The Big Gamble

Though many have tried, few markets have been able to transform their tourism industries through the economic tool of casino gaming. Atlantic City, Biloxi and New Orleans have done it, although it was a struggle for all three cities. The latest to try — and with impressive results, so far — is Niagara Falls, Ontario, the venerable family resort that's using gaming to broaden its appeal and market reach. Centerpiece of the renaissance is the Fallsview Casino Resort, a $1-billion, Las Vegas-style gaming property that opened last June and promises to serve as a catalyst for tourism development throughout the Niagara region of southern Ontario.

“We've already had a major impact on the region by the addition of several thousand jobs at our resort,” says Larry Lewin, the veteran gaming executive who is president of Niagara Casinos. “Beyond the Fallsview Resort, other businesses have also added workers, and new tourism-related businesses continue to open throughout the region. Niagara is becoming a year-round, multi-destination resort.”

The resort property isn't Niagara's first casino. The province of Ontario opened the freestanding Casino Niagara in late 1996. Falls Management Co., a consortium of U.S. and Canadian entities that includes the Pritzker family, operates Casino Niagara and developed and operates the Fallsview property, which was the largest privately financed construction project in Canada.

Built on 23 prime acres overlooking both the Canadian and American falls on the former site of a hydroelectric plant, the resort has 358 rooms, a massive casino, meeting facilities, 10 f&b options, a spa, shopping gallery and an entertainment showroom. The property's slender 30-story guestroom towers offer views of the falls from all rooms but don't block the views from other hotels surrounding the development. The developers and the provincial government also purposely capped the room count at 358 so the property didn't put too much competitive pressure on other hotels in the blossoming Fallsview tourist district.

GOING GLOBAL

Even though the resort's print ads make the connection, both Fallsview and regional officials are reluctant to refer to the project as a “Las Vegas of the North.” Rather, their marketing messages smartly focus on the natural and man-made attractions that created Niagara Falls as North America's first mass-market resort destination. (Or, as regional marketers like to say, Niagara Falls is the “resort that's 12,000 years in the making.”)

The plan, according to Lewin, is to shift Niagara from a regional resort area that mostly draws visitors from surrounding states and Ontario to a destination that attracts meetings and incentive business — as well its bread-and-butter leisure travelers — from throughout the northeast U.S. and eastern Canada.

“But in the long term, we plan to evolve into a global destination,” says Lewin. “We have the attractions, a first-class supply of hotel rooms and a lot of support within the local tourism industry to make it happen.”

For the first time in its history, the Niagara Falls hospitality community is also marketing itself as a destination with attractions beyond the falls. The region's assets include 56 wineries, 40 golf courses, the Shaw Festival for theater and 4,000 acres of parkland connecting Niagara Falls with Niagara-on-the-Lake on the shores of Lake Ontario.

“With Casinos Niagara as a strong partner, we're now able to stretch our marketing dollars and increase our penetration,” says Victor Ferraiuolo, vice president of Niagara Falls Tourism, the local visitors and convention bureau. “We can spend a significant amount of money on mass marketing, and we have the ability to segment our message between both the adult and family segments of the business.”

Tourism officials believe the combination of casino gaming, the region's existing and planned developments and aggressive cooperative marketing will boost the area's annual visitor count from 14 million people currently to 30 million in the next 10 years. Currently, about 80 percent of visitors to the region are repeat guests, says Ferraiuolo.

One goal of the regional marketing push, says Ferraiuolo, is to move Niagara Falls away from its traditional “rubber-tire tourist” focus to attract visitors from other parts of the U.S., Canada and even around the world. (While not that close, two major airports — Toronto and Buffalo — are less than 90 minutes away.)

The development of the Fallsview resort spurred additional hotel development in the area. Among the major properties opened in the past few years by local developers are a 427-room Marriott, a 224-room Doubletree Resort and a 512-unit Embassy Suites Hotel. The Embassy Suites, which opened in mid-2003, is the brand's largest property and marked the chain's return to Canada.

According to Alicia Whalen, director of marketing communications for the firm that owns and operates the Embassy, arrival of the Fallsview casino resort helped flatten out the area's seasonal occupancy trends.

“Traditionally, and not surprisingly, summers are excellent, but business turns down starting in the fall,” says Whalen. “And despite issues we've had with Sept. 11 and SARS and the influx of new hotel rooms, we had a great summer in '04 that extended into the fall months. While weekdays in the winter remain slow, weekends are great — 80- to 90-percent occupancies on Fridays and 98 percent on Saturdays.”

Whalen says the combination of new and improved attractions, more brand-name hotels and the area's marketing campaign should help Niagara position itself as an international destination. “It's still a family market in the summer, and probably always will be, but now with the facilities available within the new hotels, we have become a viable market for meetings and conventions business.”

BEYOND GAMING

More than $2 billion of new tourism development is under construction or on the drawing boards for the Niagara region. In the pipeline are the addition of a Wolfgang Puck restaurant at the Holiday By The Falls and a massive 58-story, 963-room addition to the Hilton-Niagara Falls Hotel.

