Daily Archives: January 13, 2012

Does Miami Really Need the Destination Casino Boost for Tourism? Doubts Grow!

Casinos want to boost Miami tourism, but does it need the help?

Amid a record year for Miami tourism, casino companies tout their resorts as a big boost for the vacation industry. Does it need the help?

Preslee Rakes, left, her mother Tina Rakes, center, and Brad Cunningham, right, all from Kansas, feed seagulls during a visit to the South Beach area of Miami Beach, Fla. Florida tourism bounced back better than expected in 2011. A year ago, after the oil spill and lingering economic woes, the outlook was bleak. But it wasn’t as bad as everyone thought, and more modest growth is expected in 2012. ALAN DIAZ / AP
Two of the world’s largest casino operators promise major boosts to tourism if they can open resorts in downtown Miami. But how much help does the vacation industry need?

Hotels, restaurants and other tourism businesses in Miami-Dade now employ more people than they did before the recession. Among the country’s top hotel markets, only Nashville and San Francisco saw a bigger boost in revenue from hotel rooms than in Miami-Dade, where the measure is up 14 percent this year.

Hotel taxes in Miami-Dade surged 29 percent in the latest report, despite a strong showing in 2010. In fact, taxes charged to hotel guests have more than erased losses in the recession and are back to record levels.

“We don’t need the help,” said Bruce Turkel, whose Coconut Grove advertising firm has represented the Greater Miami Convention and Visitors Bureau for nearly 20 years. “On the other hand, if [the introduction of casino resorts] is managed well, it could help us.”

His comments capture the complex equation under consideration as South Florida considers adding mega-casinos to its tourism arsenal. The vacation industry is enjoying some of its best days by many measures, yet the economy needs a significant boost to leave the recession behind. Casino resorts say they can build on Miami’s tourism appeal, particularly among conventioneers, but critics see mixed messages.

They point to Miami’s strong popularity with tourists and warn that expanded gambling could spoil the city’s image as a chic playground.

And they see the size of the proposed resorts — enough to double downtown’s current hotel inventory — as swamping an otherwise-healthy industry. With casinos able to rely on gambling profits instead of hotel revenue, some predict the resorts would bring down rates across the area.

“If you are in the gaming business and the rooms business, the gaming business wins and you give the rooms away,’’ said Michael Depatie, CEO of Kimpton Hotels, which runs the 411-room Epic hotel about 10 blocks from the proposed Sands site. “That is a threat to any hotel.”

With unemployment near record levels and South Florida down nearly 180,000 jobs since the housing bust, casinos can make a strong economic argument regardless of the status of tourism.

A bill under consideration by the Florida Legislature would allow casino resorts provided they cost $2 billion to develop — enough of a budget to create thousands of construction jobs in a region that has lost almost half of its building industry. Genting Group, the Malaysian company that has already bought $500 million worth of land along the Miami waterfront, promises to open up South Florida to the coveted Asian market through its popular casino resorts in Singapore and Malaysia.

Some experts also see lavish casino resorts as a way for Miami to stay competitive, as more destinations around the country and the globe pursue their own gambling projects.

Casino resorts are “probably the one element of the visitor experience that’s missing in Miami right now,” said Peter Yesawich, an Orlando-based tourism marketing veteran who is now vice chairman of MMGY Global.

Plans for Miami floated by Genting and the Las Vegas Sands Corp. would arguably deliver a top goal of the tourism industry: a modern convention center and adjoining headquarters hotel. This week, Miami Beach invited private developers to compete for a plan to build a hotel next to the city’s convention center as part of a major rehab of the facility, which tourism leaders have pursued since the late 1990s.

Walt Disney World is funding much of the opposition to the casino bill, with its advocates warning more gambling would tarnish Florida’s appeal as a family vacation spot. But supporters of the casino industry say Miami’s potential as a convention powerhouse could be the main motivator.

“You add gaming in with everything else, you’ve got the No. 1 convention destination,’’ said Glenn Schaeffer, a former Mandalay Bay president in Vegas who briefly worked for the Fontainebleau Miami Beach. “Orlando would have to up its game.”

