One of the interesting nuggets that slipped out during the press coverage of the opening of the MotorCity Casino Hotel was that the casino has master-planned for a second tower, the footprint of which is already known.
However, I would not count on the second tower being constructed soon. With the opening of the three casino hotels in an approximately 12 month period, the Detroit market will have to absorb approximately 438,000 room nights per year, a significant addition to the current room inventory in the City of Detroit.
In addition, the occupancy of the first tower of the MotorCity Casino Hotel on its grand opening night was reportedly approximately 35%, and the first tower is not yet sold out for the 2008 North American International Auto Show, traditionally the week with the greatest hotel demand in Detroit.
The motivation for increasing hotel revenue is clear, however. The casinos are not required to pay the 28% tax on revenues from hotel rooms, unlike gaming revenue. Of course, the profit margin on hotel revenue is substantially lower than gaming revenue, as well.
Wednesday, November 28, 2007
NHL Teams' Involvement With MotorCity Casino
Interesting to note that the Minnesota Wild and Ottawa Senators are already booked to stay at the MotorCity Casino Hotel while in town for road trips.
In addition, Detroit Red Wings players were involved in a No Limit Texas Hold 'Em tournament at the MotorCity Casino. There is a special irony involved here, since former Detroit Red Wing Darren McCarty filed for bankruptcy, many citing gambling losses as one significant cause of his financial distress. In addition, NHLers Jaromir Jagr and Rick Tocchet have suffered through gambling-related scandals.
Obviously, the NHL must take a different view of casino gambling than Major League Baseball. Of course, the NBA held its All Star Game in Las Vegas in 2007, so the NHL would not be alone in its changing views of casino gambling.
In addition, Detroit Red Wings players were involved in a No Limit Texas Hold 'Em tournament at the MotorCity Casino. There is a special irony involved here, since former Detroit Red Wing Darren McCarty filed for bankruptcy, many citing gambling losses as one significant cause of his financial distress. In addition, NHLers Jaromir Jagr and Rick Tocchet have suffered through gambling-related scandals.
Obviously, the NHL must take a different view of casino gambling than Major League Baseball. Of course, the NBA held its All Star Game in Las Vegas in 2007, so the NHL would not be alone in its changing views of casino gambling.
People Mover Extension To MotorCity Casino?
One of the more interesting, albeit off message, comments during the press coverage of the opening of the MotorCity Casino Hotel is the statement by Marian Ilitch, owner of MotorCity and wife of Mike Ilitch, owner of the Fox Theatre, Detroit Tigers, Detroit Red Wings, and Little Caesars, regarding an extension of the People Mover.
Ms. Ilitch stated that they are seriously investigated an extension of the Detroit People Mover, a fixed-circuit, elevated, light rail transit system that currently encircles the core of downtown Detroit. A couple of thoughts about that statement.
First, the People Mover has been controversial because of its low ridership and substantial annual subsidies. So, an expansion could be a double-edged sword. It would logically increase ridership, as the station at the Greektown Casino is one of the busiest in the current loop, and one would assume a second casino location would increase ridership overall. But who is going to fund the land acquisition and construction of the expansion? MotorCity Casino? The City of Detroit? If the rumored construction of a new hockey arena behind the Fox Theatre comes to fruition, there would be two logical beneficiaries, the Detroit Red Wings, and the MotorCity Casino (both of which, of course, are owned by the Ilitch family).
The second thought is that such a statement, at the grand opening of the new casino hotel, merely highlights for me that the casino's executives have come to grips with the fact that MotorCity Casino has the worst location of the three Detroit casinos. An extension of the People Mover to MotorCity would arguably reduce the gap in location benefit that MGM Grand Detroit and Greektown Casino currently enjoy.
Ms. Ilitch stated that they are seriously investigated an extension of the Detroit People Mover, a fixed-circuit, elevated, light rail transit system that currently encircles the core of downtown Detroit. A couple of thoughts about that statement.
