Fits and starts
Fits and starts
The going hasn't always been easy for Louisiana's Delta Downs, but the property is thriving with a new expansion
By Jennifer Robison
Since its founding in 1973, numerous owners have had bold visions for the Delta Downs racetrack in Vinton, La. Those ideas are finally materializing, despite trouble emerging from the starting gate.
A 1997 Louisiana law legalizing slots at racetracks upon approval of local voters encouraged gaming companies to look more closely at Louisiana's tracks. In 1999, real estate investor and developer Shawn Scott bought Delta Downs from its founder, Lee Berwick, with plans for such a racino.
Scott subsequently spearheaded a pro-slot referendum among Vinton voters; it passed, clearing the way for gaming at Delta Downs. However, Scott failed to assemble a bond offering to finance the project. In May 2001, he sold Delta Downs to Boyd Gaming Corp. for around $125 million.
Boyd also had big ideas for Delta Downs, but the hurdles weren't completely cleared. Isle of Capri Casinos Inc., a Mississippi company with major holdings in nearby Lake Charles, La., sued Boyd in November 2001, asserting that Scott maintained a lingering financial interest in the property. A Baton Rouge district court threw out the lawsuit a month later.
Boyd has since invested heavily in positioning Delta Downs as a premier racino. A series of improvements over the last three years, culminating in the opening of the track's first hotel rooms, should at last help Boyd achieve that objective.
Becoming a casino
By the time Boyd purchased Delta Downs, Shawn Scott had made $40 million in improvements. The shell of a 15,000-square-foot casino adjacent to the track's grandstand was complete. After its purchase, Boyd earned approval for just under 1,500 slots. The tally proved too much for the available space, with slots spilling into the area underneath the track's grandstand. So the Las Vegas company's first order of business, said Boyd Senior Vice President and Delta Downs General Manager Jack Bernsmeier, was to transform the existing space into a full casino.
Boyd spent $35 million installing infrastructure such as kitchen space and loading docks. In February 2002, company officials turned on the slots and "became a casino," Bernsmeier said.
After evaluating the property's performance, designers drew up plans for $60 million in additional improvements, including wider aisles, a high-limit area with a private lounge and expanded cage services-"which players love," Bernsmeier said.
Auxiliary cages, a remodeled buffet, enhanced off-track betting parlors, a bigger players' club area and new service bars on the floor also came online.
The most substantial improvements at Delta Downs opened in March. A 10-story, 203-room hotel, complete with an entertainment lounge, a five-station food court, an 850-seat arena and a new promenade joined the roster of amenities. In addition, the 1,600-space parking lot grew to 2,400 spots.
Intangible dividends
The renovation and expansion isn't paying dividends yet, though Bernsmeier said Delta Downs is meeting overall financial projections. Numbers from Boyd's year-end report show a 4.2 percent decline in Delta Downs' gross revenue from 2003 to 2004, a drop the company attributed to disruptions during reconstruction and reconfiguration.
However, the freshened racino is drawing new looks from patrons. "Now, when customers first walk in, they see the new gift shop, the new lobby, the new entertainment lounge," Bernsmeier said. "They can see the entire casino floor and the food court. It became so easy to get around the property, which was our goal."
The expansion has served other key purposes. The hotel encourages day-trippers to spend the night after a long day of playing the slots. The food court-which includes a deli, a coffee shop, an Italian restaurant and a barbecue eatery-furnishes more opportunities to cash in comps for meals.
"We needed more food choices, and we decided the customer would rather have that price-value relationship," Bernsmeier explained. "Before, we really only had the buffet [for comp meals]."
Plus, with better beverage and cage services, consumers can get drinks faster and cash checks and make change more quickly, he said.
Delta Downs execs aren't finished. The hotel's infrastructure can accommodate up to 600 rooms, and tentative plans call for an expansion of the racetrack and an RV park. Timelines aren't set for the enhancements; Bernsmeier said he'd like "more experience" with the property's first rooms to "be sure we've become as efficient as we can be. Then we'll make a decision on the remaining [additions]."
Staying competitive
The upgrades at Delta Downs are a competitive necessity in briskly growing Southwest Louisiana.
Among Boyd's key rivals in the region is Las Vegas-based Harrah's Entertainment Inc., which operates two riverboats at its Harrah's Lake Charles hotel-casino in Lake Charles. The 262-room resort has more than 1,200 slots and 58 table games in 68,000 square feet of casino space, as well as seven restaurants. Another major competitor is Isle of Capri, which also docks two riverboats in Lake Charles (though the company is considering moving one of the ships to suburban New Orleans). Isle of Capri Casino & Hotel features 1,837 slots, 112 table games and 48,900 square feet of casino, as well as five restaurants and 493 hotel rooms.
To a lesser extent, Delta Downs must also grapple with Indian gaming. The Coushatta Tribe's Coushatta Casino Resort, 55 miles northeast in Kinder, La., has a 107,600-square-foot casino with 3,200 slots, 80 table games and more than 500 rooms. Amenities include six restaurants, an RV park and an 18-hole golf course. In addition, Louisiana has two other racinos. The Harrah's-owned Louisiana Downs in Bossier City is 200 miles east, while Peninsula Gaming Co.'s Evangeline Downs in Opelousas is 47 miles east.
