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Tunica Casino Operators and Tourism Advocates Try to Figure Out Ways to Break
 the No-growth Doldrums; Need New Attractions On a Very Large and Grand Scale
 
By David Flaum, The Commercial Appeal, Memphis, Tenn.McClatchy-Tribune Business News

Mar. 11, 2007 - The flow of gamblers and money to Tunica casinos from the hurricane-stricken Gulf Coast has dried up.

Stable is the word you hear most often about the business as operators and tourism advocates try to figure out ways to break the market out of the old no-growth doldrums despite strong numbers last year.

"The difference from 2005 to 2006 was the increased business after (Hurricane) Katrina," said John Osborne, general manager of Hollywood Casino.

But the Hurricane Katrina-induced traffic had lasting impact, said Jeff Wallace, senior research analyst at the Sparks Bureau of Business and Economic Research at University of Memphis.

"It gave people a chance to see what Tunica has to offer and, I have no doubt, the casinos there were quite pleasing to people who had never been there before," Wallace said.

The hurricane wiped out all Gulf Coast casino business from September to November 2005 and coast casinos didn't approach 2004 monthly gross gaming figures until September 2006, according to figures from the Mississippi Gaming Commission.

September was also the last month of large year-over-year increases in Tunica. For the last three months of 2006, they were flat.

"As the Gulf Coast properties open, you can see a steady decline in business in the Tunica market," said John Payne, Central Division president for Harrah's Entertainment, which owns Horseshoe, Sheraton and Grand casinos in Tunica.

But, said Osborne, "We were able to convert a lot of people who were exclusively Gulf Coast customers to become Tunica customers entirely or at least to split their trips."

Still, that won't be enough to break Tunica out of the $1.1 billion gross gaming revenue rut it's been stuck in for the past few years.

Even with the Katrina effect, that figure last year was $1.16 billion, said Dennis Forst, gaming analyst for KeyBanc Capital Markets.

"The properties there have mined (the market) as much as they can," he said.

The larger players -- Horseshoe, Grand -- show the strongest performance while others are struggling, he said.

"I believe they can all stay open at this point," Forst said. "Two years from now, I don't know. I don't see anything that's going to move the needle."

Neither does Wallace.

There's nothing in Tunica like Beau Rivage in Biloxi -- a true, giant Las Vegas type of casino, he said.

"What Tunica offers is very close, but it's not quite there," Wallace said.

Golf, the river and air travel have started the process, said Webster Franklin, executive director of the Tunica Convention and Visitors Bureau.

"There has not been a lot of outside capital investment in the market in several years," he said.

But that earlier investment in Tunica National Golf and Tennis Center and the RiverPark have paid some dividends, he said.

The third golf course in the area boosted the number of golf rounds played from 47,300 in 2003 to 83,000 last year.

That, Franklin said, helped increase the average stay of overnight visitors from 1.9 nights to 2.8 from 1998 to 2006.

Expansion of the airport has increased the number of passengers from 8,900 in 2005 to 25,000 last year. Arrivals are at a 60,000 annual pace for the first two months of this year, Franklin said.

Wallace and others agree that Tunica needs more, probably nongambling, options to attract people from farther than the typical day-trip distance.

"What the Tunica market is going to need is some magnificent property -- it could be a casino or a Disney World -- that will bring a new group of people into that market," said Larry Gregory, executive director of the Mississippi Gaming Commission.

One possibility: The Myriad Botanical Resort, a planned complex including two or three casinos, a hotel, convention center, golf course, water and snow parks and other attractions.

The proposed $2.7 billion Riverbend Crossing in nearby DeSoto County might provide a boost for Tunica as well -- if the project and its MGM entertainment district are ever built.

Wallace is skeptical about the benefits of such additions for the gaming venue, although they might make Tunica more of a destination than a day trip.

"Las Vegas tried family stuff for awhile," he said. "They've gotten away from that for adult themes and amusements."

To help Tunica, attractions would have to appeal first to adults and "be on a very large and grand scale," Wallace said.

Franklin views the next growth step as development of the community. Projects with about 1,000 homes are in the works.

"That can be the spark that creates additional development," Gregory said, especially if it attracts retirees who make up a substantial percentage of casino visitors.

Development, said Franklin, means more grocery stores, pharmacies and people in the area itself.

"That bodes well for a better experience for people when they come," he said.

Closer relationships between Tunica and Memphis tourism promoters are developing and that "cross-selling\rdblquote could help add to travel and stay lengths, Franklin said.

The area has plenty of assets, from the airport, culture and history to the nearness to Memphis, Gregory said.

"They have no way to go but up," he said.

TUNICA COUNTY CASINOS GROSS GAMING REVENUES:

(in millions)

September 2005: $88.6  2006: $102.7

October 2005: $100.2  2006: $103.8

November 2005: $99.9  2006: $99.4

December 2005: $96.3  2006: $97.8

January 2006: $122.8  2007: $108.0

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To see more of The Commercial Appeal, or to subscribe to the newspaper, go to http://www.commercialappeal.com.

Copyright (c) 2007, The Commercial Appeal, Memphis, Tenn.

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