Broward’s tourism industry hasn’t rebounded as strongly as in Miami-Dade, where a steady stream of foreign tourists bolstered bookings throughout the downturn. Casino companies are also shopping potential Broward sites, though industry insiders say Miami is the No. 1 choice for a casino resort given its global appeal.

Genting estimates its 5,200-room Resorts World Miami would employ 19,000 people. That would make it Miami-Dade’s largest private employer. Under current conditions, that many jobs would shrink the county’s unemployment rate from 10.2 percent to 8.8 percent.

With 30 acres and six towers modeled after a coral reef, Resorts World Miami would be grand enough to become a destination unto itself, Genting contends. Executives pointed to a similar Genting resort in Singapore, saying it helped boost tourism in the country by 40 percent. A top target would be Latin American gamblers who switch planes in Miami on their way to Vegas.

Genting’s plan calls for a sprawling 200,000-square-foot meeting space on an upper floor of its resort. Sands said it would create an exhibit hall with as much as one million square feet of space. — about twice the size of the Miami Beach expo. Sands, which runs one of the top convention centers in Vegas, claims it can bring the kind of large-scale meetings and trade shows that have mostly eluded Miami Beach and its 1957 convention center.

“There are lot of cities that are a lot less appealing than Miami that do better with conventions and trade shows,’’ said Andy Abboud, vice president of government relations for Sands. With fewer than 2,000 rooms, a Sands downtown resort would not be large enough to accommodate the thousands of attendees for major shows, so local hotels will benefit, he said. “We don’t want to build it all.’’

A downtown convention center may be successful enough to leave Miami Beach wondering if it needs one too. A Sands facility large enough to house the Miami International Boat Show and other massive events, would be a significant threat, said Stuart Blumberg, a co-chair of an advisory panel for the Miami Beach Convention Center. “The Sands model would really build up the downtown hoteliers,’’ he said. “It puts the Beach [center] out of business.”

Genting Lobbying Art Form – In NY and Florida. There’s Something Wrong With This Picture in Our “Democracy”

Behind an Army of Lobbyists, an Instant Force in Gambling
Published: January 12, 2012

In the summer of 2009, a Malaysian billionaire took an unexpected interest in a small town in the Catskill Mountains in New York. With little notice, he bought a stake in a racetrack casino where the owners had struggled for more than a decade to develop a gambling complex.

It was the first move in a brash attempt by KT Lim, chairman of one of the world’s largest gambling conglomerates, to muscle his way into the potentially lucrative American market. But Mr. Lim’s company, Genting Berhad, did not go it alone.

First, Genting hired a lobbyist named John L. Cordo, who was once on the staff of the Republican majority in the New York Senate. Then, with the company rapidly expanding, it amassed a who’s who of influential lobbyists.

Now, as Genting pursues multibillion-dollar projects in New York City at Aqueduct Racetrack and in Miami, its lobbying offers a primer on how a well-heeled newcomer can make up for its lack of experience and connections in the United States.

Because casino gambling is highly regulated, the industry has long drawn swarms of lobbyists promising to help navigate state capitols. Casino gambling is banned in New York, with the exception of casinos on Indian land and electronic slot machines at nine racetracks. Gov. Andrew M. Cuomo has proposed legalizing the industry, though such a move would require action by the Legislature and a referendum.

Genting’s lobbyists in New York, according to state lobbying records, include Patricia Lynch, a former top aide to the Democratic Assembly speaker, Sheldon Silver, and Nicholas A. Spano, a former Republican state senator.

The company has also hired Jennifer Cunningham, a close friend of Mr. Cuomo’s, to do public relations work and Bradley Tusk, who was Mayor Michael R. Bloomberg’s campaign manager in 2009, to assist with planning.

Genting even created an advocacy group called the New York Gaming Association, which is led by another prominent lobbyist, James Featherstonhaugh.

Much of Genting’s spending on advocacy does not have to be disclosed under New York law, but the company did report that it paid Mr. Cordo $195,000 in the first half of 2011. Genting’s spending is believed to have increased sharply in recent months.

Christian Goode, a senior Genting executive on the New York and Miami projects, said in an interview that Genting had hired so many lobbyists in those locations because it wanted to participate in the political process “like any other company.”

