The Sun Herald, Biloxi, Miss., Inside Gambling Notes Column
By Dave Palermo, The Sun Herald, Biloxi, Miss.
Knight Ridder/Tribune Business News
May 23--THE ROOM BOOM: Some 5,138 hotel and motel rooms have been built on the Coast since 1993, a year after the opening of the Isle of Capri ignited a casino industry explosion on the Mississippi Sound.
The growing gambling and tourism industry has doubled the inventory of Coast accommodations. There are 11,585 hotel and motel rooms in Harrison, Hancock and Jackson counties today with another 4,465 rooms proposed, planned or under construction.
The inventory will reach 16,050 in 1999, largely due to the scheduled February opening of Mirage Resorts' 1,800-room Beau Rivage on Biloxi Beach. That's three times the number of rooms on the Coast in 1993.
Linda Hornsby, executive director of the Gulf Coast Hotel-Motel Association, said construction was so brisk at one point she had trouble keeping a running tally.
"When people asked how many rooms we had," Hornsby said, "I'd have to look at my watch."
The growth has been a bit unsettling for some operators, particularly those without casinos to fill the rooms.
The occupancy rate for casino hotels is 80 percent, according to Hotel-Motel Association figures, compared to 63 percent for noncasino properties.
The numbers are somewhat misleading because casinos provide discount rates and free rooms to preferred gamblers. Nonetheless, the figures show it's easier to fill rooms with a casino than without one. And whenever there is a rash of hotel-casino openings, smaller operators take the hit.
Noncasino operators braced themselves for a drop in occupancy with the February openings of Grand Casinos' Bayview Hotel in Biloxi and the first 15 floors of Ralph Engelstad's Imperial Palace hotel on the Back Bay.
"Easter weekend was the first time in years we've had room availability," Hornsby said.
The same phenomenon occurred in 1995, when Grand Casinos opened its Biloxi and Gulfport hotels and the Isle of Capri opened its Crowne Plaza Resort. Occupancy rates fell from 74 percent in 1994 to 71 percent in 1995 to 68 percent in 1996.
"I think (noncasino hotels and motels) expected a period of adjustment," Hornsby said.
The opening this month of Casino Magic's 378-room hotel tower caused smaller operators some concern. Engelstad has another 500 rooms left to finish and, of course, there's the towering Beau Rivage.
"It's a very scary feeling to know the room inventory is about to triple what it was in 1990," said Asher Travis, whose Gulfshores Inc. operates five Holiday Inns.
"I think we are already starting to feel the impact," Travis said.
Things are certainly better than before the casinos. Occupancy rates were an abysmal 50.8 percent in 1991. They skyrocketed from 55.9 percent in 1992 to 74 percent in 1994.
Meanwhile, average daily room rates jumped from $47 in 1992 to $60 in 1994.
The additional rooms are drawing motorists from farther away.
"If you do nothing but observe car tags, you can see that," Hornsby said. "We're also getting overnight tour buses," along with those arriving in the morning and leaving at night.
Hornsby believes the Coast will absorb the additional inventory. But it will take some creative marketing efforts, she said. And additional jet service and a major theme park wouldn't hurt.
"I see people doing marketing that have never done so before," Hornsby said, including the smaller operators. "They're placing ads in the papers. Some are hiring sales people. We want everybody to be in the marketing game."
Travis said he's hired about six people since 1990 who are either directly or indirectly involved in marketing the Holiday Inns, including a golf coordinator.
A nongambling attraction would spur additional visitors, Hornsby said. Something along the lines of a Six Flags, Busch Gardens or Sea World.
"I'm talking about a good, two-day theme park," Hornsby said. "If that happens, 16,000 rooms won't be enough."
(c) 1998, The Sun Herald, Biloxi, Miss. Distributed by Knight Ridder/Tribune Business News.