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New Owners of the Resorts Casino Hotel in Atlantic City, New Jersey
Survive Challenging First Year with Determination to Rejuvenate the
Property and Predict Continued Improvement in 2012

By Donald Wittkowski, The Press of Atlantic City, Pleasantville, N.J.McClatchy-Tribune Regional News

Dec. 07, 2011--ATLANTIC CITY -- Dennis Gomes has learned in the past year that bare butts on billboards are good for business. However, lawsuits, labor strife, a hurricane and competition from bigger and younger casinos are not.

Those are some of the things Gomes has had to deal with in his first year as co-owner and chief executive officer of Resorts Casino Hotel, Atlantic City's oldest gaming hall.

Looking back on the ups and downs of the past 12 months, Gomes said he and his casino partner, New York real-estate magnate Morris Bailey, are more determined than ever to rejuvenate the property, which is losing millions.

"My answer to some places who hope that we're going out of business is that we're going to last longer than them," Gomes said in a shot at his competitors.

Gomes and Bailey officially took over on Dec. 7, 2010, after buying Resorts for the fire-sale price of $31.5 million, a fraction of the $140 million that former owner Colony Capital LLC paid for it in 2001. The two men acquired the casino from a group of lenders that had grabbed control after the Colony group defaulted on the mortgage.

Gomes, a 40-year veteran of the Atlantic City and Las Vegas gaming markets, has tried to revive Resorts using a combination of physical improvements to the casino hotel and some zany marketing stunts.

On the positive side, Gomes said Resorts' cash-paying business for hotel rooms and food and beverage is up about 45 percent from a year ago.

Remodeled hotel rooms, a new Asian gaming parlor and Atlantic City's first casino gay nightclub are among the new touches at Resorts in the past year. Gomes declined to divulge the price tag for the improvements, although it is in the millions.

Resorts has also spent heavily on marketing promotions in hopes of drawing customers. To advertise the "Moonshine Follies" musical revue held at Resorts in early spring, Gomes slapped a picture of a dancer's near-nude backside on highway billboards. Gomes estimated the headline-making billboards -- along with other promotions and events at Resorts in the past year -- helped to generate $14 million in free publicity for the city and $6 million for his casino.

Most notably, Gomes has rebranded Resorts into a Roaring '20s theme to capitalize on the national publicity of the hit HBO show "Boardwalk Empire," which was inspired by Prohibition-era Atlantic City.

Winnie and Sal Termine, a married couple from Long Island, N.Y., said the recent changes will keep them coming back to Resorts. Both in their late 70s, the Termines have been customers since the casino opened in 1978.

"I like all of the shows they have," Winnie Termine said.

Sal Termine said he had only one complaint -- the windows for the guest rooms in Resorts' Ocean Tower are too drafty.

"We were in there and the drapes were going like this," he said, using his fingers to show how the curtains were swaying in the draft.

Resorts' new Roaring '20s theme includes having employees dress up in Prohibition-style costumes. Cocktail servers parade around in skimpy outfits reminiscent of those worn by the flamboyant flapper girls of the 1920s. The costumes generated controversy when dozens of former cocktail servers filed discrimination lawsuits against Resorts alleging they were fired to make room for younger, sexier women.

Gomes has denied the allegations, claiming the suits have no merit. But celebrity attorney Gloria Allred, who represents nine middle-aged women in one of the suits, has denounced Gomes and Resorts for their hiring and firing practices.

Resorts encountered labor trouble of another type when Gomes required Resorts' employees to reapply for their jobs as part of the transition to new ownership. Most of the workers were rehired, but at reduced wages. Gomes argued he had every right to cut labor costs in his role as the workers' new employer, but union officials have complained about "poverty wages."

"There's no difference to me between union and nonunion people," Gomes said, insisting that he has treated all employees fairly.

Resorts was just days from closing before Gomes and Bailey bought the property. Gomes maintains that nearly 2,000 employees would now be out of work if he had not stepped in.

Local 54 of UNITE-HERE, Atlantic City's largest casino union, has staged noisy demonstrations at Resorts to protest the pay cuts. Bob McDevitt, Local 54's president, criticized Resorts for doing "a lot of economic damage" to the casino's veteran workers.

McDevitt, though, has toned down his rhetoric against Resorts in recent weeks as both sides have tried to work out a contract settlement. He expressed hope that an agreement will be reached after the holidays.

"I believe we're going to be able to move forward with the negotiations and get things resolved," McDevitt said.

Gomes said Resorts must keep its labor costs in check as part of its economic salvation. During the ownership switch last year, Gomes said he discovered Resorts was in a financial hole "as deep as the Grand Canyon."

Despite efforts to revive the casino, the hole has gotten even deeper. Resorts has suffered a nearly $16 million operating loss through the first three quarters of this year. For the same period in 2010 under the previous owners, the operating loss was $13.7 million.

Gomes estimated that Resorts will end the year with about a $9 million operating loss. Helping to cut Resorts' losses will be several millions of dollars in tax credits for promotional slot play. Previously, Resorts wasn't allowed to get those credits because the former owner did not fulfill the requirements, Gomes said.

Gomes blamed a large chunk of Resorts' losses on Hurricane Irene, which forced all of Atlantic City's casinos to shut down for three days during the last weekend in August. The hurricane, plus the subsequent flooding in Atlantic City's feeder markets of eastern Pennsylvania and North Jersey, cost Resorts about $4 million in revenue, Gomes said.

Although he originally thought Resorts would start turning a profit this year, Gomes now believes the casino will be in the black in 2012.

"My partner is happy and I'm relatively happy," Gomes said. "But would we prefer to be in a profit situation right now? Of course we would."

Contact Donald Wittkowski:

609-272-7258

DWittkowski@pressofac.com

___

(c)2011 The Press of Atlantic City (Pleasantville, N.J.)

Visit The Press of Atlantic City (Pleasantville, N.J.) at www.pressofatlanticcity.com

Distributed by MCT Information Services




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