Scarlet Pearl enters Mississippi Gulf Coast market
Scarlet Pearl enters the crowded Mississippi Gulf Coast market with a project that is original in more ways than one
When plans for Scarlet Pearl Casino Resort in D’Iberville were approved by the Mississippi Gaming Commission in December of 2013, the reaction on the ground from many market participants was, “Why?”
Not surprising, as nobody ever wants new competition, but skeptics could point to a market that was already served by 11 casinos, in Biloxi, Gulfport and Bay St. Louis and is still rebounding from the twin shocks of Hurricane Katrina and The Great Recession. That said, the hurricane was over 10 years ago and the market has lacked new, ground-up projects, with Island View being the last one to open in 2006. The now-shuttered casino-only Margaritaville project followed, the failure of which resulted in new standards for Gulf Coast project applications, including a minimum of 300, three-diamond hotel rooms and a tourism-driving non-gaming amenity that is unique to the market.
The result is Scarlet Pearl Casino Resort, and, by the looks of it, the Commission may be excused for running a victory lap.
Scarlet Pearl, D’Iberville’s first casino, is located in the city’s Old Town on the Biloxi Back Bay, making it the first gaming resort everyone sees if they are driving to Biloxi on Interstate-10 from the east or west. The $290 million project, which is owned by financier Bob Granieri, has a 300-room all-suite hotel in an 18-story glass tower, over 1,300 slot machines, 45 table games, a new poker room, four restaurants and two 18-hole miniature golf courses built on an exploding volcano.
“The property,” said Luann Pappas, chief executive officer, Scarlet Pearl Casino Resort, “is exquisite.”
CONTEMPORARY & COMPETITIVE
Scarlet Pearl, which opened last month to big crowds, makes a strong exterior statement with its all-glass tower; visually, it stands out. Pappas radiates confidence about the strength of the design, starting with the hotel.
“There is no other room product in this market, or any other that I’ve been in for that matter, that is as fabulous as this,” she said. “The windows have remotely-operated shades for dark-out and for light-in. The bathrooms have very large walk-in showers. Some of our corner suites actually have floor-to-ceiling windows even in the bathroom. There are 10 penthouses and 45 corner suites. All beds are Serta sleeper-top beds; I don’t think you find that anywhere. When you go to bed at night, whether you’re in the bathroom or in your bed, you are literally looking out over the Gulf of Mexico or a combination of the Back Bay of Biloxi and the city of D’Iberville. You would think you were in Manhattan when all you’re looking at are the lights at nighttime. There are fabulous sunsets and sunrises. In an 18-story building that’s all glass, there isn’t a bad view. Everyone is in an exterior room.”
The rooms range in size from 400 to 965 square feet for a Scarlet Suite.
These rooms should be in high demand since the Mississippi Gulf Coast market has a busy calendar year-round, more so than the typical regional gaming market. “July is a phenomenal month in the South, for example,” said Pappas. “Mardi Gras, which other markets would not understand, creates significant demand, and there are numerous city-wide events such as Cruisin’ the Coast which brings in hundreds of thousands of people. They say you build a church for Easter Sunday; we have more Easter Sundays in the South than in other jurisdictions. I would not at this point consider filling 300 rooms, given where our feeder markets come from, a challenge. Not that we wouldn’t want to add more hotel rooms at some point but it wouldn’t be the reason we would say we thought we would do better. It’s probably the perfect number.”
There are four restaurants: Under the Oak Café; Waterfront Buffet; Chopstx Noodle bar; and Scarlet Grille. The unifying characteristics from the design standpoint are nature and light. On the food offer side, it’s creative menus with a regional flare.
“The property is all about the views, the glass, the sunsets and sunrises,” she said, with a nod to the project’s designer, SOSH Architects, led by Nory Hazaveh. “SOSH, more importantly Nory, put a mind-boggling level of detail and thought into this property. The light is like someone took a white-linen table cloth and threw it up onto the ceiling. There aren’t enough adjectives to describe the décor in the restaurants, and how each restaurant’s name and menu fits both the restaurant and the overall design of the property.”
Chopstx is located right off of the Asian table games area (D’Iberville has a very large Vietnamese community). The 250-seat sunshine-filled Waterfront Buffet looks over the Back Bay. The 24-hour Under The Oak café is situated under a very large live oak tree with a picket fence around it. It has items like cat head biscuits and other local fare. Scarlet Grille steakhouse has 175 seats and offers items such as sweet tea-brined pork chops and shrimp cocktail marinated in pink lemonade.
The non-gaming amenity that met the Mississippi Gaming Commission’s “unique to the market” requirement is the Lava Links Golf Club, which was built at a cost of $3 million. The two 18-hole miniature golf courses are surrounded by lush gardens, tiki huts, waterfalls, footbridges and music, and are fully handicapped-equipped. Players enter through the bottom of a volcano that erupts every 30 minutes. It will host the Mini-PGA Championship in 2017.
Why miniature golf? “When you think about what has happened to gaming in general and mature markets in particular; projects were built without a thought to what would those customers look like long-term,” said Pappas. “This provides a unique family attraction for all ages. The belief is, and our position in developing this project was, we must continue to expand the facility by providing family-friendly attractions. In this area, our state officials believe that to be true. Everything must have a family/community non-gaming attraction in order to be built here. And with our climate, you can run this course 12 months a year.”
