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As the attention of the design and construction industry was focused on China, a funny thing happened. As the recession slowly began to recede in the rest of the world, projects started appearing again. First they were small renovations—maybe a restaurant here, a gaming floor there. Then, new expansions began with a few modest hotel towers or more floor space. And then, the big projects began to reappear.
    
In Atlantic City, the Revel development was “on again” after shutting down for more than a year. In the Bahamas, the Baha Mar project promises to bring a new way to build to Nassau and the Caribbean. And the legalization of gaming is on the horizon in several states, which will mean more interesting projects.
   
In Casino Design magazine’s annual roundtable of design experts, the questions put forth examine the fragile recovery and how things have changed. Are the changes permanent or transitory? This year, in addition to the five questions posed to the experts, we added a “wild card” round where the respondents could pick one question—and we bring you the most interesting responses.

Our 2011 faculty, led by moderator Julie Brinkerhoff-Jacobs, president and CFO of Lifescapes International, includes:
• Dike Bacon, director of planning and development, Hnedak Bobo Group
• DeRuyter Butler, executive vice president of architecture, Wynn Design & Development LLC
• John Culligan, principal, Cuningham Group Architecture, P.A.
• Brett Ewing, Las Vegas partner and project manager, Thalden Boyd Emery Architects
• Bob Kelly, president, Innovation Project Development
• Andrew Kreft, senior principal with Lifescapes International, Inc.
• Richard Meister, vice president of construction and design, Isle of Capri Casinos, Inc.
• Eric Rahe, principal, BLT Architects
• Brad Schulz, vice president, Bergman Walls Architects
• Ed Wilms, design and client leader, DLR Group KKE’s gaming and entertainment studios
• Paul Yeomans, president, hospitality and gaming business unit, McCarthy Building Companies, Inc.

Have we seen the last of the billion-dollar casino developments?

Bacon: There are some tasty new or underserved gaming markets potentially coming on line that could present the opportunity for substantial investments. States like Massachusetts, New York, Florida and Texas are the most promising, of course. If these high-demand, low-supply markets open with high barriers to entry, the few companies (gaming and/or financial) that are able to invest at these levels may get aggressive and take full advantage.

Butler: I believe it will be a number of years before we see a new domestic, billion-dollar-plus casino development. There are a few in the pipeline that were halted and one or more of them will likely restart before a totally new one is announced.

Culligan: No! We are currently working on large entertainment master plans in several Asian countries that include extensive gaming resorts, so we hope to be designing billion-dollar casino resorts soon.

Kelly: I do believe we will see billion-dollar casinos again; never say never. I also believe we will not see them here in the United States any time soon. This industry is still one of the best economic engines in the hospitality business, but like all business this one is risky, and while we expected of the gaming industry to be more resilient to the downturns in the economy, we found this time it was wishful thinking. Our lending institutions are much more careful of big new projects, and look for more investment by the owners. When we look overseas, we see the Asian market to be growing, so maybe billion-dollar casino resorts will not be a thing of the past.

Kreft: Will this type of development come back quickly (at least in the US)? No, but it will come back. Will it take the same form as it would have before the recession? Probably not, but the dynamics and synergy that created it have not changed. There still is a logic and economy of scale of the “city within a city” type of development where multiple hotels, commercial and entertainment options feed off of a central heart (the casino). When times are tough, the public is even more critical of who gets their cash, so you have to lure them in.

Rahe: In regional markets, the proliferation of gaming and high taxes does not support amenities that create billion-dollar resorts. It is possible in select markets with good demographics, such as Massachusetts, that a limit on licenses and reasonable taxes may result in developments in that range.

Schulz: I do not believe we have seen the end of billion-dollar developments. The
difficulty is finding funding with any sort
of acceptable terms. Market-driven projects, however, will happen utilizing creative financing, even at the billion-dollar-plus level.

Yeomans: Las Vegas is a very resilient and entrepreneurial city, and this trend is going to continue into the next decade. I see the dynamic of these large projects changing as owners/developers utilize master planning and then implement the development in phases. With Wall Street hesitant to invest in future billion-dollar projects, casino owners are going to have to get creative with the design and phasing of future large-scale projects.

How important is it for casino operators to keep their properties new and fresh? What sorts of renovations and/or revitalizations might you have under way, and what’s most unique about it?

Culligan: We constantly remind our clients to “refresh, refinish and renovate or lose out.” We are currently working on a $650 million revitalization and expansion project, among others. Our projects all transform existing gaming floors, convention facilities, bars, restaurants and retail areas, and also feature great new guest amenities. Added value is why these projects are proceeding. Casino operators must take advantage of market opportunities now to maintain their competitive edge.