First, the People Mover has been controversial because of its low ridership and substantial annual subsidies. So, an expansion could be a double-edged sword. It would logically increase ridership, as the station at the Greektown Casino is one of the busiest in the current loop, and one would assume a second casino location would increase ridership overall. But who is going to fund the land acquisition and construction of the expansion? MotorCity Casino? The City of Detroit? If the rumored construction of a new hockey arena behind the Fox Theatre comes to fruition, there would be two logical beneficiaries, the Detroit Red Wings, and the MotorCity Casino (both of which, of course, are owned by the Ilitch family).
The second thought is that such a statement, at the grand opening of the new casino hotel, merely highlights for me that the casino's executives have come to grips with the fact that MotorCity Casino has the worst location of the three Detroit casinos. An extension of the People Mover to MotorCity would arguably reduce the gap in location benefit that MGM Grand Detroit and Greektown Casino currently enjoy.
MotorCity Casino Hotel Only 35% Occupied On Opening Night?
One of the interesting items noted in the press coverage of the opening of the MotorCity Casino Hotel is that the hotel expects to be only 35% occupied on opening night, and "is looking to be" to be sold out for New Year's Eve and the North American International Auto Show.
Compare that occupancy level to the sold out opening night at MGM Grand Detroit, and the sold out Book Cadillac for the 2009 North American International Auto Show. So again, the question is: Is the vacancy due to the location of the hotel? The management? Or something else. . .
Compare that occupancy level to the sold out opening night at MGM Grand Detroit, and the sold out Book Cadillac for the 2009 North American International Auto Show. So again, the question is: Is the vacancy due to the location of the hotel? The management? Or something else. . .
More News From The Press Tour of MotorCity's New Hotel
Yesterday was the VIP and press tour of the MotorCity hotel tower. The Detroit Free Press, Detroit News and Associated Press all have detailed stories up about the hotel opening.
There is a lot of interesting info in these articles, which I will be addressing in separate posts later. In general, though, what is most notable to me is the sense that, while the MGM Grand Detroit executives at their grand opening focused almost exclusively on the resort they were opening, the focus of the MotorCity executives appears to be on what is still to come. It is as though the expectation level for the current hotel tower is intentionally being lowered. More to come in later posts, though.
There is a lot of interesting info in these articles, which I will be addressing in separate posts later. In general, though, what is most notable to me is the sense that, while the MGM Grand Detroit executives at their grand opening focused almost exclusively on the resort they were opening, the focus of the MotorCity executives appears to be on what is still to come. It is as though the expectation level for the current hotel tower is intentionally being lowered. More to come in later posts, though.
Tuesday, November 27, 2007
After Delay, MotorCity Casino Hotel Opens Tomorrow At 3:00pm
After a one month delay, the MotorCity Casino Hotel will officially open to the public Wednesday, November 28, 2007 at 3:00pm. Even after the one month delay, the casino is billing Wednesday's opening as a "soft opening," as portions of the hotel remain under construction.
It is interesting how much more excitement and press coverage the MGM Grand Detroit opening generated. MotorCity's phased-in openings of new casino spaces and the hotel has spread the publicity for the MotorCity out over several time periods. One school of thought is that the big bang of publicity MGM Grand received was more worthwhile. However, perhaps the constant drip, drip, drip of news from MotorCity will keep the venue in the gamblers' minds more often.
I suppose the Deceber 2008 monthly revenue report will tell the real story.
UPDATE: The Detroit News has a story posted after a tour of the hotel, which is largely positive.
UPDATE 2: The Free Press now has its story of the hotel tour posted. The story also gives a deadline of the end of March, 2008, for the opening of all remaining renovated gaming areas.
It is interesting how much more excitement and press coverage the MGM Grand Detroit opening generated. MotorCity's phased-in openings of new casino spaces and the hotel has spread the publicity for the MotorCity out over several time periods. One school of thought is that the big bang of publicity MGM Grand received was more worthwhile. However, perhaps the constant drip, drip, drip of news from MotorCity will keep the venue in the gamblers' minds more often.
I suppose the Deceber 2008 monthly revenue report will tell the real story.
UPDATE: The Detroit News has a story posted after a tour of the hotel, which is largely positive.
