Hilton expansion delayed in AC

January 30, 2008 12:36:10 PM PST
Not even Atlantic City's multi-billion dollar casino industry is immune from the worsening economy.

The company that owns Resorts Atlantic City and the Atlantic City Hilton Casino Resort has put a $1 billion expansion plan at the Hilton on hold.

Word of the delay came Wednesday as the state Casino Control Commission granted the Hilton's sister casino, Resorts, a new five-year license.

"We looked at a major expansion, then a scaled-down expansion" for the Hilton, said Resorts president Tony Rodio. "Right now, with the uncertainty in the markets, that's on hold. That's not something we can't revisit."

Last April, the Hilton said it was planning to build a 1,000-room hotel tower, double its gambling floor area to 120,000 square feet, and add new shops, restaurants and a 3,500-seat theater for shows, along with a 3,000-space parking garage.

Ironically, the expansion plans became public at the Hilton's own relicensing hearing. The Hilton won a five-year license last year.

On Wednesday, Resorts won the same prize. But the city's first casino, which opened in 1978, will make do with smaller improvements in the near term.

Rodio said Resorts has underutilized or unused space throughout its buildings that can be put to use as new attractions such as restaurants, a men's clothing shop and other uses. It also has 11 acres of vacant land next to the casino that can host a future expansion.

Resorts added 63 new hotel rooms last year, bringing its total to 942.

That helped offset the damage from slots parlors in Pennsylvania and New York, as well as a partial smoking ban in Atlantic City. Resorts' casino revenue was down 1.5 percent for the year, which was still the fourth-best performance among the city's 11 casinos.

The company that owns Resorts and the Hilton, Colony Capital LLC, is also seeking to buy the Tropicana Casino and Resort, whose owners were stripped of their casino license in December following a year of poor performance, massive layoffs and customer complaints.

The company has offered $850 million for the property, which analysts say is expected to sell for around $1 billion.

None of the casino commissioners or staff members raised any questions about the proposed acquisition of the Tropicana on Colony Capital's ability to simultaneously run three Atlantic City casinos.

"At this point, that's premature," said Commission Chairwoman Linda Kassekert. If Colony were to acquire the Tropicana, the question should be raised at that time, but should not have any impact on the Resorts' new license, she added.

Harrah's Entertainment runs four casinos here, and Trump Entertainment Resorts has three.

Kassekert said the partnership between Colony Capital and Nicholas Ribis, a veteran Atlantic City casino executive, that owns Resorts will expire in November, but said "there is every indication" that it will be extended at least through 2009 and possibly beyond that if needed.

Ribis said ownership has proven it has the resources and commitment to Atlantic City that it will need to successfully operate for the next five years.

"The commission can look at the history of our properties in Atlantic City, and the type of owners we are," he testified. "We are prepared to do what needs to be done."

Ribis said he and Colony are negotiating with a new investor to inject additional money into the venture, but would not identify the party.

"We as recently as yesterday spent a significant portion of the day working with an investor to Atlantic City for a minority interest in Resorts," he testified. "We are optimistic something will come out of that in the very near future. We had six lawyers in the room, so the day cost me something like a million dollars."