Ewing: When the economy tanked, owners were holding things together with duct tape. Things got a little better, and they started using “colored” duct tape. Today, customers won’t accept that, as they have suffered just as owners have, and they need and expect change and regeneration. We currently have some restaurant and gaming remodels under way on the Las Vegas Strip. The projects are unique in the fact that capital is limited, so the planning and implementation is strategic and very well-thought-out.

Kreft: It is even more important now that casinos keep their offerings fresh. With so many competing options, the average or “long in the tooth” properties will get lost in the frenzy. When all is said and done, always keeping your property clean, manicured and in good repair is much more enticing and attractive than a unique place with a poor maintenance regime.

Meister: In the past two years, Isle re-branded two properties to the Lady Luck brand. By focusing on what our players wanted, utilizing a methodical design process, evaluating and repurposing existing architectural elements, focusing on one or two feature elements, we completely rebranded both properties for significantly less than many operators would have spent on a single buffet remodel a few short years ago. Today, these properties are providing solid returns on our investment.

Schulz: Competition for the local and tourist dollar will continue to be fierce. Tired properties that do not renovate will fall by the wayside. Growth in markets such as Las Vegas has always involved a “what’s new” mentality. Currently, Bergman Walls & Associates has several large and small renovation projects in process to five major properties.

Wilms: With new properties continually coming online, maintaining and growing your market share is an ongoing challenge. Player incentives and new marketing campaigns can be effective, but providing an experience on property that exceeds guest expectations will give you word-of-mouth recommendations that you can’t buy.
   
Guests have access to incredible restaurants, nightclubs, spas and recreation facilities across the country. A resort destination that brings all these things together can’t do so by delivering middle-of-the-road offerings. Celebrity brand recognition can be a key differentiator for the casino—and a vital component to their success.
   
We’re also seeing an increased demand for additional amenities such as championship golf courses, luxury hotel accommodations, retail and wellness spas. The spending habits of the consumer have significantly changed during the downturn, and competing for their attention in the era of the “new norm” is absolutely critical.

In general, what improvements to a casino resort produce the most return on investment, and why?

Bacon: Facility owner/operators with limited budgets should initiate a process of identifying primary focus points and revenue-generators within a facility that, with various kinds of improvement, will be immediately recognized and/or valued by the customer. Piecemeal floor layouts, dated aesthetics, poor air quality, bad sound and old games will drive a customer down the street quicker than a fire drill. In order to better define risk-adjusted return, the best facility managers are becoming more hands-on and more directly involved in the planning and design process. 

Butler: In the current environment, it appears nightclubs and beach clubs are the new hottest thing, and it has very quickly become an extremely competitive segment of the market, with certain venues having clear competitive advantages and the second tier playing catch-up. 

Ewing: Here’s just some of the important elements:
• Guest room renovation: Every hotel needs to stay fresh and clean.
• Nightclub/beach clubs: The new equation is Entertainment + Fun + Booze = $$$, which is especially true with the younger   market.
• Restaurants: Many properties are bringing in third-party brands and partners today. Some will also bring capital with them.
• Casino floor: This is the No. 1 missed opportunity today. Too many have lost focus and forgotten about the “engine,” and the casino needs to change with new technology.
• Sun, water and skin: Now pool areas extend their hours and transform into nightclubs.
• Improvements in technology: This is a very important subject, and we all have to change and grow with the younger generations. 

Kelly: I truly believe your repeat guest expects you to do some new things each year to keep your property from becoming that same old place. This is so important to your word-of-mouth marketing. It is always a good idea to ask your guests what they want, and it is imperative to the success of your new amenities. If the guest wants it, you should deliver it.

Kreft: As I don’t operate a property, I will answer this in terms of a guest. State-of-the-art, comfortable, beautiful rooms really seem like one of the best things to do. This is our little taste of living the high life, so we want to feel like we are getting something much better than if we just stayed home. Amenities like restaurants, clubs and interactive pool areas seem to be a good draw that sets you apart.

Schulz: Here are areas within casinos we believe produce the most return on investment:
• Spa: Medium
• Guest Room Renovation: High
• Nightclub/Beach Clubs: Very High
• Restaurants: High
• Casino Floor: High
• Entertainment Offerings: Medium
• Retail: Low
• Pool areas: Medium—High when coupled
  with a beach club.
 
Wilms: Guest service on the casino floor is, of course, paramount. Players shouldn’t have to look very far to have all their needs met while gaming. Center bars that are a destination in themselves are a key way to raise the visibility of guest service and create a hub for the floor. Keeping the guest connected to the action on the floor is critical. Delivering national touring acts as well as quality local entertainment is a way to draw in new guests that may not have initially considered spending time at a casino.
   
