Vol. 3, No. 12, December 2006
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Tony Rodio and Phil Juliano
Sometimes two heads are better than one, and that is certainly true for the Atlantic City Hilton and now Resorts Atlantic City. Tony Rodio, the president, and Phil Juliano, the vice president of marketing for the Atlantic City operations of Resorts International, have more than 40 years of combined experience in the Atlantic City gaming industry, and it shows. At the Atlantic City Hilton, Rodio and Juliano turned the property around after Resorts’ parent company, Colony Capital, bought it from Harrah’s Entertainment two years ago. Now, they’ve added Resorts Atlantic City, the city’s first casino, to their portfolio. Each hotel has its challenges and opportunities, and by giving the customer a good gamble and focusing on things that are important to the gambler, the Hilton and now Resorts are making remarkable turnarounds. Casino Connection Editor Roger Gros and Associate Editor Beth Joseph spoke with the two executives at their offices in Resorts Atlantic City in late September.
Casino Connection: What was the difference that you made at the Hilton that previous owners since Steve Wynn could not make?
Rodio: I think first and foremost was the positioning of the property. The best way to describe it is that everybody in the market is trying to become more Borgata-like and rush to add all these non-gaming amenities. Given the fact that we don’t have many of those amenities and that the lion’s share of the revenue in the market still comes from the gambler, we thought that we would take an opposite approach and fill the void of a gambling position. That has really worked well for us, and Phil, more than anybody, was the architect of that.
You have been emphasizing good games and a fair chance for the players along with the great customer service that has been a signature at the Hilton all these years. How have you communicated this kind of philosophy to your employees?
Juliano: We tried to resurrect the heritage. It goes back to when the place first opened and it was a gambling hall, a gambling joint, and that’s the way it felt and we reminded them of that. The key was that we focused their attention on the value of a gaming experience.
R: Another key, from the employee’s perspective, is getting their buy-in. There was a lot of uncertainty when Colony first acquired the property. They had worked for Caesars Entertainment for a number of years, Bally’s before that, and Golden Nugget before that. And here comes this non-gaming company, in essence, so it was important that we showed some positive results quickly. We were able to do that. We immediately saw some reversals of the negative trends we had seen. It was evident from early on that the business was returning, and that allowed us to get the employees’ buy-in very quickly.
J: We also had to throw off the shackles of being a stepchild. For so long, they had been the third-rate cousin in the Caesars world. We got rid of that pretty quickly and told them we are going to compete.
Tell us about the additions and the changes that have gone on at the Hilton since you guys have been there.
R: From a physical standpoint, I think the most significant change was the capital that we spent on the property on the second level. We took what was a retail dress shop and our players club, and we created a gaming space on the second level, a poker room and an Asian gaming room. We combined them by having a joint cashiering area that joins the two together. It was critical for a number of reasons; first and foremost, if we are going to take on this gambling-centric position, you can’t do that without a poker offering—even though it isn’t the largest poker room in the city.
Secondly, we have such a rich tradition at the Hilton with our Asian gaming customer base and the bus program out of New York, it was important that we solidify that portion of our business and show how important they are to us. So we created a separate experience for them that has gone over huge.
Even more important, we are so pressed for space on the casino floor, it allowed us to take that Asian gaming pit that resided on the casino floor, move it upstairs and gave us space for 110 additional slot machines. We have the highest win-per-square-foot in the city. There is a lot of demand for the property and we just don’t have enough gaming space to meet that demand, or enough hotel rooms and parking and restaurants. But the casino space was one of the critical needs that we had, and addressing that has been a big part of our turnaround.
You recently sold some land owned by Hilton to the group led by Wally Barr and Curtis Bashaw. Why was that decision made ?
J: As you look at all the land that we have in the area, we have some significant acreage still contiguous with the Atlantic City Hilton we can develop. We have plenty of room for a master plan and a major expansion. We are currently working on those plans, and the sale of that land puts us, from a capitalization standpoint, in a better position to expand the current property. We see nothing but upside there, so I think that it was more land than we can actually build on. If it was going to sit undeveloped for a number of years, why not monetize the land and use it for an expansion at the existing property down the road?
