Resorts $125 Mil Gaming Property Expansion is Put Off, Other Local Projects on Hold

ATLANTIC CITY – Earlier this year, Colony Capital announced that it would spend $125 million to add a 30-story, 500-room tower to its Resorts Atlantic City Casino/Hotel (see earlier story). The company had acquired the property for $140 million from Sun International late last year with the intention of turning this seaside city’s oldest casino/hotel into one of its biggest.

But the events of September 11 have cast a pall on the tourism business and the Resorts expansion project is one of the casualties, at least for the time being. Simply put, “the attacks changed everything from an economic standpoint,” Resorts vice chairman Nick Ribis told reporters late last week. “There’s no way we can go to the financial markets right now.”

The setback for the aging hotel property comes at a time when it has been making some financial progress against its competition. For the first three quarters of this year, its revenues were up by $2.4 million to $186.3 million, and it cash flow had dramatically improved. Casino industry observers credit the improvement in its performance to the property’s revitalized management team under its new ownership.

Nor is the setback just a reflection on Resorts. Several other expansion projects are being delayed here, including upgrades planned by Park Park Entertainment for its Bally’s, Caesars and Hilton properties. And Aztar Corp. is said to be mulling a delay of its $225 million expansion of the Tropicana. Boyd Gaming and its development partners are moving ahead on schedule with the new Borgata, however, and Steve Wynn has given no indication that he will delay construction of his new property here, now in the planning stages.

Resorts officials insist that the delay is temporary, although they have given no indication of a revised timeline. “The economic impact is still being evaluated,” according to Ribis. “We will move ahead with the expansion when the bond market recovers. We will also move ahead with our ongoing projects, such as renovating our suites.”

Resorts officials also insist that the weak financial market and the subsequent delay in their project has nothing to do with New York’s plan to legalize up to a half-dozen casinos at various native American reservations around the state. Still, that plan has casino industry people here a little nervous, especially in the wake of estimates that they could cost this city’s casinos as much as 15% of total gaming revenues when they’re all open.