People love food—and are still willing to pay for quality. Celebrity chefs, architecturally significant spaces and refined interior design will raise the profile of a venue and its profitability. The 2010 American Gaming Association survey reported that 13 million people went to casinos for attractions like restaurants, concerts or other entertainment, but did not gamble while there. Nearly three-quarters of those surveyed chose a fine-dining restaurant while they were at a casino, and over half attended an event or show.

Yeomans: ROIs are done by individual properties on a project-by-project basis, and if the ROI doesn’t meet a certain minimum percentage, the project is not approved. Depending on the property, you need guest rooms to be fresh and attractive to attract convention business.
   
Nightclubs can be a big success from a revenue-generating and ROI standpoint, but can also be a big miss. Nightclubs are very volatile, and have a high risk associated with them. Generally, you need the right amenity or venue depending on the property, but generally, the hits (and misses) are bigger for nightclubs versus restaurants.

Should casinos improve their properties now or wait until the economy is well on the road to recovery?

Butler: It is tough to commit to major expenditures for renovations and upgrades while the business climate is just barely recovering from a lengthy and severe recession, particularly with unemployment remaining unusually high. There appears to be adequate demand, a little heavy on the supply but everyone is looking to take advantage of a deal, keeping the pressure on new project expenditures. Those that have taken advantage of the slow time will reap the benefit of being in a better competitive position later on.

Meister: Current market conditions are favorable to obtaining the best pricing seen in years. This is an excellent opportunity to look at refurbishment projects with low or nonexistent returns on investment such as public spaces and restrooms, along with those projects that will enhance the property’s position moving forward. No matter which route it takes, moving into the end of 2011 and 2012, costs will escalate, placing those who wait too long at a disadvantage.

Rahe: Their competition is deciding to improve now. Many of our clients have commissioned feasibility studies for a wide range of projects to determine costs and investment return, and are now scheduling the next stage of design with construction planned for late 2011 or 2012. They believe the economy is on the road to recovery, and are looking to be early to market with new offerings and to take advantage of discounted construction costs before they return to the norm.

Wilms: The best time to invest in a casino property is now. Like a company that hires the best talent in an economic downturn to position itself for the eventual uptick, a casino property that ignores or postpones improvements to its physical property now is just asking to be left behind when the guests return in full force. The sweet spot for renovation seems to be in the seven- to 10-year window.
   
Adding natural daylight to a facility used to be unheard of, but many of our new or remodeled properties use day-lighting as a way to offset energy usage and some artificial lighting. We’re also seeing changes to mechanical systems that vastly improve the air quality and distribution to the casino floor. 

Yeomans: There is no better time to implement property improvements than right now. The casino industry is a very capital-intensive business, and if you don’t refresh your property, you can’t stay competitive. Gaming companies need to take advantage of these market conditions to the extent they can. It is unfortunate that some companies have debt covenants that restrict the amount they can spend on cap ex, but they know they have to do something, and to the extent they can afford capital improvement projects, properties should be moving forward now. 

What are some creative ways your company/organization has marketed to existing casinos, or if you are an operator, to your existing customers?

Bacon: New hotel rooms can be an excellent non-gaming incremental revenue-generating investment. A new hotel has to be delivered at an investment level that can actually get financed. We identified a unique business opportunity to respond to this challenge and started a completely new company—DreamCatcher Hotels (DCH). DreamCatcher’s business model is the turn-key development of a high-quality, non-flagged casino hotel product delivered at a surprising value proposition that can actually get financed. DCH has taken a brand or “flag-oriented” approach to this concept, and has forged strategic partnerships with some of the most recognized product brands in the hospitality industry.

Culligan: We discuss potential development opportunities together with our clients, introduce investors, and help evaluate project financing scenarios. We also work closely with our clients to create or expand their unique brand story. This brand development strategy translates into casinos that cater to a younger crowd with ultra lounges and party pits; an affluent, urban crowd with upscale retail and high-roller pits; or in a more remote location, hotels and outlet shopping to draw casino guests off the highway. Our creativity helps clients visualize their project’s potential.

Ewing: We have requested performance results from past built projects that proved their ROI; there isn’t any better marketing tool than that.

Kelly: Innovation Project Development has seen a downturn just like everybody else. The key to an owner’s representatives is to be consistent and diligent in making recommendations on spending our owners’ money. When developing budgets, they are complete and have no project surprises. We have gone to every venue available to seek out new clients.

Meister: Marketing comes in many forms. The most valuable is an organization’s team members. If an improvement is staffed with employees who are unable or unwilling to make the guest feel welcome, provide poor service or have a blind eye toward cleanliness, it is unlikely the project will meet its anticipated return on investment.

Rahe: Initiatives have included email blasts of new work, “top-to-top” executive meetings with key clients and consultants and creation of a related website, areturnondesign.com, to draw attention to the value of investment return resulting from good design. We are also offering non-conventional services such as facility management and energy assessments.