Do you think more casinos at the Hilton end of the Boardwalk will end up helping the Hilton by drawing more people down there?
R: No question, absolutely no question. I definitely think that it would ultimately help the Atlantic City Hilton.
Let’s talk about Resorts. You were appointed to lead Resorts earlier this year when Audrey Oswell resigned. The property never performed up to Colony expectations when it built the hotel addition. What have you done to help fulfill the potential of Resorts?
R: First of all, in terms of the hotel expansion and not meeting expectations, it’s a little misleading in a couple respects. Number one, to build the new tower we actually had to take out of service almost 400 rooms, so the net increase to the property was really only about 100 hotel rooms. So, in the grand scheme of things there wasn’t a huge increase in capacity. The expectation for the numbers to dramatically move I think was probably not fair.
Secondly, it opened in close proximity to the opening of Borgata, so while you open this additional tower you are going up against this new behemoth in the market that was stealing market share from everybody.
What we plan on doing here is not totally different from what we have done at the Hilton. Although we don’t want to occupy the same positioning, we are trying to move more towards a gambling-centric look and feel of the property in terms of our advertising, our message, and the way we speak to the customers and the public at large. We have come up with a tag line, “The Original Home of the Player,” that goes back to the fact that it was the first casino in Atlantic City. People can take a lot of positions, but there are some things that nobody else can take, and nobody else can ever be first.
Like the Hilton, there is a lot of history at Resorts, a lot of things to be proud of. How do you plan to emphasize that?
J: You need to see us again for the first time. Some people think that this place is what it fell into during the ’80s and halfway through the ’90s. But it really has undergone a number of renovations and today it looks very good. So that idea will be carried along with the gambling-centric positioning that you should come back and see this place.
As with the Hilton, Resorts has many loyal employees who have endured many management changes. What did you do to assure them that Colony (Resorts International) is here for the long term?
R: Similar to what we did down at the Hilton, I think that the key is for them to see some positive change and see it very quickly, and we’ve been able to accomplish that. Our numbers in September were actually tied with Borgata in terms of industry growth. So the best thing we can do is just show positive change in terms of the business results, and I think we are already on our way there.
Also like the Hilton, you’ve got some valuable land adjacent to Resorts. Any plans for expansion at this point or are you just trying to get this moving in the right direction?
J: Right now, the focus is to just turn the thing around a little bit and to post some positive results. One difference between Resorts and the Hilton is at the Hilton we have to use a shoehorn to find a place to get in one more slot machine. At Resorts, with the current buildings and the new tower, we have some unfinished spaces, so we can in essence expand without having to develop that land yet. We have three floors of rooms in the new tower that are unfinished, so we could add 63 keys. We have a penthouse floor at the top that is unfinished. That could be eight to 12 amazing suites. We have space on the second level, mezzanine level, in the new building that will have an escalator right down into the casino that is over 30,000 square feet. So we have plenty of space that we can still develop here. First we want to turn the business around, grow the business, grow the profitability, finish the spaces in there and in a year or so we can look toward the land.
Another thing that people do not realize about this property and what we have in terms of future development is that we have the ability and the rights to rebuild the old Steeplechase Pier. That pier could be five acres of additional development, and given what land is going for in this city nowadays, five acres of space that can be developed contiguous to any property or to the Boardwalk is a huge asset down the road.
Phil, having been away from this market for a while, what are your impressions of Atlantic City as a destination? Do you think Atlantic City is more or less competitive than the past, or is it about the same?
J: I think it is more competitive. You just can’t deny what the Borgata did. They put a product in here that was entirely different than anything that had been here, and awakened a group of people who just did not use this town. As a result, the capital that is coming on board, and the capital that is proposed to be spent, has given the town a new face.
Atlantic City is absolutely a destination. It is a gambling spot and a destination tourist spot. However, I think it suffers from the lack of rooms. If it had more rooms, all these minor-league places putting gaming at racetracks with big tax rates are just playing into the hands of Atlantic City operators. The city is just exploding on the weekends. Five to 10 years from now, it will be typical to see a critical mass here on weekends the likes of which we have never seen.