Perhaps Delta Downs' most sizable competitor will dock in Lake Charles Memorial Day weekend, when Pinnacle Entertainment Inc. of Las Vegas launches its L'Auberge du Lac Hotel & Casino riverboat in Lake Charles. The $365 million complex will include a 26-story, 746-room hotel, a spa, four restaurants and an 18-hole golf course by noted greens architect Tom Fazio.
Location, location, location
The Lake Charles-area properties are pursuing a big prize: The 3.5 million Texans who live within 100 miles of southwest Louisiana, according to Bernsmeier. The market pulls residents from two distinct areas, including Houston and Texas' Golden Triangle, composed of Beaumont, Port Arthur and Orange.
In luring that population, Bernsmeier said Delta Downs has an advantage its competitors can't copy: its location. Its position off Exit 4 on Interstate 10 places the racino just three miles east of the Texas border-a full 22 miles closer to the Lone Star State than its Lake Charles counterparts. That enables Delta Downs to capture customers before they reach the alternatives down the road.
Bernsmeier said attentive customer service and "hard-working employees" are playing vital roles in the success of Delta Downs as well. The property's promotional staffers also maintain a significant surveying operation, with both qualitative and quantitative outsourced marketing, intercept surveys and biweekly customer-service questionnaires via phone. The objective? "We hope for unaided recognition," Bernsmeier said. "If we survey the masses, we would like for them to have a recall of our place. We want our product and services to have enough quality to them that after customers have been here, they want to return."
The share of contenders in Southwest Louisiana isn't likely to increase in coming years. Pinnacle's L'Auberge du Lac is absorbing Louisiana's 15th and final riverboat license. And Bernsmeier doesn't anticipate any new tribal resorts in the area. Yet, the scope of Lake Charles' resorts, coupled with the looming prospect of laws that would legalize gaming in Texas, are encouraging Bernsmeier to retain a competitive edge.
"We can always improve. Even if we're No. 1, I think we're better off with the attitude that we're No. 2. It's a better state of mind. It makes us work harder."
SIDEBAR:
Delta Downs by the numbers
Demographic base: 3.5 million
Casino square footage: 15,000
Slot machines: 1,500
Current hotel rooms: 203
Future hotel rooms: 600
Parking spaces: 2,400
Employees: 1,200
Boyd's purchase price: $125 million
Boyd's improvements: $95 million
The going hasn't always been easy for Louisiana's Delta Downs, but the property is thriving with a new expansion
By Jennifer Robison
Since its founding in 1973, numerous owners have had bold visions for the Delta Downs racetrack in Vinton, La. Those ideas are finally materializing, despite trouble emerging from the starting gate.
A 1997 Louisiana law legalizing slots at racetracks upon approval of local voters encouraged gaming companies to look more closely at Louisiana's tracks. In 1999, real estate investor and developer Shawn Scott bought Delta Downs from its founder, Lee Berwick, with plans for such a racino.
Scott subsequently spearheaded a pro-slot referendum among Vinton voters; it passed, clearing the way for gaming at Delta Downs. However, Scott failed to assemble a bond offering to finance the project. In May 2001, he sold Delta Downs to Boyd Gaming Corp. for around $125 million.
Boyd also had big ideas for Delta Downs, but the hurdles weren't completely cleared. Isle of Capri Casinos Inc., a Mississippi company with major holdings in nearby Lake Charles, La., sued Boyd in November 2001, asserting that Scott maintained a lingering financial interest in the property. A Baton Rouge district court threw out the lawsuit a month later.
Boyd has since invested heavily in positioning Delta Downs as a premier racino. A series of improvements over the last three years, culminating in the opening of the track's first hotel rooms, should at last help Boyd achieve that objective.
Becoming a casino
By the time Boyd purchased Delta Downs, Shawn Scott had made $40 million in improvements. The shell of a 15,000-square-foot casino adjacent to the track's grandstand was complete. After its purchase, Boyd earned approval for just under 1,500 slots. The tally proved too much for the available space, with slots spilling into the area underneath the track's grandstand. So the Las Vegas company's first order of business, said Boyd Senior Vice President and Delta Downs General Manager Jack Bernsmeier, was to transform the existing space into a full casino.
Boyd spent $35 million installing infrastructure such as kitchen space and loading docks. In February 2002, company officials turned on the slots and "became a casino," Bernsmeier said.
After evaluating the property's performance, designers drew up plans for $60 million in additional improvements, including wider aisles, a high-limit area with a private lounge and expanded cage services-"which players love," Bernsmeier said.
Auxiliary cages, a remodeled buffet, enhanced off-track betting parlors, a bigger players' club area and new service bars on the floor also came online.
The most substantial improvements at Delta Downs opened in March. A 10-story, 203-room hotel, complete with an entertainment lounge, a five-station food court, an 850-seat arena and a new promenade joined the roster of amenities. In addition, the 1,600-space parking lot grew to 2,400 spots.