WILD CARD QUESTIONS

Over the next 20 years, what is the most important thing the gaming industry can accomplish?

Culligan: Gaming will be the energizing catalyst that revitalizes our cities. Gaming and associated entertainment venues will become the epicenter of downtown entertainment districts. Daily draws of 10,000-20,000 gaming visitors will invigorate existing urban entertainment venues, restaurants and retail, and become the difference-maker when booking conventions and meeting spaces. Double-loading entertainment venues along pedestrian streets and plazas near casinos will enhance an entire downtown experience and expand a city’s business base.

Why, in the last 10-15 years, has the casino space itself been given the least amount of design attention? 

Ewing: Because owners/operators were focused on non-gaming elements (restaurants with celebrity chefs, high-end retail, elaborate spas, over-sized guest rooms, etc.) of their property during programming and design. The casino is still the revenue-driver of a gaming property. We see this as an opportunity at many properties, and we have assembled a think-tank of experts. We currently have a couple of projects in the works.

So, what about the return of the “dreaded” theme resort? 
 
Kreft: As more and more resort casino options pop up around the U.S. and the world, each one needs to work harder to stand out. Having a beautiful, contemporary design is nice, but can’t you get that anywhere? I think that as we work harder to get people to come back to casino properties and travel farther than their local commuter casinos, the idea of fantasy needs to come back too. We go on vacation to a place like Las Vegas for a reason: to escape. We need (and expect) fantasy!

What do you believe is the most important issue that designers and operators fail to take into consideration during the design process?    

Meister: Maintenance and operating costs are areas both designers and operators often fail to properly address during the design process. There is a tendency by designers to develop designs which pay little consideration to how the finished space will be cleaned or maintained. In addition, operators forget to take into consideration the ongoing costs associated with the maintenance and operation of the improvement.
Will the traditional layout and operational relationships of a casino change
as regional gaming expands into urban areas?    

Rahe: Not in the near future. Current offerings in urban areas may be surrounded by an urban context but still provide a similar casino floor layout, relationship of amenities to the casino floor, service efficiency and an abundance of surface parking. Most regional casinos are operated by established gaming companies, and it is unlikely you will see a fundamental change from precedents that have been successful. Several developers are exploring alternative layouts with distributed amenities and more outdoor space, an approach with roots in the “new urbanism” movement of town planning. It will be interesting to see, if successful in executing their projects, whether a less conventional layout will be accepted by gaming operators and customers.

Will we see a return of the value-oriented casino/resort? 
   
Schulz: As times improve and recreational funds are available, there will be a hangover effect. People will spend but will not be overtly extravagant and certainly not wasteful. New projects and renovations will need to be designed providing operational efficiencies, sustainability, energy conservation, prudent use of space and materials and, above all, value to the customer.

Has the casino industry reached the height of development, or is there still room for additional growth? 

Wilms: People point to the downturn of gaming revenue in Las Vegas and Atlantic City and suspect the industry has reached its zenith. While it’s true that uncertainty about jobs, housing and national economic stability have changed people’s attitudes about where to spend their hard-earned dollar, guests still crave entertainment. Casino developments have responded by improving gaming floors, adding new machines as well as world-class entertainment venues and restaurants. Operators will continue to add hotel rooms, golf courses, spas, movie theaters and retail, knowing that even in regional operations, the expectation is that the casino property will have everything—and the properties that don’t will be left behind.

In the beginning was the Sahara. Las Vegas’ “jewel of the desert,” the Sahara Hotel and Casino was a Moroccan-themed oasis with gold-tipped minarets, neon camels, African warriors and towering palms. In its heyday in the 1950s and ’60s, stars including Elizabeth Taylor, Marilyn Monroe and Elvis could be spotted at the Garden of Allah pool, which resembled the reflecting pool at the Taj Mahal.
   
At the end, which came in May 2011, the former playground of the Rat Pack seemed almost out of place on a Las Vegas Strip it helped to define. When it closed in May, the Sahara featured dollar-blackjack and burrito-eating contests. In its NASCAR bar, a replica of Dale Earnhardt’s race car was on display—with a flat tire, dents in the hood and coins haphazardly tossed on the front seat.

Evolution not Revolution

The Sahara’s demise is the latest milestone in an evolving Las Vegas Strip. Though hotelier Sam Nazarian bought the place to restore it, the timing was brutal—2007, just as the economy was starting to crater. And while Nazarian “had a good design plan in motion,” says architect Brett Ewing of Thalden Boyd Emery of Las Vegas, “the property is in a very poor location. In order to draw the market to the Sahara, it was going to require substantial capital. The ROI isn’t there in today’s economy.”
   
