 licensees along the Las Vegas Strip.

"That's without the people who don't go there now because there's nothing there for them ... (Atlantic City) doesn't meet their minimum standard," Boughner said.

The Borgata effort is drawing on the experience of the Mirage's opening in 1989. When the Mirage opened, it was the first major new casino on the Strip in 17 years, and it helped spark the trend toward high-end themed resorts in Las Vegas. The Borgata will be Atlantic City's first new casino in 12 years.

Borgata will stretch over 25 acres, more than three times the size of any other Atlantic City casino. In a market known for appealing to day-trippers, it will add 1,500 hotel rooms, including 346 luxury suits and 112 villas. It will shun the low-cost staples of the Atlantic City market, such as slot coin giveaways or cheap rooms. By charging more than their neighbors, Boyd and Mirage are calculating that the Borgata will attract a higher-end client that now shuns Atlantic City.

"The day trippers are the majority of the business in Atlantic City, and absolutely, we'll be encouraging them," Boughner said. "But we know there's untapped potential.

"If you add value, you can raise prices."

But Boughner doesn't think that Atlantic City will ever completely displace Las Vegas for East Coast clients, simply because the huge resorts found here couldn't be duplicated in that market.