One of the most exciting projects is the addition of a Great Wolf Lodge that licensee Ripley Entertainment (of Believe It Or Not fame) is developing as part of a $25-million entertainment destination. The 406-room property will include a 94,000-square-foot indoor waterpark, an Aveda spa, meeting space and a variety of food and retail outlets. The 25-acre site will also be home to Ripley's Aquarium of Canada, which opens in 2007. The lodging and waterpark open in spring 2006.

Other planned developments include a $250-million people mover system, a new 36-hole championship-quality golf club and a $160-million expansion of Marineland, the region's first man-made attraction.

The Fallsview Casino Resort is growing, too. This month, as homage to the Falls' legacy as a honeymoon destination, it opened a wedding chapel in the property. On opening day, crooner Paul Anka entertained and more than 260 couples got married. Next to open will be a poker room in the casino to capitalize on the popularity of card gaming, thanks to near-non-stop coverage on cable TV.

After decades of trying, Niagara Falls, New York is still struggling to catch up to its counterpart community across the border in terms of tourism infrastructure. The latest attempt to match Ontario's success will be a new 26-story, $140-million hotel the Seneca Nation tribe is building on the U.S. side next to its existing casino. Tribal officials say the 600-room property will be four-star caliber and include two restaurants, additional casino space and a spa. A top-floor lounge will provide views of the falls now only found in properties on the Canadian side.

THE BIG IDEAS

Fallsview by the Numbers

  • 200,000-square-foot casino with 150 gaming tables and 3,000 slot machines;

  • 50,000 square feet of meeting space, including a 30,000-square-foot exhibition hall that can be divided into five sections;

  • 10 dining and food facilities, including a signature restaurant, 750-seat buffet, 24-hour coffee shop and a food court;

  • 1,500-seat showroom that presents a variety of Las Vegas-style entertainment, sporting events and other presentations;

  • 15,000-square-foot spa with fitness facilities, swimming pool and treatment rooms.

  • 3,000-car parking garage.

What About Las Vegas?

It's unlikely that Niagara Falls, Atlantic City or any other gaming market in North America will ever overtake Las Vegas as top dog in the casino hotel industry. City tourism officials expect gaming revenues to rise four percent this year to $9 billion. In 2004, the city broke a four-year-old record for arrivals at McCarran Airport: 41 million passengers deplaned versus 36.9 million in the previous high-water-mark year of 2000. 2005 will probably break last year's record. The city's lodging census of 131,500 hotel rooms will grow to 151,000 units in the next five years. Another 6,300 timeshare and condo units are also planned.

To make sure it remains on top, Las Vegas continues to grow and, more importantly, reinvent itself. Here's a rundown of ongoing developments in Sin City:

  • The catalyst for the next stage of major growth in the market will be the April opening of the $2.5-billion Wynn Las Vegas, the latest project from the fertile and creative mind of the city's supreme impresario Steve Wynn. Built on the site of the former Desert Inn, the 2,800-room megaresort has a number of unique attractions — its own golf course (the only one on the Strip), an 1,800-seat, $30-million water-based theater in the round with 2.5 million gallons of water flowing under the audience and an in-house Ferrari and Maserati dealership.

    But as Wynn did at the Mirage, Bellagio and other casino properties he developed, the main attractions at Wynn Las Vegas will be top-notch restaurants and entertainment, luxury accommodations and bend-over-backward service. Each guestroom will have nine-foot-high floor-to-ceiling windows with views of the Strip, the property's lake or the golf course. Amenities include European linens, upscale bedding, flat screen TVs in both the living area and bathroom and high-speed Internet access.

    While not yet open, the property is already a roaring success. Chris Flatt, the hotel's director of sales and marketing, anticipates 100-percent occupancy for the first full year of operation. She says the property also has meetings booked into its 200,000-square-foot convention space for as far out as 2011. Not surprisingly, Wynn already has expansion on his mind: In November, he announced plans for another 1,500-room tower plus additional casino, restaurant, recreation, retail and meeting space. The expansion, which opens in 2007, will cost $900 million and be known as Encore at Wynn Las Vegas.

  • Not to be upstaged by Wynn, MGM Mirage recently unveiled plans for its Project CityCenter, a multi-billion-dollar development that will include residential and retail components as well as a more traditional casino hotel. The complex will be built on the 66-acre site of the Boardwalk casino between the Monte Carlo and Bellagio properties. First phase of the project will open in about five years and will include a 4,000-room casino hotel, three boutique hotels, 550,000 square feet of retail, dining and entertainment and 1,650 luxury condo, condo-hotel and residence club units.

  • Despite his well-publicized financial problems, newlywed Donald Trump is about to make his own splash in Las Vegas. The Donald and partner Phil Ruffin have plans to build two Trump International condo towers with a combined 2,564 units on the grounds of the Frontier Hotel. Ruffin also plans to raze the aging hotel and build a 3,000-room casino hotel property in its place. The partners, who plan to break ground on the first condo tower in April, say 1,200 of the first building's 1,282 condo units are already reserved.

  • Basketball legend Michael Jordan is a partner with Diversified Real Estate Concepts on the $600-million Aqua Blue Hotel and Resort, an 825-unit condo hotel project that will be built on Flamingo Rd. a couple of blocks from the Strip. The complex will include the first Michael Jordan Athletic Center and two Jordan-themed restaurants.

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