As a result, the historic Sahara ended with padlocks on those famous doors along with the sign, “Thanks for the memories.”
   
The recession has forced a number of gaming companies to suspend expansions and sell off properties. That fast shuffle has put plenty of bargains on the table, but after the acquisition comes the renovation. How do you refresh a property that’s priced right, but a little worse for wear?
   
One example of a quick, cost-conscious redo is the Siena Hotel Spa Casino in Reno. The resort’s last big overhaul, in the late 1990s, cost $20 million. When the Siena went bankrupt in 2010, an investment group picked it up for just $3.9 million, and remade it as a boutique resort in just five months. Workers ditched the Old World Italian décor for an ultra-contemporary look meant to draw a sophisticated clientele.
   
The new Siena has a luxury spa, lots of marble, and a veritable gallery of imported art. The work is not yet complete, but the renovation so far has cost just $5 million—more than the actual sale price, but a quarter of the previous renovation.
   
Buffalo Bill’s in Primm, Nevada, hit the jackpot when a Las Vegas mega-project went south. As part of a recent $1.5 million upgrade, Bill’s picked up about $500,000 worth of sleek, modern furniture once destined for the Fontainebleau, the unfinished resort on the north end of the Strip. About half of Buffalo Bill’s 1,242 rooms have benefited from the sell-off—a bargain-basement renovation that cost an economical $800 per room.
   
Ewing cites his company’s project, the Cherokee Hard Rock Hotel and Casino in Tulsa, as an “expansion and re-branding that has been remarkable addressing an untapped market.” Others include Treasure Island, purchased from MGM Resorts by Phil Ruffin, who is “strategically renovating it to a specific middle market. This is a great example of the strength of a sole proprietor,” says Ewing.
   
The Mirage is another example of a property with intact architecture and infrastructure that has “implemented substantial interior remodels to keep the property top-notch.”
   
Scheduled Upgrades

As a rule, hotel-casino upgrades are budgeted on a five-to-seven-year schedule as part of capital expenditures; with the economy still uncertain, that once-fixed cycle has now become more elastic, with some properties pushing it up to a decade.
   
But failing to maintain and improve in a competitive environment may be the definition of “penny-wise and pound-foolish.” Especially when a property changes hands, a new look signals to customers that they have something to look forward to, or a reason to come back.
   
While all eyes are on the bottom line, if the chips are down and ROI is in decline, renovations must be made “inside and out to the greatest extent possible within the budget,” says architect Joel Bergman.
   
“Customers don’t care about maintenance and operating costs; they care about what’s appealing, what’s sexy, what gets their juices flowing,” says Bergman, of Bergman Walls and Associates in Las Vegas. “If all I give a damn about is operating costs, I don’t stand a chance of getting new customers and pulling back old ones. I’ve got to ask, ‘What’s going to grab people, get them excited, get them talking to their friends? What’s going to get the media jazzed up?’”
   
While upgrading colors and finishes and swapping out furniture, fixtures and equipment are the first steps in the playbook, it’s just as important to find the pizzazz. For a casino hotel outside Minneapolis, the answer was a single dramatic fixture.
   
Mystic River, a onetime ragtag tribal property, had seen half a dozen additions over time, but never achieved a unifying theme or link. With almost 650,000 square feet of disjointed casino, hotel, retail and convention space, the property posed an interesting challenge for Bergman Walls and the Cuningham Group, enlisted by the Shakopee Mdewakanton Sioux to collaborate on a remedy.
   
Their solution was simple but striking. Designers came up with a fiery “Golden River” ceiling feature that not only organized the gaming space but created a dynamic flow from the casino to adjoining areas of interest, like shops and restaurants. Patrons naturally found themselves following what could be described as an inverse Yellow Brick Road; the design won a 2010 FAB Award in the hospitality category.
   
“It became a vibrant, flowing space, a common river running through the ceiling,” says Bergman. “The customers loved it; it was just
a happening.”

Public Perception

Although it’s important to renovate with ease of maintenance, durability and safety in mind, subtle changes or simple upkeep won’t create a sufficient change in perception among the public, says Bergman.
   
“You have to spend seriously on the front of the house, change the things visitors can see from the moment they arrive,” he says. 
   
Ewing notes that physical comfort—that sometimes-overlooked essential—is as vital to the successful casino hotel as “color, space, lighting and all the other things we love to talk about.”
   
“Maybe there are functional issues you have to handle; do something with walls and ceiling, resolve spatial issues if it’s not a comfortable space. Sometimes if the climate is off—if it’s cold and customers are just not comfortable—that can kill an opportunity.” For older patrons, lighting must be enhanced and signage must be clear and bold.
   
As importantly, says Ewing, marketing must be backed up with unstinting service.
    
