Ready to Grow
by Andy Holtmann
Ready to Grow
AC Hilton to undergo $1 billion overhaul
Continuing with what have become wide-sweeping plans of Atlantic City casino operators to revitalize their market, the owners of the Atlantic City Hilton recently confirmed rumors of a significant renovation project for the property.
Resorts International Holdings, an affiliate of Los Angeles-based Colony Capital said it could spend between $1 billion and $1.2 billion to turn the Hilton—currently the market’s smallest hotel-casino—into a megaresort. The project would include constructing a new, 1,000-room hotel; the addition of retail shops, restaurants and a 3,500-seat entertainment venue; and doubling the size of the property’s casino from 60,000 square feet to 120,000 square feet.
“I think it’s a gem of a property that would benefit from an expansion more than any other casino,” Anthony Rodio, regional president of the Hilton and sister property Resorts Atlantic City recently told the Press of Atlantic City.
While no timetable for such project has been identified, Resorts International executives told the New Jersey Casino Control Commission that an architect has been hired for the project.
Rodio said the Hilton’s small size—it currently has only an 800-room hotel—has been somewhat of a roadblock for the property’s earning potential. Each month, the Hilton has to turn away between 30,000 and 35,000 potential customers, and occupancy rates are always at or above 95 percent, he said.
Despite the size, the Hilton has flourished under Resorts International’s control. Colony purchased the Hilton along with three other casinos in Mississippi and Indiana in 2005 for $1.24 billion (the company is selling its Resorts East Chicago property to Ameristar for $675 million). Between 2005 and 2006, the Hilton’s operating profit increased 80 percent to $51.8 million, while net revenue climbed 11 percent to $294.3 million—the only Atlantic City property to enjoy double-digit growth during that span.
“The new senior management team has certainly guided the company, both locally and at the corporate level, to a significant financial recovery,” the Press quoted Casino Control Commission Chair Linda M. Kassekert.
The last time the Hilton expanded, it was on a much smaller scale. In 1997, the property added 300 hotel rooms in a project that cost $50 million.