Business declines in Atlantic City, never before experienced since gambling was approved in 1978, have caused operators to take different views on how to address the problem.
Trump Entertainment Resorts Inc. (TRMP), feeling the impact of additional competition from southern New York State and Pennsylvania, elected to put itself up for sale by hiring a Wall Street firm to seek strategic alternatives.
Unfortunately, there were no buyers, at least, no one willing to pay the huge price (reportedly $21 per share) being demanded by Donald Trump, owner of about 30% of the outstanding shares.
Others, like Borgata Hotel Casino & Spa, the most successful addition to the Atlantic City market in recent years, decided to fight fire with fire, that is to build a $400 million "cosmopolitan hotel which will feature 800 finely-appointed guestrooms and suites with five tiers of accommodations, a two-story spa in the sky, 18,000 square feet of meeting space and more."
The property, being built by the partnership of Boyd Gaming Corp. (BYD) and MGM MIRAGE Inc. (MGM), will open in early 2008 as "The Water Club."
This will bring the partnership’s investment in the resort to $1.7 billion.
"Shortly after we opened Borgata," said Larry Mullin, president and COO of Borgata, "we announced our plans for The Water Club, recognizing the high consumer demand for a second hotel under the Borgata brand of hospitality.
"Upon its opening in early 2008, The Water Club will continue Borgata’s efforts in redefining Atlantic City as a travel destination by introducing a new, uncharted hotel experience to the market."
The project is also indicative of the two companies approach to the future of gaming. In Las Vegas, MGM is building the $7.7 billion City Center as an adjunct to its existing property while Boyd Gaming has begun building its $4.5 billion Echelon Place on the site of the former Stardust Hotel/Casino on the Las Vegas Strip.