“You have one shot at attracting that customer on the fence, the one who’s thinking, ‘Should I try this place or not?’ Service has to line up with any design change and marketing. There is so much product out there. The customer pocketbook is limited, and people are making more intelligent decisions.”
    
While the Siena courts the moneyed older crowd, Mystic Lake woos the locals, and family-friendly Buffalo Bill’s goes for the super-affordable renovation, the trend in Las Vegas proper is toward young, hip and ever-new, says John Platon, senior vice president of KHS&S Contractors.
    
“Gen X has taken over. It used to be old-school guys like me going to the bars and clubs,” says Platon. “Now it’s these 23-to-30-year-old beautiful people who stand in line for three hours to get into the latest cool club and spend the rent on bottle service.”
   
With capital expenditures tight, Platon says casinos are relying on entertainment to get people on property. Once there to see the superstar concert, showroom spectacular or celebrity deejay, hopefully they spend; if the formula works and is repeated often enough, a property stands a chance of building customer loyalty.
    
“It costs a lot of money to put on a show,” says Platon, “but after 5,000 people are drunk and done, they go and gamble. The challenge is getting them there.”
   
Bar Stars

The Tropicana in Las Vegas is getting them there with a $180 million renovation that brought a South Beach vibe to its Strip property. Like the Sahara, the Trop opened in the 1950s, but managed to rebrand itself for a contemporary clientele. The casino has implemented the usual upgrades—new furniture, new carpets, and new slots and tables, along with renovated hotel rooms and three new restaurants.
   
But the buzz centers on Nikki Beach, a 15,000-square-foot day-to-night club that takes its cues from other successful venues in the franchise, in Miami, Cabo San Lucas, Marrakesh and Saint-Tropez.
   
Ewing applauds the all-purpose club that “stretches from 10 a.m. to 3 a.m., indoor and outdoor.
   
“We’ve had several spaces at Rio, a theater that had a supper club and turned to an entertainment space with a video wall, then turned into a popular club. Encore’s Surrender nightclub and Beach Club are great spaces, and very successful. You go out in the morning for the pool and sun, and at night it turns into a nightclub.”
   
But the casinos should not forget their core customers in the pursuit of younger patrons, Ewing warns.
   
“I was at Cosmo with my daughter who’s in town. She’s 21, and we went to the Chandelier Bar. The place was packed; the food and beverage, restaurants and entertainment are all doing well. But the gaming revenue isn’t there. I looked into the slot and table areas, and they weren’t busy on a Friday night in primetime. If you go to Bellagio, which has an established gaming reputation, you don’t see the same thing.”
   
Those demographic tiers—free-spending young partiers versus established slot players—are “the root of a big discussion,” says Ewing. “The beautiful people are spending most of their money on $15 drinks. They’re not gaming as much.
   
“When it comes to traditional customers, those from 55 to 70, they need to go into places where the lighting is good. Sometimes contemporary lighting is dim, and the signage is not clear, it has an elaborate font or something that is hard to read, and that makes people uncomfortable. All these factors have an impact, and that older customer should not be counted out. They have more disposable income and they have more time,” as well as a tradition and history of gambling.
   
Amazing Amenities

Today’s casino is more than just a gaming floor, hotel rooms and restaurants. It’s a collection of attractions that make the sum of the parts greater than the whole.
   
Richard Rizzo, vice chairman of Perini Building Co., agrees that success in the casino industry today is more “venue and entertainment-driven.”
   
“It’s not just the facility itself, but a lot more about the nightclubs and uniquely themed restaurants and shows,” says Rizzo. “It’s now more about who we are and what we look like than what we’re offering.
   
“Take as an example CityCenter,” Rizzo says. “It has a bit of everything, but no common theme through the place other than a holiday, urban setting. It’s just a backdrop to everything else that’s happening inside the facility, the accumulated venues and attractions that get people there. There are 35 restaurants, outside-the-box retail, the highest-end shopping in the country—those are the unique features that draw people and get them to spend money. People want to be entertained.”
   
Paul Steelman, CEO of Steelman Partners of Las Vegas, argues that all change is not for the better, and Las Vegas should not position itself as “an urban shopping mall.”
   
In the past, says Steelman, “The Strip was a street where the grand signature resorts were located”—resorts with “suburban oasis-types of landscaping and design” and “beautiful front yards.”
   
Now, says Steelman, many of those grand resorts have added “out of theme” additions and signage that “virtually destroy the original aesthetic.”
   
“Many of the projects have crammed themselves as close to the Strip as possible, eliminating the suburban experience and creating the dreaded urban aesthetic,” Steelman laments.
   
Ewing admires CityCenter’s architecture, but calls it “psychologically cold, without a warm residential feeling.”
   