UPDATE 2: The Free Press now has its story of the hotel tour posted. The story also gives a deadline of the end of March, 2008, for the opening of all remaining renovated gaming areas.
Sunday, November 25, 2007
Free Press Has Front Page Story On Marian Ilitch And Mike Malik
The Detroit Free Press published a Sunday Free Press front page story from the Freep's Washington Bureau, which analyzed the business relationship between Marian Ilitch, sole owner of the MotorCity Casino, and Mike Malik, a former co-owner of the MotorCity Casino.
The article discussed the pair's efforts to become involved in managing Native American casinos in Long Island, New York, and Barstow, California, as well as Malik's efforts in support of the Bay Mills tribe to secure a casino in Port Huron, Michigan.
Michigan Casino Blog will have further posts throughout this week about the efforts of Ilitch and Malik, and their political fundraising efforts to achieve their business goals through lobbying.
The article discussed the pair's efforts to become involved in managing Native American casinos in Long Island, New York, and Barstow, California, as well as Malik's efforts in support of the Bay Mills tribe to secure a casino in Port Huron, Michigan.
Michigan Casino Blog will have further posts throughout this week about the efforts of Ilitch and Malik, and their political fundraising efforts to achieve their business goals through lobbying.
Wednesday, November 21, 2007
MotorCity Casino Hotel Has Lights, Vacancies
I'm not exactly sure how this is a story, but MotorCity managed to garner some press coverage for turning on the LED lights that encircle the new hotel tower. The tower can display up to 16.7 million different colors, and will be lit from dusk til dawn, with programmed light displays to match the seasons and holidays. Good job by the MotorCity public relations gurus to get this non-story covered.
The only actual news reported in the story is that MotorCity still has approximately 50 rooms available for the North American International Auto Show in January, 2008. That seems a bit troubling, since that is the one week each year when downtown hotels are universally fully-occupied, and MotorCity has a 12.5% vacancy with only one month remaining. By way of comparison, the Book Cadillac hotel, which does not open until October 1, 2008, is reportedly already fully booked for the 2009 auto show, one year out.
I am not sure whether MotorCity's vacancy rate is an indication of the poor location of the hotel for downtown convention business, or a testament to the lack of confidence in the hotel's management, given the unexpected one month delay in opening the hotel.
The only actual news reported in the story is that MotorCity still has approximately 50 rooms available for the North American International Auto Show in January, 2008. That seems a bit troubling, since that is the one week each year when downtown hotels are universally fully-occupied, and MotorCity has a 12.5% vacancy with only one month remaining. By way of comparison, the Book Cadillac hotel, which does not open until October 1, 2008, is reportedly already fully booked for the 2009 auto show, one year out.
I am not sure whether MotorCity's vacancy rate is an indication of the poor location of the hotel for downtown convention business, or a testament to the lack of confidence in the hotel's management, given the unexpected one month delay in opening the hotel.
Tuesday, November 20, 2007
Chicago Tribune Has Glowing Review of MGM Grand Detroit
The Chicago Tribune's travel section has a glowing review of the MGM Grand Detroit. The review focuses not on the casino, but rather on the hotel and restaurants. The reviewer (a restaurant reviewer, not a travel critic) dined at all three "high-end" restaurants, and rated Saltwater as the jewel of the three.
Monday, November 19, 2007
MGM Grand Detroit Revenues Up 38.4% In October 2007
The move from the temporary MGM Grand casino to the permanent MGM Grand Detroit Casino caused revenues to increase 38.4% when comparing October 2007 to October 2006. Revenues for October 2007 totaled $54.9 million. The increase was achieved even though the casino was shut down for 2 days to effectuate the move from the temporary casino to the permanent casino.
However, the increases experienced by MGM Grand Detroit were not shared by either Greektown Casino, where revenues decreased by 1% to $25.6 Million (likely caused by hotel and road construction headaches at the casino), or by MotorCity Casino, where revenues increased only 1% to $37.7 Million.
