Integrated Resort

Swapping Out Debt: Solving the riddle of debt-asset swaps and triangular deal structures

Posted on April 16, 2009

The riddle of “debt-asset swaps” is currently befuddling CFOs, public debt analysts, casino buyers and hedge funds.

All look to profit from discounted gaming company debt and the sale of distressed assets. Right now, there is a disconnect between a gaming company and its debt. On the one hand, the gaming company’s debt—whether $5 billion of publicly traded bonds or $50 million in privately held notes—is trading at prices that may be 10 cents to 70 cents on the dollar. On the other hand, the gaming company may be willing to retire that debt at face value, as part of its de-leveraging process.

The theory of a debt-asset swap is to take advantage of that disconnect. If one could purchase the gaming company debt at today’s steeply discounted price, and then present it to the gaming company for retirement at face value, then one should be able to profit greatly.

View Full Article Read More

The Challenges of Developing a Casino Resort

Posted on November 16, 2006

Over the past fifteen years the Indian casino industry has evolved and so too have the individual properties that make up this industry. Many of these casinos have evolved from simple gaming operations housed in temporary structures to regional gaming entertainment centers, and some have succeeded in evolving into lavish full-scale resorts. While the evolution of a casino into a regional gaming entertainment center is often a natural and progressive form of casino development, the creation of a true casino resort is often a difficult, expensive and risky process. There is, in fact, a wealth of problems facing any casino operator that attempts to make the transition from a local oriented casino to a full-scale casino resort.

When conducting a market assessment for an expansion of a casino into a resort, consultants examine a number of variables including 1) the location of the proposed resort and
its ability to support this kind of development, 2) the expected demand for a resort from primary feeder markets, 3) the proposed quality level of the resort, 4) the kinds of amenities
that will support the resort experience, 5) the size of the proposed resort and the size of its related amenities, 6) the relative strength of the competition and 7) the ability of casino
management to effectively manage a full-scale resort operation. Misreading any of these variables can doom the project.

View Full Article Read More

The Coming of the Entertainment Superstore

Posted on June 17, 2006

Casino development in Las Vegas has historically acted as a bellwether for the development of gaming and nongaming amenities in regional markets. Development trends such as the multi-station buffet, multiple dining options, casino food courts and showrooms were first introduced in Southern Nevada and eventually exported to other markets. Casino developers in regional markets have traditionally looked to Las Vegas to see what works and what doesn’t work; what is particularly appealing to gamers and what is not and adopted those development trends that hold the greatest promise.

While Strip properties often offer the most glamorous of amenities, it is Las Vegas’s locals casinos that have developed amenities that are most relevant to casinos in regional markets. Beginning with the opening of Sam’s Town Casino in 1978, followed by the Gold Coast Casino, the whole concept of a locals casino was first developed in Southern Nevada along with the suite of amenities that held appeal to local gamblers.

View Full Article Read More

What Makes a Casino Comfortable?

Posted on December 17, 2005

What makes a casino comfortable? While this may sound like a simple question and whose answer may seem obvious, it is rarely asked during the design process of a new casino or the renovation of an existing one. Nor is it a particularly easy question to answer. To some, a comfortable casino is one that has a down-home feel. To others it may be a casino that provides an environment that is exciting and energetic. Still to others, it may be nothing more than a place where customers are greeted by friendly and happy employees. In reality, a comfortable casino is comprised of a variety of elements including sound casino design, quality engineering, employee training in customer service skills and a healthy dose of common sense.

In the early days of Indian gaming, comfort was often overlooked in the rush to build and open properties as quickly as possible. As casinos became more popular, operators added more machines to existing space or expanded their properties in order to accommodate as many customers as possible. The notion of customer comfort played a secondary or even a tertiary role in the operation of the business. What has evolved for many casino operators are properties that are decidedly uncomfortable to be in.

View Full Article Read More

Be The Best Locals Casino You Can Be

Posted on September 16, 2005

As casino markets mature, there is a propensity among gaming operators and, in particular, Indian tribes, to diversify their businesses away from simple casinos. For some, the logical next step in the development process is to build full scale resorts, complete with golf courses, spas, elegant hotel rooms, ultra lounges and other amenities that appeal to new and different
customer segments. The basic assumption is that the local gaming markets are reasonably served and, in order for revenue to grow, a tribe must bring in new, different and far wealthier tourist segments.

The fundamental problem is that resort hotels are expensive to build and difficult to operate. They require a highly trained staff and an experienced sales team. A resort hotel stands a better chance of being successful if it is located within a resort community but that often means they must compete with branded hotel chains with international reservation centers. In addition, a resort hotel may alienate the very customers that made the casino successful as it often holds little appeal to local gamers.

View Full Article Read More

The Casino Marketing Plan: Objectives, Strategies and Action Plans

Posted on May 16, 2002

Last month this column focused on the first part of the casino marketing plan: conducting a thorough situation analysis in order to understand current and anticipated market conditions, the competition and the customer. Having performed this analysis, a casino marketing team can now focus on the development of realistic goals and objectives, a strategy that will achieve them and the specific action plans that become the marketing department’s “to do” list.

Too often the marketing team loses sight of the property’s mission. Operating a tribal gaming enterprise is more than about making money. It is about improving the quality of life for tribal members, providing security for future generations, offering employees opportunities for growth, and being a responsible member of the community. The marketing mission statement flows from the tribal mission but is also based on current market conditions. Once the team has prepared its situation analysis it is ready to develop the marketing mission d1at will guide the department’s efforts through the next year.

View Full Article Read More