Bergman is also critical of the so-called “vertical resort,” calling it “an office building—not entertaining, not customer-friendly.” He adds that it should never be the goal of any resort to overwhelm its customers or make them feel they’re in the wrong place. 
   
“Our audiences are not that sophisticated,” says Bergman. “They come to let their hair down and hang out. They want to give us their money, but they want to do it their way. The Bellagio, the Mirage, Paris let them do it their way.
   
“People don’t want to be educated,” Bergman adds. “They don’t want to be sophisticated. They want to relax with their shirt out, wearing their tennis shoes.”

Last October, the Yocha Dehe Wintun Indian Nation pulled the plug on a planned 0 million renovation of the Cache Creek Casino Resort in Brooks, California.

The project would have added a 10-story hotel and two dozen cottages, and more than tripled the number of guest rooms at the property. Suspension of the plan was “a pretty straight-ahead business decision,” said tribal spokesman Brent Andrew, based on the still-struggling economy. The tribe settled for an upgrade of the existing hotel.    

The Jamestown S’Klallam tribe of Washington State, which plans a $50 million hotel complex for its 7 Cedars Casino, will not break ground for several years at least, due to the soft economy. “We have some beautiful renderings,” said CEO Jerry Allen—but that’s all they will have until about 2015.

In Buffalo, New York, the Seneca Nation recently completed a $9 million expansion of its temporary casino, which opened in 2007. But the temporary facility—with 223 more slot machines and 5,000 square feet of added gaming space—sits in the shadow of the stalled permanent casino, a steel hulk that has actually begun to rust. Construction on the $333 million permanent casino was halted in 2008, due to the economy.

And the stories go on and on. Tribal casinos that once made ambitious plans to overhaul and expand their casino properties have been forced by a historic recession and jittery lenders to base their renovation cycles on necessity alone.     

According to Smith Travel Research, which compiles data for the hospitality industry, construction projects were down by more than one-third between December 2007 and September 2009. Projects on the drawing board at that time were cut by 26 percent. And beautiful renderings continue to gather dust at gaming companies around the U.S.

It’s a matter of simple math. Capital expenditures for improvements typically derive from a percentage of revenues (hotels, for example, usually reserve 4 percent to 5 percent of annual gross revenues to offset upgrades; some brand-related “refresh” programs mandate capital improvements every five to seven years).

But with revenues down 10 percent, 20 percent, even 30 percent in some sectors, discretionary expenditures are the first thing to drop off the to-do list. In an increasingly competitive industry, however, delaying essential upgrades is not an option.

When major overhauls are out of the question, tribes are staying competitive by practicing the Three R’s: refresh, renovate, retrofit.

Next to Godliness
The most cost-efficient upgrade is a soft-goods renovation—replacing pillows, bed linens, curtains, etc.

“Once you’ve taken care of fire and life safety and made sure your physical plant is running smoothly—the AC is working, there’s no leaky roof—you have to make sure everything the guests touch on a regular basis is clean: the bedspread, the duvet cover, throw pillows, linens, draperies and sheets,” says Bill Langmade, president of Purchasing Management International, LP of Dallas, the leading purchasing agent for the gaming industry. “Most gaming properties have very high occupancies—80 percent and 90 percent, where 65 percent and 75 percent is the norm. So the rooms in these hotels get beat up more quickly.” As a property ages, capital expenses and the cost of repairs and maintenance increase.

A soft-goods renovation—which also involves touching up nicked or scratched furniture and replacing upholstery and carpet—can save about 60 percent to 70 percent of the price of a hard-goods renovation.

“Leave the lighting alone,” says Langmade. “Leave the art alone, the wall coverings, the TV, but replace or repair anything that your guest feels or touches. If that’s the only thing you do to keep the decision-maker from choosing to go elsewhere, do it. Because once you lose a customer, they never come back.”

Minimal improvements can also justify rate increases, so the investment will be recouped over time.

“Refresh a room and you can expect to get an extra couple of bucks in rentals,” says Langmade. “Or you can discount the room and drive that occupancy into the casino. At least you won’t be losing money.”

Newly upgraded rooms are also cause for an ad blitz: “Come see our new look.” But there are downsides to phased renovations, Langmade says.

“You’ll get a better buy if you do all 300 rooms at once instead of 100 rooms at a time, and you certainly don’t want to be in an interminable renovation that lasts for years at a time. If you have the money, yes, it’s best to get in, get out and get it over with.

“But if you’re limited in capital, find those things that guests touch, and fix or replace them as you can. The best thing you can do for a casino is maintain it meticulously, have the greatest crew, give them tools to keep it as clean as possible, and repair as you go along.”

Price vs. Value
Lee Cagley, principal of the interior design firm Cagley and Tanner of Las Vegas, rejects the notion that effective upgrades have to come with a big price tag.

