A.C. looks to follow Las Vegas' non-gambling success

The Strip in Las Vegas is still glittering, but now mostly thanks to non-gambling entertainment revenues.
The Strip in Las Vegas is still glittering, but now mostly thanks to non-gambling entertainment revenues. (JULIE JACOBSON / Associated Press)
Posted: October 29, 2012

LAS VEGAS - As soon as you land here, you're on sensory overload. Billboards line the airport and the streets leading to the Strip: Rod Stewart at Caesars Colosseum; Penn & Teller at the Rio; gondola rides at the Venetian; a faux Eiffel Tower at Paris.

Get into a cab, and Steve Wynn's soothing voice streams over a TV monitor, boasting about his casino-hotels' "fabulous restaurants, retail shops, rooms, nightclubs, and shows."

It's all part of a re-branding that began about 15 years ago, when tribal casinos in California became a threat to Vegas' gambling fortunes. When Sin City had to reinvent itself, it unleashed a marketing and advertising campaign, now a $127 million-a-year global juggernaut, to make Las Vegas the entertainment capital of the world.

Although Atlantic City, primarily a drive-in market, is no Vegas, there are more than a few lessons it can take away as it embarks on selling itself as a non-gambling destination. Like Vegas before it, it has encountered bruising competition - in this case, from Pennsylvania and other nearby states - that forced its hand.

"There is a lot of similarity," said Don Marrandino, Eastern Division president at Caesars Entertainment Inc., which owns four casinos in Atlantic City and nine on the Strip. Marrandino worked in Las Vegas from 1988 to 2009 and watched it evolve from a purely leisure market to a convention powerhouse.

"We want to become an all-round resort instead of just gaming," Marrandino said of Atlantic City, where he is now based. "Vegas experienced a very similar paradigm shift in the '90s."

Transformation didn't happen overnight. To get where it is today, Las Vegas took several key steps:

Mega-resorts began to rise, packaging under one roof shops, theaters, pools, and gambling.

McCarran International Airport, now the sixth busiest in the country, underwent successive expansions to extend Vegas' reach. International travelers now make up 16 percent of its clientele.

Midweek conventions were courted, and won. Meetings, trade shows, and conventions now account for 12.5 percent of total visits here.

Casino operators began to continually reinvest in their properties, to ensure that there was always something new to attract visitors.

Customer service got heavy emphasis.

Already, Atlantic City has started to follow the leader. Earlier this month, plans were unveiled for a $134 million, Las Vegas-style conference center at Harrah's Resort. And Borgata and Revel are both mega-resorts, built on the Vegas model.

Starting in 1989, with Wynn's Mirage, Vegas began rolling out multibillion-dollar mega-resorts - Venetian, Bellagio, Mandalay Bay - to create a critical mass of rooms on the Strip (now more than 150,000). MGM Grand and Mandalay Bay added full-size arenas to accommodate top entertainment acts, such as Barbra Streisand and the Rolling Stones.

In 1990, the split between gaming and non-gaming revenue in Vegas was 80 percent to 20 percent. By 2010, it was 50-50, and now, it's at 38-62, with non-gaming far ahead.

Atlantic City, where the breakdown currently favors gaming revenue, 73 percent to 27 percent, would like to see a similar shift.

Sitting this month in an "outdoor" cafe at the Grand Canal Shoppes at the Venetian, a luxury mall featuring gondolas on a man-made canal under a skyscape, Nahla Fitzgerald, 48, a social worker from New York, said: "It's much more elaborate in Las Vegas. There are more shops and entertainment here."

Compared with Atlantic City, that is. Fitzgerald said she goes there only when friends or relatives are visiting. Otherwise, she skips the trip.

"A.C. is a little scary once you're off the Boardwalk at night," she said.

Yet with far fewer casinos and other offerings, and not nearly as many conventions, Atlantic City still attracted 29.5 million visitors last year.

Just under 39 million people visited Las Vegas in 2011, many of them lured by the emphasis on grown-up fun popularized by the "What Happens Here, Stays Here" ad campaign that started almost a decade ago.

