License renewed, Borgata looks to expand

John Curran

Thursday, June 24, 2004 | 8:59 a.m.

ATLANTIC CITY -- The Borgata Hotel Casino & Spa, which has hit the jackpot with gamblers since its opening nearly a year ago, had its license renewed Wednesday.

The casino hotel, which began taking bets July 2, was granted a one-year license renewal by the state Casino Control Commission. As is customary with Atlantic City casinos, one-year licenses are issued for the first three years.

After that, regulators issue licenses with four-year terms.

The $1 billion casino, a joint venture of Boyd Gaming Corp. and MGM MIRAGE, has done a booming business since its opening, with gamblers and curiosity-seekers eager to check out its coinless slot machines, upscale restaurants and scantily clad "Borgata Babes" cocktail servers.

In its first quarter, Borgata produced $31 million in earnings before taxes, interest, depreciation and amortization. Earnings have climbed ever since, Boyd Gaming Chief Financial Officer Ellis Landau told commission members.

"Every quarter's been better than the quarter before," he said.

The Borgata, which has 2,010 rooms, has posted below-average occupancy rates, however. The casino's daily average is 85 percent, compared with 92 percent among the 12 casinos as a whole. Borgata officials attribute that to the price of their rooms, which average $125, higher than other casinos.

"We've developed a great, loyal customer base that we're very, very pleased with. All in all, we feel it's been a great first year for Borgata," said William S. Boyd, chairman and CEO of Boyd Gaming.

According to Boyd, Atlantic City could support two or three more mega-resorts like it.

So far, Borgata's biggest problem has been success.

Reaching the casino on the telephone can be difficult, and getting a room or a restaurant reservation is even tougher, especially in warm-weather months.

For those reasons, Borgata officials are already drawing up plans to expand the marina district casino.

CEO Robert Boughner told regulators that he and Boyd executives are conducting market research to determine what kind of expansion is most feasible, but he said the most pressing issue was making room in public areas.

"Our principal goal, at this point in time, is to take care of the excess demand that we have from a food-and-beverage standpoint," Boughner said.

The addition of 600 to 1,000 rooms is a possibility, but no decisions have been made yet, he said.

Boughner acknowledged that the Borgata's success had come at the expense of its competitors.

"Our goal was to attract customers to Borgata by taking (market) share from our competitors and by growing the market. I think we've demonstrated we've been successful at both," he said.