“There’s a difference between quality and expense,” says Cagley. “It’s a fallacy to say it’s easier to do a design when lots of money is involved. The work we’ve done most recently was well-priced to begin with.”

He recommends judicious spending on furniture, fixtures and equipment, economizing on some items, and splurging on those that have maximum impact.

“For years, the classic East Coast uniform for a woman was a Lilly Pulitzer dress and an Hermes scarf,” Cagley says. “In times like these, I may have to use full lead crystal in a chandelier, but I don’t have to spend $10,000 a yard on the fabric that hangs around it. You put your money in a specific place where it changes the perception of the entirety.”

Cagley believes effective lighting is always a good investment. The goal in a casino, he says, is to keep the lighting primarily at eye level, which creates a sense of comfort and familiarity, mimicking residential lighting.

“Sometimes in casinos, the only thing at eye level that’s lighted is the slot machine face. So you have a black ceiling with down-lights that show every scrap of paper on the floor.” Far better to “layer” light at and near eye level through sconces, cove lighting, hanging lamps and illuminated columns, he says. “It’s a hard job to do, but when it’s done right, the finished space has an indefinable glow” that enhances every offering on the floor.

Though the casino is a world unto itself, a self-contained universe of entertainment, Cagley advocates a blend of the familiar and the aspirational that both soothes and excites.

“People love to try on alternate lifestyles, imagine what it would be like to be some Saudi prince or a rock-and-roller. But they also want to feel comfortable, and the point of reference for that is their home.” It’s vital, he says, to create many spaces within one space, and design pathways that lead guests to different kinds of entertainment, be it a bank of table games, a nightclub or a restaurant.

By their nature, he says, “casinos want to be great, big, huge, column-free spaces. But people don’t live in warehouses and they don’t live in barns. You want to break massive spaces into smaller units so your guests don’t feel like they’re one of 10,000 people sitting on a slot machine stool.”

Telling the Story
“Casinos are very similar to retail or theme parks from the standpoint of creating paths or walkways that draw customers along, creating excitement and interest throughout the journey,” says Tom Hoskens, principal of the Cuningham Group. “Reconfiguring gaming areas is an ongoing thing with casinos,” which constantly monitor the hot spots and dead spots on and around the casino floor.  

At the recently renovated Mystic Lake Casino in Minnesota, designer John Culligan of the Cuningham Group created a dynamic, lava-like “Golden River” ceiling feature that both articulates the gaming floor and leads guests on a journey through the resort’s many entertainment venues.    

Mystic Lake, owned and operated by the Shakopee Mdewakanton Sioux, is the Midwest’s largest gaming hall. Its “multi-phased, Las Vegas-style renovation” was designed to reignite the excitement for existing patrons, and entice a new demographic as well.    

It’s a delicate balance, introducing new features yet retaining enough of the familiar that longtime guests—who already enjoy and patronize the venue—don’t feel excluded.

“Part of the challenge of renovation is to keep it as comfortable and as homey as you can for loyal patrons, making it better and easier to navigate,” says Hoskens, so that the change is more an improvement than a radical departure that could alienate base customers.  

Though Las Vegas remains the standard, most tribal designs continue to reflect the community’s heritage and association with nature. The design at Mystic Lake included multiple natural finishes—granite, onyx, a variety of woods—to evoke the flowing water, craggy banks and verdant landscape of the Minnesota River Valley.

The same principle applied at Harrah’s Cherokee, now in the midst of a $633 million overhaul that will make its hotel the largest in North Carolina (it is one of few massive renovations that went forward despite the recession). There, Cuningham designers created “a revision of a modern Smoky Mountains lodge concept inside the casino itself,” says Hoskens, with an unfolding interior path that includes artistic representations of rivers, valleys, woodlands and mountains. They guide patrons through the space, make iteasy to explore without confusion, and recall the tribe’s history at the
same time.

“We have a slogan here, ‘Every building tells a story,’” says Hoskens. “If you tell that story correctly, you capture the soul of the place and the people.”

Timing Is Everything
In the years leading up to the recession (when all those renderings were being rendered), the building industry enjoyed a spike in both renovation and new construction. Costs of labor and raw materials soared. According to RS Means, a building costs data firm, the price of construction rose a median 8.6 percent between 2004 and 2006.

That pendulum has clearly swung in the opposite direction. According to some figures, construction costs were down 15 percent to 20 percent in fourth-quarter 2009, and construction saw the highest unemployment rate of any sector. Despite signs that the economy is inching toward recovery, many projects are currently being bid at cost or even below, and competition is keen among vendors, contractors and subcontractors.

But the trend will not continue indefinitely, and some experts predict a rush to build in 2012 that mirrors the post-9/11 recovery. This could be the time to make a deal, and ensure that your property is primed to take advantage of the rebound.