Chief executive says Borgata building strong business base

Wednesday, Oct. 15, 2003 | 11:12 a.m.

While Atlantic City casino watchers have been looking for indications of whether the opening of the $1.1 billion Borgata would grow the market or steal share away from established properties, operators of the property feel they've won either way.

"It's too soon to determine whether we'll be profitable for the long term," said Robert Boughner, chief executive of the Borgata. "But we're off to a great foundation."

The Borgata had been open 105 days when Boughner gave his keynote speech at the inaugural Casino Design 2003 conference that concluded Tuesday at the Hyatt Regency Lake Las Vegas Resort in Henderson.

New Jersey gaming regulators said Atlantic City casino revenue dropped 0.6 percent to $368.9 million in September and the Borgata -- a property jointly owned by Las Vegas-based Boyd Gaming Corp., the managing partner, and MGM MIRAGE -- reported gaming revenue of $42.1 million for the month. Analysts have calculated that older Atlantic City casinos saw their revenue drop by 12 percent in September.

Boughner, speaking to an audience that included developers, designers and architects as well as casino executives, explained in his 45-minute presentation how the 2,000-room property in Atlantic City's Marina district grew from a concept to one of the city's most visited properties.

A director on the Boyd Gaming board, Boughner said the first step in the process was to research what type of features would appeal most in the Atlantic City market.

"What we found was a group of middle-market consumers who were ready to trade up," Boughner said. "They aspired to higher levels of quality and taste and were willing to pay a premium for the escape."

Boyd and MGM MIRAGE found consumers "were tired of faceless places and wanted the type of properties in Atlantic City like they have in Las Vegas."

Boughner said the company didn't aspire to be like the Hard Rock hotel-casino or to what ultimately became the Palms hotel-casino in Las Vegas because executives felt that would produce a niche market that was too narrow. Instead, he said, planners projected building a property that was fun, upscale, energetic, sensual and international.

"One of the smartest things we ever did was not to get too cute," Boughner said. "We said this is not going to be an ersatz Tuscany."

But explaining the vision of the Borgata to lenders proved to be a challenge.

"We were looking for $630 million in loans," Boughner said. "We took that to the markets and said we wanted fun, upscale, energetic, sensual and international, and they said to us, 'Yeah, but what's the theme?"'

One of the keys to success, he said, was hiring experienced casino designers to create the 11 restaurants, 11 retail outlets and the 125,000-square-foot casino.

Boyd and MGM MIRAGE contracted with Las Vegas development titan Marnell Carrao Associates, which built the Mirage and Bellagio and is working on Wynn Las Vegas, to develop the Borgata property and take it from concept to reality.

"Marnell was put in a position to do all the detail work," Boughner said. "They helped inspire confidence and they critiqued the work of others."

The end result was the first new property to open in Atlantic City in 13 years coming on line in early July. Boughner said the property was created for a demographic between the ages of 25 and 39, invited customers between the ages of 25 and 49 and ultimately attracted people between the ages of 25 and 65.

Boughner said the Borgata's restaurant and entertainment venues have been popular and that the property had "the biggest Saturday night since we opened" last weekend. Entertainers have helped put the Borgata on the map, with singer David Bowie announcing the start of his "A Reality Tour" there. Boughner said that show sold out in 13 minutes.

Developing a quality building, he said, helped draw quality applicants to work. When the Borgata set out to fill 4,800 jobs, it got 65,000 applications, he said.

"We did not want to be a commoditized property," Boughner said. "From that perspective, I think we have succeeded."