April 03, 2011--ATLANTIC CITY -- Atlantic City's stagnant gaming market means that Borgata Hotel Casino & Spa is still the newest place in town, even though it is approaching eight years old.

But Borgata won't hold that distinction much longer. The $2.4 billion Revel megaresort, rising at the northern end of the Boardwalk, will open in mid-2012 to finally break the casino drought.

Revel's upscale casino is expected to compete for the same well-heeled customers who now gamble at the posh Borgata, so Borgata is giving itself a fresher look to fight its younger rival.

Boyd Gaming Corp., Borgata's parent company, is spending about $50 million to renovate the casino's 2,000-room hotel tower. More than 300 suites were redesigned last year. Renovations are now under way on 1,600 regular guest rooms, hallways and other parts of the hotel. Completion is scheduled for summer 2012, about the same time Revel will open.

Borgata is keeping things under wraps at this time -- declining to release architectural designs, allow photographers inside for a sneak peek or even discuss the project beyond a brief written statement.

"Offering a compelling guest room or suite experience has been an important aspect of the relationship that we enjoy with our customers. For many of them, the enduring comfort and style of our guest rooms has made Borgata their 'home away from home,'" Dave Coskey, Borgata's vice president of marketing, said in the statement.

Harvey Perkins, a casino analyst and executive vice president of Spectrum Gaming Group, called Borgata's project a "brilliant reinvestment strategy." Using the now-defunct Sands Casino Hotel as an example, he noted that older gaming halls that neglect their appearance are doomed in a highly competitive market.

"By deploying fresh rooms, they will continue to position themselves as a preferred destination among their customer groups," Perkins said of Borgata. "The timing of their deployment in 2012 also shows their defensive posture due to the anticipated opening of Revel. From where I sit, it's more about Revel."

Simple arithmetic indicates Borgata will spend about $31,000 per room for the 1,600-room renovation, a figure that Perkins called "adequate."

Borgata, which opened in July 2003, has more hotel rooms than any other Atlantic City casino. Its main 2,000-room tower was joined in 2008 by the new 800-room Water Club, a boutique-style property that cost $400 million to build.

Perkins said Borgata's hotel renovations are not only aimed at Revel, but also at the rival Pennsylvania casinos.

"This is a posture of anticipating new hotels in Pennsylvania," he said.

Since casino gambling began in Pennsylvania in 2006, Atlantic City gaming revenue has plunged from a peak of $5.2 billion in 2006 to $3.6 billion in 2010.

Mount Airy Casino Resort in the Pocono Mountains is the only Pennsylvania casino that currently has a hotel. However, the Sands Casino Resort in Bethlehem is preparing to open a 300-room hotel this spring. Other Pennsylvania casinos are considering hotel projects in hopes of becoming more like the resort-style properties in Atlantic City.

"I think hotels are the next obvious step in this market. In order to compete, we need more amenities," Wendy Hamilton, general manager of the SugarHouse Casino in Philadelphia, said in remarks last month during the Pennsylvania Gaming Congress. "When you want to game, you stay in Pennsylvania. When you want a weekend, you go to Atlantic City."

Pennsylvania originally was limited to slot machines, but added table games last July to become an even tougher competitor for Atlantic City. In 2010, Pennsylvania's 10 casinos grossed about $2.7 billion in gaming revenue, compared to $3.6 billion for the 11 properties in Atlantic City.

Wall Street analysts, during a panel discussion at the Pennsylvania Gaming Congress, predicted that Pennsylvania's surging gaming industry will likely overtake the slumping Atlantic City casinos in 2012 to become the nation's second-largest casino market behind Nevada.

Contact Donald Wittkowski:

609-272-7258

[email protected]

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