Big gain in gaming revenues on Coast; hotel occupancy causes concern

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Published: October 30,2006

Coast gaming revenues posted a significant gain in September from the previous month, nearly doubling from $66.8 million in August to $109.8 million.

It was the best September ever for the Coast casinos. The Coast casinos had zero revenues in September 2005 following Hurricane Katrina. Revenues in 2004 for September were $86.5 million and September 2003 revenues were $93.3 million.

“The numbers for September are reflective of hard work, but they are not a big surprise,” said Larry Gregory, executive director of the Mississippi Gaming Commission. “We projected the Coast market would return once a majority of the casinos were reopened. The numbers indicate growth in the market. If the numbers hold, and I think they will, we will return to the $1 billion mark for state gaming revenues by January 2007, one year after the re-opening of the Gulf Coast market.”

Gregory said as the Gulf Coast returns, the Mississippi River casinos are also growing with a 10% increase over 2005. September 2006 river casino revenues of $131 million were the highest September gross gaming revenues since 1992.

“Overall, the numbers definitely reflect a healthy Mississippi gaming market,” Gregory said.

The Coast’s largest casino, the Beau Rivage, reopened August 29, 2006. Other Coast casinos also reopened in late summer. That likely had a big impact on the increased gaming revenues.

“Coast-wide business was very strong in September as would be expected with the reopening of several properties,” said Allison Lewis, public affairs coordinator for the Beau Rivage. “Business continues to be strong when adjusted for this time of year. Our marketing department is operating in high gear getting the word out that the Beau is back and better than ever. By the end of the year the Beau Rivage will open three gourmet restaurants, our high-end men’s and lady’s retail stores, the theater and our spectacular golf course, Fallen Oak.”

Lewis said they have seen strong bookings for 2007 and expect that trend to continue.

However, there have been concerns about low hotel room occupancy on the Coast during a time of the year generally slow for business anyhow. Part of the issue is that Katrina volunteers, government and business workers, previously filling up many of the hotels have largely concluded their work and left.

“In a window of three months, there was a 40% increase in actual rooms available on the Coast and a decrease of 50% in rooms being used long time by contractors, volunteers, government workers, insurance adjusters and even some of our local residents,” said Steven Richer, executive director of the Mississippi Gulf Coast Convention and Visitors Bureau (CVB). “That is a good thing. We want to put those rooms back into circulation for visitors.”

For many months after Hurricane Katrina it was difficult to get hotel rooms at all. The challenge now is to get the word out that most of the casinos have reopened and plenty of rooms are available. Entertainment, including shows by big national stars, is also back.

The Mississippi Gulf Coast is heeding the experience of Gulf Shores, Ala., which took a big tourism hit with Hurricane Ivan in 2004. Tourism officials in Gulf Shores report that the first year after Ivan, they had almost no first-time visitors. Gulf Shores had decreased visitation even after most of the hurricane repairs were complete.

“We think we will do better than that because we have received so much positive coverage about the recovery of the Gulf Coast,” Richer said. “It is really hard when the fourth quarter is usually the worst quarter. Then things start picking up in January through spring and summer. All of a sudden we have a big increase in rooms at not the easiest time of the year to fill them.”

Some hotel representatives have been critical of lack of advertising to date to attract tourists back to the Coast. The Harrison County Tourism Commission has been under contract with Florida-based Turkel Advertising Agency, which has been receiving a $16,500 monthly retainer. Linda Hornsby, executive director, Mississippi Hotel and Lodging Association, said her association, representatives from local lodging companies and members of the Harrison County Tourism Commission met with Turkel two months ago and said a coordinated advertising campaign was needed immediately. But nothing yet has been done.

“I understand they are working on a long-term campaign and that is excellent,” Hornsby said. “But we could not have emphasized enough that we need something now. We needed something done two months ago. It is true occupancy is low. We understand this is typically the shoulder season, but occupancy is much lower than normal even considering the decreased inventory of rooms.

“Typically occupancy falls off starting August 15, but not this drastically. It is hitting hotels hard on weekends, in addition to weekdays. Usually you can pick up on weekends what you lose on weekdays. We just need something done.”

Hornsby said immediate action is needed to help properties that are still struggling to recover from business interruption and repairs as a result of Hurricane Katrina. The impact of lower visitation is not just restricted to hotels. Other businesses such as restaurants, charter boat fishing operations, golf courses and other attractions suffer when visitation to the Coast is low.

October isn’t usually that bad a month for occupancy. The end of August and September are traditionally slow, Hornsby said, but October usually picks up with some good business whether from conventions or tour groups.

“We just aren’t seeing that,” Hornsby said. “Everything we do is gauged by overnight stays because that is what pays the bills not only in the private sector, but room tax is what the coliseum and tourism commission depend on for revenue.”

Three local advertising agencies recently met with some members of the tourism commission offering to help with the situation — without charging a monthly retainer fee.

The Prime Time Agency, The Ad Group and The Guice Agency have proposed a campaign to bring back visitors to the Coast. Reed Guice of The Guice Agency said representatives from the tourism commission were very attentive, and appeared to be appreciative of the proposal.

“The next step would be to make a presentation before the entire commission,” Guice said. “We hope we will have that opportunity. Our advertising agencies have done very well here on the Mississippi Gulf Coast. In order for them to continue to do well, we must have a vibrant tourism industry. We live here, we have worked in these markets for decades, and feel like we are uniquely positioned to handle this challenge right now.”

Guice said the advertising message is simple: The Mississippi Gulf Coast is coming back, and we want you to come back, too.

“We need to reach out to the people who came to the Mississippi Gulf Coast before Katrina and simply ask them to come back,” Guice said. “We have to manage expectations, though. While we have a lot of attractions and many reasons to visit right now, we’re also in the process of coming back and rebuilding. We want to make sure we don’t over promise.”
Guice said a few months ago you couldn’t get a room on the Coast for love or money. Now the Coast’s hotel inventory is up to 10,000 rooms, and hundreds, if not thousands, go vacant every evening.

“The time to act is now,” Guice said.

Richer said the proposal from the three Coast ad groups will be evaluated along with the proposal from Turkel. Richer said there are amazing similarities in material approaches proposed by the local ad agencies and Turkel.

“We have seen some common themes but different vehicles of execution,” Richer said. “Everybody is very focused on how the Mississippi Gulf Coast is returning to its winning stride. I think we have a good message to get out, and I’m sure we are going to have some good help to do it. The tourism commission will certainly make a decision about how to proceed with our advertising in the next two weeks. That means advertising will certainly start in November, one way or another. We realize there are rooms that need to be filled, and we are going to be moving on this very quickly.”
Richer said the Coast is also getting a boost from the positive national press in publications such as The New York Times, Business Week, The Wall Street Journal and USA Today.

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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