But Kevin Bagger, senior director of marketing at the Las Vegas Convention and Visitors Authority, said Vegas' biggest weapon is its continually fresh product, thanks to casino operators like Wynn and Las Vegas Sands Corp. chairman and CEO Sheldon Adelson - owner of the Venetian and Sands Expo and Convention Center - who spend money to make money.

"We have always had . . . a really strong diversification of the non-gaming experiences in the last 20 years," Bagger said. "Golf courses, roller coasters, every major international chef ... to ensure the product is attractive."

It's a formula that worked for physicist Cliff Fortgang, 56, of Los Alamos, N.M., who was catching the October rays poolside at Harrah's in Vegas recently.

"Even if you don't gamble much, like me, there is plenty to do," he said.

Erin Mawdsley, 30, of Vancouver, British Columbia, took in Le Reve ( The Dream) at Wynn Resorts during her first visit to Vegas this month. The $100 million production - tickets go for $100-plus each - combined water, fire, swimming, dance, and acrobatics.

"Spectacular," she said, staring from her seat.

Not by coincidence, since its gaming revenue has plummeted nearly $2 billion since 2006, Atlantic City now is pushing its golf courses and museums, and is creating an arts district. In November, a program to put public art in blighted areas along the Boardwalk, to be led by international curator Lance Fung, will be rolled out.

"In the past, Atlantic City spent $3 million on advertising," said Assemblyman Christopher A. Brown (R., Atlantic), who sits on the state Assembly's Tourism and the Arts Committee. "This year, we are spending $30 million. We need to invest the money . . . so we can continue to employ people and keep jobs local."

Citing Margaritaville at Resorts and the Conference Center at Harrah's Resort as new non-gaming projects, John Palmieri, executive director of the Casino Reinvestment Development Authority (CRDA), said, "Atlantic City most certainly can reinvent itself, freshen its brand, and provide a new experience to visitors on every visit."

About 2,200 miles away, visitor Mawdsley marveled, "There are no words to describe Las Vegas," as smoke billowed around the theater for Le Reve's finale.

Such flattering terms haven't often been applied to Atlantic City lately.

In initiating a state takeover of its tourism district last year as part of a five-year plan to resuscitate the Shore resort and boost tourism, Gov. Christie put the CRDA in charge with these stated goals: improve public safety and cleanliness; market the city better; and beautify the Boardwalk. Sixty "Boardwalk Ambassadors" have been hired to guide visitors year-round to restaurants and other attractions.

The end game is to radically alter public perceptions of Atlantic City. The "DO AC" marketing campaign, urges them - via TV, radio, billboards, print, and online - to give it another shot. Fall ads highlight the indoor pools, spas, and shopping.

Liza Cartmell, president of the nonprofit Atlantic City Alliance that is driving the five-year campaign and working in partnership with the CRDA, said that, unlike Vegas, Atlantic City was not being sold as an adult-only playground, but for "everyone to enjoy in their own way, from chill or doing the late night."

But, just as Vegas does, she told community, business, and political leaders this month that "we really need to continue to build the brand."

David G. Schwartz, director of the Center for Gaming Research at the University of Nevada at Las Vegas, said Atlantic City was moving in the right direction, but needed to "redefine the public perception of a hospitality resort" - something Vegas has down to a science.

Every nuance of what a visitor does while in Vegas - where he stays and for how long, what she eats and drinks, how much he spends, and more - is tracked meticulously by the Las Vegas Convention and Visitors Authority, which puts out a monthly snapshot based on information gathered from casinos, airlines, transportation agencies, and state gaming regulators. (It takes at least four New Jersey agencies to pull together similar data on Atlantic City.)

The Las Vegas Convention and Visitors Authority also publishes an annual visitor profile compiled from year-round interviews. It routinely conducts research with its ad agency, R&R Partners - which created the "What Happens Here" tag line - to understand different market segments and how various audiences respond to the Vegas brand and ads for it.

Among its findings: Vegas routinely gets high marks on customer service, something casino hoteliers stress in employee training.

Said Bagger: "That's what drives our economy. They make sure people who come here have a good time."


Contact Suzette Parmley

at 215-854-2855 or sparmley@phillynews.com.

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