On the gaming side, all of the over 1,300 slot machines in the 60,000-square-foot casino are brand new. There is a private players lounge for top-tier, Scarlet-level customers that has a full-service bar and very comfortable seating. In addition to the 45 table games there is a well-appointed 10-table poker room that Pappas feels “will be one of the best in the region.”
Player comfort was another area of investment. “We all know that everyone is not always lucky when they come into a casino, so we have state-of-the-art chairs that were very expensive,” said Pappas. “They are fully adjustable; the backs rock, each one has a handle that allows you to slide it out. When we opened we heard so many comments about the chairs; ‘I could sleep in this… I want to take it home with me.’ These are the kinds of finishing touches that so often when you’re in a re-furb, and expansion or a new property, you typically find yourself saying, ‘Gee, I can cut corners on certain kinds of things.’ And the positon here was we weren’t going to cut corners on the slot machines, the chairs in the casino, the menus, or the quality of the ingredients in the restaurants.”
All new properties open with a to-do list, and for Scarlet Pearl, the top item is parking. The property is taking bids for a parking garage and the goal is to have one built in less than 18 moths. Meanwhile, there is no covered parking, apart from 300 underground parking spaces allocated for VIP-level customers. The remainder of the parking spaces are flat-lot, outdoor parking. Scarlet Pearl has partnered with D’Iberville’s transportation authority to have shuttle buses that rotate the parking lots and there are covered waiting stations for customers.
“We managed very well on opening day with the parking, but we know that weather can change in a moment’s notice in the South, which is why we have a very extensive valet parking and valet staff,” said Pappas. “Probably our next move from a marketing standpoint will be to incorporate and encourage valet parking because it is a very beautiful area.”
Speaking of marketing, Scarlet Pearl’s management team is blessed with an abundance of marketing talent, led by Pappas, who comes out of Caesars Entertainment, where she held the top regional marketing jobs in both Atlantic City and the South. In addition, The Fine Point Group, led by another ex-Caesars marketer Randy Fine, serves as the property’s marketing consultant.
“Randy and I have worked together before; we have the same philosophies about how you attract and retain customers,” said Pappas. “It’s actually very refreshing because we can have healthy debates behind closed doors and come out with the right decision for the business and more importantly for the consumer. It’s a feeling that I cannot describe, and The Fine Point Group will tell you the same thing. We are so charged up because we are all creative individuals and we come from different backgrounds; analytical,marketing and IT. That’s a fabulous combination for success.”
One point of agreement is that the Scarlet Peal team does not buy into the notion that all of its business will come at the expense of existing operators. They reject the zero sum game theory.
“You certainly anticipate that a percentage of your revenue is going to come from stealing share, and that would absolutely be the case if this was a market that you didn’t see tremendous growth potential in,” said Pappas. “There is significant expansion going on in D’Iberville and there is no other product like Scarlet Pearl in the market. Will it grow the market? Absolutely. Will it take from our competitors? Sure; that’s what happens, but this market has growth and there continues to be redevelopment down here. There are larger corporations looking to relocate their headquarters down here. There are future plans for convention centers with hotels. We’re positive on the market. We wouldn’t have built the project to steal from our competitors. We have a locals strategy and a regional/overnight strategy. We are going to do significant line and charter runs. We haven’t made a decision yet, but we have an opportunity to reach further out with charter aircraft midweek. On the weekends we become a property for your more premium, regional customer. There is a local market for a property like this and an attraction for the regional customer.”
Given that the Gulf Coast market includes the biggest marketing powerhouses in the industry, such as MGM Resorts International, Caesars, and Boyd Gaming, just to name a few, an independent property such as Scarlet Pearl knows the bar will be very high when it comes to attracting and retaining the top customers in the market. In addition to the new property’s attributes, there are some other key areas of advantage, according to Pappas.
“As someone who has spent 30 years with a large gaming corporation, our advantage is that we’re nimble,” she said. “We can create a marketing program today and, if it’s successful, expand upon it in no time. Or, if it’s a program that didn’t resonate so well, you can quickly change it. We’re self-contained and do everything here. In a larger corporate environment it’s more time consuming to start new programs and to turn them off. Our cost structure is another advantage. We own all of the ground; we don’t lease anything because we’re not on the water. We don’t have corporate overhead and/or allocations.”
Which is a good thing in more ways than one, starting with the property’s loyalty program, which will be generous in terms of player reinvestment.
“For the consumer, a higher-end customer, you’re entrenched in someone else’s loyalty program and the cost to switch at a certain level is pretty great,” said Pappas. “We are going to be aggressive because we believe we don’t have to be as promotions-heavy as everyone else. We understand that promotions are often times designed to attract large masses of customers and enable lower reinvestment. We believe the base program has to be the best in-market at all times and we won’t look at promotions as driving big days or big months. This isn’t to say we won’t have promotions, but we’ve spent an extensive amount of time developing our loyalty program in terms of cash back, direct marketing, our comp program and our point program for tiers. We do not plan to be in the middle or the bottom in terms of the base reinvestment. We’re going to be extremely competitive and stay at the high tier of reinvestment. It’s a position we can take and we’re very fortunate in that respect. It comes down to the quality of the offer and the fact that we don’t have a lot of the overhead that our competitors have.”