Steady at the helm: Talking Points with Jon Lucas
Whether surviving the storm of the century or the economic crisis of a lifetime, Jon Lucas believes you can’t stand still. The president and general manager of Biloxi’s IP Casino Resort & Spa has guided his property through the recovery following Hurricane Katrina and now is busily positioning the IP for when economic conditions improve. He spoke recently with Casino Journal Associate Editor Craig Berosh.
How is the Biloxi market holding up in this economy?
Lucas: We certainly haven’t had the same fall-off in business as other jurisdictions. It hasn’t been nearly as severe, and I think there are a variety of reasons for that. I think being a regional, drive-in market is a help in this environment because people are watching their spending and maybe not getting on an airplane and flying to Vegas. I think we here in the region are less dependent on non-gaming amenities, although our property is positioned similar to Vegas with a lot of non-gaming amenities. What we have seen is less spending per person. Occupancy has held up pretty well for us, but people are not really paying the same rates.
For folks who don’t live in the region, are there still effects from Hurricane Katrina?
There are definitely still effects. If you drive around here you would probably be surprised by the lack of rebuilding that has happened, or not happened. There are challenges that were just not anticipated. No. 1 was that many people still haven’t settled with their insurance because of the fight with the insurance companies over wind damage versus water damage. If you don’t have money to spend to rebuild then you have to wait until that is settled. Problem No. 2 going forward, the cost of insurance is prohibitive. They are working in the Legislature to try to find ways to lower the insurance costs, and that is taking time. Then there was a period of time when the cost of construction was high, or higher. And secondarily there were requirements from FEMA, post-Katrina. You had to, for example, elevate your building if you were in a flood zone, where you might not have had to do that before. That being said, casinos are back up and running, but it’s not quite where it needs to be yet.
Do people in the area’s tourism business like to talk about Katrina?
I’m sure there is a group of people who are tired of talking about it. I think people, generally speaking, want to put it past them from a standpoint that tourism is a very important part of our economy here, and gaming is really the engine that drives the economy, so they don’t want to talk of Katrina to scare people from coming here. But I don’t think people are afraid to talk about it in general.
There is a new TV and Internet marketing campaign promoting the region. Can you tell us about that?
What was done was a co-op ad campaign between the [Harrison County Tourism Commission] and some casinos. It’s intended to say, “Hey, we are back in business.” We’re restarting some scheduled airline service into Jacksonville and Tampa, so some of the dollars were spent in marketing to those two areas. It’s really a way to do a joint ad and marketing campaign to try to drive play to the regional markets. Such a collaborative effort had not been done before, so it’s new from that standpoint.
We believe that you can’t stand still. You have to be positioned for when the recession subsides and the economy turns around. You want to be positioned to take advantage, so we have continued to reinvest in the property. Maybe not at the level or speed we were. As an example of that we had 78 suites that we were going to renovate this year; instead of not doing it we spread it out over two or three years. We did do a renovation to our entertainment venue [which opened in January] and spent about $9 million to create a 1,400-seat venue and dive into the entertainment world. The customer who is looking for an entertainment option who didn’t have it with us before, now they do, so hopefully that will drive a different customer to our property.
How else has the IP stayed competitive in these tough economic conditions?
I’m not sure during these times and in this marketplace that you are going to grow the market, but what you can do is grow your market share. What we do is what I call “differentiators” - things that set you apart from the competition. We are well-known as having the best restaurants on the coast. One of my big philosophies is that what everybody does is eat. Not everybody plays blackjack, not everybody plays slots, not everybody stays in your hotel room, but everybody is going to eat and go to the bathroom, so have nice, clean bathrooms and great food. We try to make it more of a destination so people have more than just gambling to do. We cater to a variety of people so we provide every genre of music. Lastly, we believe service is another differentiator. We spend a great deal of time and effort with service training.
There are many state-level initiatives that could result in an increase in competition for Biloxi. What is the outlook of the Mississippi Casino Operators Association on that possibility?
Anything in the region is a threat to our business. We have to keep an eye on it and watch it, which is all the more reason to have a destination resort facility. Our biggest market is regional, so from an MCOA standpoint any threats from Arkansas, Tennessee, Alabama, Georgia, Florida, would have an impact on our business. Right now, for instance, with the limited options in Florida gaming, it’s not that big of a deterrent, but with the Seminoles adding table games, it certainly could impact us.
Would you say the competition for gaming patrons is more intense today than in the past?
There’s definitely more talk now, and I think the reason is clearly the economy. Everybody has a budget shortfall, and they are running out of ways to fund it, so they look at these other states that have gaming. The reality is that so many states have gaming. I’ve never understood two things: The first is, if your state has Native American gaming you are beyond the moral issue - it’s already there - so why wouldn’t you want your own state to collect monies that you probably aren’t getting from Native American gaming. That’s not anything bad against Native American gaming. Then, if you are a state where there is gaming right across the border, and all your people are going across and gambling, why are you going to let your money go outside the state? Now, I’m not wanting all these states to get gaming. I just find it pretty odd.
Jon Lucas is president and general manager of IP Casino Resort & Spa in Biloxi, Miss., and president of the Mississippi Casino Operators Association. He has served in top management positions with Ameristar Casinos, Primadonna Resorts, the former Sands Casino Hotel in Atlantic City and most recently was president of the Tunica Casino Group for Caesars Entertainment. He is a member of the Gulf Coast Business Council and the board of governors of the Mississippi Economic Council.