Mr. Goode declined to discuss the lobbyists’ specific roles. “We are a large multinational company with lots of exposure,” he said. “Things come up from time to time. We just want to make sure we’re properly represented.”

Stefan Friedman of SKD Knickerbocker, Ms. Cunningham’s consulting firm, said: “We have a proactive agenda that includes building a $4 billion convention center and legalizing table gaming in New York, both of which will create tens of thousands of jobs and generate billions of dollars in economic revenue. We think those issues are important, and we know nothing comes without a lot of hard work.”

Genting’s lobbying reflects its sizable ambitions and spending in New York. When a subsidiary won the license to open the first gambling hall in New York City, at the Aqueduct racetrack, with an offer of $380 million, it far outbid its rivals. It has since poured an additional $450 million into erecting the casino, which opened in October.

Until Genting took over, the state’s 10-year effort to find a casino operator for Aqueduct had been hobbled by delays, missteps and political scandals. In 2010, the state inspector general determined that State Senate leaders had manipulated the process to give the contract in an earlier round of bidding to a company that had donated to Democratic candidates. Genting was not involved in that earlier bidding.

Because of that scandal, lobbyists in New York say they are advising gambling companies to avoid giving sizable campaign contributions to Albany politicians. Genting did not give large ones in the first half of 2011; filings for the second half are due next week.

Last week, Mr. Cuomo made Genting’s plans for a $4 billion expansion at Aqueduct a central element of his economic development strategy. The expansion would include the country’s largest convention center, three hotels with a total of 3,000 rooms, an entertainment center and room for additional electronic slot machines and table games.

Genting is following a similar approach in Florida as part of its strategy to conquer the American market.

The company popped up in Miami last May, announcing it would build the largest casino in the world on Biscayne Bay with 5,200 hotel rooms, a convention center, 50 restaurants, luxury shops and a rooftop lagoon.

The planned casino is not even legal yet, but Genting has spent more than $400 million on land, joined local civic associations, contributed $628,320 to Republicans and Democrats and hired two dozen lobbyists and public relations firms.

On Monday, a State Senate panel approved a bill that would allow for three megacasino resorts in southern Florida.

“Being a relatively unknown Asian company has not been an impediment for Genting in New York or Florida,” said Grant Govertsen, a principal of the Union Gaming Group, a research firm. “More than anything else these days, money talks.”

Gambling critics said Genting’s ability to spend so lavishly on lobbying suggested how much the company stood to gain.

“They intend to soak so much money out of our community that spending millions on local and state government isn’t much more than a rounding error,” said Dan Gelber, a former federal prosecutor in Miami and the chairman of the No Casinos group in South Florida.

Genting boasts it has $5 billion in cash, at a time when most developers are unable to obtain financing for major projects. The family of Mr. Lim, the Genting chairman, has provided financing for Indian casinos in New York and Connecticut.

But in 2009, the family’s real estate firm bought a stake in Monticello Raceway in the Catskills, 90 miles from Manhattan, seeking to build a Las Vegas-style casino for the St. Regis Mohawks. That effort ended with recriminations among the partners, although the Lims still own the electronic slot parlor there.

At Aqueduct, there have been no such missteps. Genting is promoting a plan to add hotels and a convention center that would capitalize on the site’s proximity to two international airports and the ability to draw conventions that are too large for the Jacob K. Javits Convention Center in Manhattan.

But the lavish spending does not assure success in New York or Miami.

Across New York, there are now nine racetracks, including Aqueduct, where operators have installed electronic slot machines, and five Indian casinos, all outside New York City. Mr. Cuomo’s proposal to legalize casino gambling would allow for poker, blackjack and other table games, as well as slot machines.

Mr. Goode, the Genting executive, said the company wanted the state to grant it exclusive gambling rights, regardless of whether live table games are approved, although he would not say whether he meant within New York City or in the region.

Genting also wants a substantially lower “tax rate” on gambling revenues for any additional machines at Aqueduct, he said.

Both of those proposals would require approval by the New York Legislature. Other gambling companies will surely resist the proposals and hire their own lobbyists to help fight them.