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Sept. 11th attacks slow traffic but long-term negative impact not expected

Drive-in market keeps Mississippi casinos busy

No part of the economy has remained untouched by the terrorist attacks of Sept. 11. But the entertainment industry, including casinos, has been particularly hard hit.

“The terrorist events have had a significant negative effect on the travel and leisure industry, particularly on the airline, lodging and gaming sectors,” said Jay Osman, a casino analyst in Biloxi. “The four largest gaming companies, Harrah’s Entertainment, Park Place, MGM-Mirage and Mandalay Bay, collectively lost $2.5 billion in market capitalization on the first day of trading after the attack, and continued to lose ground since.”

Parent companies of casinos in the state have donated millions to the relief efforts even as they saw their own fortunes fall as reflected by declining stock prices.

Las Vegas and Atlantic City hotel occupancies were off by 40% and 25%, respectively, after Sept. 11. Osman said this situation is likely to continue with Vegas suffering the most since it relies on air traffic for more than 75% of its business.

Longer term, Osman predicts the gaming industry will recover once confidence is reestablished in travel safety, but the declining economy will continue to impact the industry somewhat.

“On the other side of the issue, this economy may prompt new jurisdictions to legalize gaming under fiscal pressures similar to the proliferating that took place during the 1990-1991 recession,” Osman said.

The tragedies happened at a time when business slows at casinos anyhow following the summer tourism season, said Andy Bourland, executive director of the Mississippi Gaming Association. Bourland said it will take a while to gauge the impacts.

“I believe that many of the properties are concerned about a pretty significant downturn for the foreseeable future,” Bourland said. “Clearly we’re already out for the normal tourist travel season in any case. I think it is going to depend a great deal on just how quickly the country recovers and moves forward from those events.”

Attendance at baseball games that resumed following the tragedy was higher than was expected although full houses weren’t seen. And attendance at Coast casinos a week after the tragedy was close to normal.

“It may have been a case where people were looking for an escape from the unfortunate situations,” Bourland said “It is a very difficult issue, and one that potentially has long-term effects.”

The Mississippi gaming market is not expected to be impacted as much as the Las Vegas or Atlantic City market.

“Las Vegas gets a significant portion of its business from air travel, and that is down dramatically right now,” said Duncan McKenzie, president and general manager of Grand Casino, Biloxi. “Atlantic City’s big market is New York City.”

McKenzie said that on Tuesday and the immediate days following as news was breaking customers were not coming out to casinos. People were home glued to television sets watching the news. By the weekend things did pick up, which was partly attributed to other entertainment being cancelled such as baseball and college football. McKenzie said as a result, business was closer to the levels normally seen.

Mary Cracchiolo, public relations manager, Beau Rivage Resort and Casino, said there were conventions that cancelled following the terrorist events. But hotel occupancy remains in the high 90s that has been the norm.

“The disruption of business in Biloxi was not as severe as at other MGM-Mirage properties because we are a strong drive-in market,” Cracchiolo said. “Typically it slows down this time of year, and we manage business to the volume. Our transient bookings are staying about the same. If this weekend is not a sellout, it will be very close.”

Cracchiolo said no layoffs are planned as a result of the drop off in business following the attacks.

The Silver Star Resort and Casino near Philadelphia reported no change in its business as a result of the Sept. 11th attacks.

“Operations have not been impacted,” said Silver Star public relations specialist Leroy Clemons. “People are not flying to Las Vegas, but they are driving to Philadelphia.”

Clemons added that security has always been high — and visible — at the Silver Star, so few changes have been made following the terrorist events in New York and Washington.

Tunica is also primarily a drive-in market for gaming, according to Webster Franklin, executive director of the Tunica Convention and Visitor’s Bureau.

“Going into the future, the market of Tunica is in a good position to remain healthy in that 95% of all of our traffic arrives in Tunica via their own personal automobile,” he said. “So we don’t depend heavily on airlines to bring our guests here. And I think once Americans get back to the business of life and everyday activities, you will see the Tunica market stabilize. Right now a week after the tragedy I don’t think most people are thinking about taking a fun get away weekend or a happy vacation. But time heals wounds, and I think Tunica is still in good position to be a strong market.”

The Tunica market grew about 2% last year. Franklin said that compares well to other tourist destinations across the country. Most destinations did not grow at all.

Misty Valaquez, director of communications for the Mississippi Gulf Coast Visitors and Convention Bureau, said traditionally gaming destinations have continued to see growth even during times of a slowing economy.

“Since the event that took place last week was unprecedented, all bets are off as to what would occur,” Valaquez said.

However, she said the Mississippi Gulf Coast has a reputation for providing good value for the dollar with reasonably priced hotel rooms, dining and entertainment. That should work in the area’s favor in continuing to attract visitors.

Casinos report being on a higher level of alert since Sept. 11. Precautions such as checking bags as people enter casinos have been instituted at some properties, and extra security officers brought in to work on the casino floor. Casinos already have extensive surveillance equipment.

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

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