Friday, November 16, 2007
Port Huron and Romulus Indian Casino Legislation Is Off Again
The on-again, off-again legislation to give federal approval to a land swap negotiated in 2002 by then-Governor John Engler is apparently off again. Detroit Rep. Carolyn Cheeks Kilpatrick, mother of Detroit Mayor Kwame Kilpatrick, put the kibosh on the legislation.
Expect this legislation to be revisited, as two sponsors, Rep. John Dingell, and Rep. Bart Stupak, support the legislation. Rep. Dingell's support is critical, as he is the senior member of the Michigan congressional delegation, and has significant allies in Congress.
Expect this legislation to be revisited, as two sponsors, Rep. John Dingell, and Rep. Bart Stupak, support the legislation. Rep. Dingell's support is critical, as he is the senior member of the Michigan congressional delegation, and has significant allies in Congress.
Greektown Workers Ratify New Contract
With an 85% affirmative vote, unionized members at Greektown Casino became the third and final casino to approve a new four year contract with the casino. The contract includes 4% pay increases each year of the contract, enhanced 401(k) contributions, and a lump sum $1,200 bonus per worker.
Wednesday, November 14, 2007
Casino Windsor Lays Off 239 Workers
Blaming a smoking ban in the casino, and lower revenues, Casino Windsor has laid off a total of 239 workers, including 23 non-union workers and 206 unionized workers.
The casino's revenues have dropped from $440 million to $320 million annually in the past year.
A $400 million expansion, including a new hotel tower, is to open in 2008. The expansion is expected to create additional job opportunities.
Tuesday, November 13, 2007
More Details On Greektown's Garage
The new parking garage at Greektown Casino will open at 11:30am on Thursday, November 15, 2007. The $65 million, 13 story, 2,900 space garage will be the foundation for the 39 story, 400 room hotel that will open in 2008.
Unions And Greektown Casino Reach Tentative Contract Agreement
The Detroit Casino Council, a consortium of the four unions that represent workers at the three Detroit casinos, reached a tentative agreement with Greektown Casino.
The ratification vote of union members will occur on Thursday, November 15, 2007.
The ratification vote of union members will occur on Thursday, November 15, 2007.
Saturday, November 10, 2007
Two Bills In Congress Would Authorize New Indian Casinos In Port Huron and Romulus
The Natural Resources Committee will be holding hearings next week on two separate pieces of legislation that would give federal approval to the agreement signed by then-outgoing Governor John Engler and two Michigan Indian tribes in 2002. The legislation would authorize the opening of Indian-run casinos in Port Huron and Romulus.
The Port Huron casino would be owned by the Bay Mills Indian Community, which currently operates a casino in the Upper Peninsula of Michigan.
The Romulus casino would be owned by the Sault Ste. Marie Tribe of Chippewa, which currently operates the Greektown Casino in Detroit, as well as the Kewadin casinos in Michigan's Upper Peninsula.
The Port Huron casino would be owned by the Bay Mills Indian Community, which currently operates a casino in the Upper Peninsula of Michigan.
The Romulus casino would be owned by the Sault Ste. Marie Tribe of Chippewa, which currently operates the Greektown Casino in Detroit, as well as the Kewadin casinos in Michigan's Upper Peninsula.
Friday, November 09, 2007
Greektown Casino's New Parking Garage To Open November 15
Perhaps resolving one of its greatest competitive disadvantages, the Greektown Casino announced that its new 2,991 space parking garage, which will be directly connected to the casino by a covered walkway, will open on November 15, 2007.
The casino's 400 room hotel is being constructed above the parking structure. The hotel is tentatively scheduled to open in late 2008.
The casino's 400 room hotel is being constructed above the parking structure. The hotel is tentatively scheduled to open in late 2008.
MotorCity Casino Hotel To Open November 28
Satisfying the marketing that has promised a "November" opening of the MotorCity Casino Hotel, it was announced that the hotel would open on November 28, 2007, nearly a month after the originally announced opening date of November 2, 2007.
The casino's new restaurants, nightclub, spa, and convention facilities are now scheduled to open in the first quarter of 2008.
The casino's new restaurants, nightclub, spa, and convention facilities are now scheduled to open in the first quarter of 2008.
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