Intangible dividends
The renovation and expansion isn't paying dividends yet, though Bernsmeier said Delta Downs is meeting overall financial projections. Numbers from Boyd's year-end report show a 4.2 percent decline in Delta Downs' gross revenue from 2003 to 2004, a drop the company attributed to disruptions during reconstruction and reconfiguration.
However, the freshened racino is drawing new looks from patrons. "Now, when customers first walk in, they see the new gift shop, the new lobby, the new entertainment lounge," Bernsmeier said. "They can see the entire casino floor and the food court. It became so easy to get around the property, which was our goal."
The expansion has served other key purposes. The hotel encourages day-trippers to spend the night after a long day of playing the slots. The food court-which includes a deli, a coffee shop, an Italian restaurant and a barbecue eatery-furnishes more opportunities to cash in comps for meals.
"We needed more food choices, and we decided the customer would rather have that price-value relationship," Bernsmeier explained. "Before, we really only had the buffet [for comp meals]."
Plus, with better beverage and cage services, consumers can get drinks faster and cash checks and make change more quickly, he said.
Delta Downs execs aren't finished. The hotel's infrastructure can accommodate up to 600 rooms, and tentative plans call for an expansion of the racetrack and an RV park. Timelines aren't set for the enhancements; Bernsmeier said he'd like "more experience" with the property's first rooms to "be sure we've become as efficient as we can be. Then we'll make a decision on the remaining [additions]."
Staying competitive
The upgrades at Delta Downs are a competitive necessity in briskly growing Southwest Louisiana.
Among Boyd's key rivals in the region is Las Vegas-based Harrah's Entertainment Inc., which operates two riverboats at its Harrah's Lake Charles hotel-casino in Lake Charles. The 262-room resort has more than 1,200 slots and 58 table games in 68,000 square feet of casino space, as well as seven restaurants. Another major competitor is Isle of Capri, which also docks two riverboats in Lake Charles (though the company is considering moving one of the ships to suburban New Orleans). Isle of Capri Casino & Hotel features 1,837 slots, 112 table games and 48,900 square feet of casino, as well as five restaurants and 493 hotel rooms.
To a lesser extent, Delta Downs must also grapple with Indian gaming. The Coushatta Tribe's Coushatta Casino Resort, 55 miles northeast in Kinder, La., has a 107,600-square-foot casino with 3,200 slots, 80 table games and more than 500 rooms. Amenities include six restaurants, an RV park and an 18-hole golf course. In addition, Louisiana has two other racinos. The Harrah's-owned Louisiana Downs in Bossier City is 200 miles east, while Peninsula Gaming Co.'s Evangeline Downs in Opelousas is 47 miles east.
Perhaps Delta Downs' most sizable competitor will dock in Lake Charles Memorial Day weekend, when Pinnacle Entertainment Inc. of Las Vegas launches its L'Auberge du Lac Hotel & Casino riverboat in Lake Charles. The $365 million complex will include a 26-story, 746-room hotel, a spa, four restaurants and an 18-hole golf course by noted greens architect Tom Fazio.
Location, location, location
The Lake Charles-area properties are pursuing a big prize: The 3.5 million Texans who live within 100 miles of southwest Louisiana, according to Bernsmeier. The market pulls residents from two distinct areas, including Houston and Texas' Golden Triangle, composed of Beaumont, Port Arthur and Orange.
In luring that population, Bernsmeier said Delta Downs has an advantage its competitors can't copy: its location. Its position off Exit 4 on Interstate 10 places the racino just three miles east of the Texas border-a full 22 miles closer to the Lone Star State than its Lake Charles counterparts. That enables Delta Downs to capture customers before they reach the alternatives down the road.
Bernsmeier said attentive customer service and "hard-working employees" are playing vital roles in the success of Delta Downs as well. The property's promotional staffers also maintain a significant surveying operation, with both qualitative and quantitative outsourced marketing, intercept surveys and biweekly customer-service questionnaires via phone. The objective? "We hope for unaided recognition," Bernsmeier said. "If we survey the masses, we would like for them to have a recall of our place. We want our product and services to have enough quality to them that after customers have been here, they want to return."
The share of contenders in Southwest Louisiana isn't likely to increase in coming years. Pinnacle's L'Auberge du Lac is absorbing Louisiana's 15th and final riverboat license. And Bernsmeier doesn't anticipate any new tribal resorts in the area. Yet, the scope of Lake Charles' resorts, coupled with the looming prospect of laws that would legalize gaming in Texas, are encouraging Bernsmeier to retain a competitive edge.
"We can always improve. Even if we're No. 1, I think we're better off with the attitude that we're No. 2. It's a better state of mind. It makes us work harder."
SIDEBAR:
Delta Downs by the numbers
Demographic base: 3.5 million
Casino square footage: 15,000
Slot machines: 1,500
Current hotel rooms: 203
Future hotel rooms: 600
Parking spaces: 2,400
Employees: 1,200
Boyd's purchase price: $125 million
Boyd's improvements: $95 million
