Pennsylvania casinos thinking lodge

BETHLEHEM, Pa. -- Nearly a year after lucrative table games arrived in Pennsylvania, casinos here are starting to add "stay" to "play," building luxurious hotels meant to entice high-rolling patrons to linger longer and gamble more.

Sands Casino Resort in Bethlehem showed off its long-awaited 300-room hotel to reporters Thursday. The tower is part of a broader redevelopment of Bethlehem Steel's former headquarters plant that includes a 35-store shopping mall, a convention center and performing arts venues rising amid the iconic blast furnaces.

"The addition of the new hotel is really a game-changer for us," Robert DeSalvio, Sands Bethlehem's president, said Thursday. "Now guests from all over the region will be able to come in for the first time, see the revitalization of the Bethlehem Steel plant, stay overnight at the Sands and experience all we have to offer."

At least one other Pennsylvania casino, Mohegan Sun at Pocono Downs, hopes to break ground on a hotel this year, while a third, Mount Airy Casino Resort, is planning to double the size of its existing hotel to meet demand for rooms.

Analysts say hotels are a logical next step in the development of Pennsylvania's thriving, 5-year-old casino industry. Having started life essentially as warehouses for slot machines, many casinos have added restaurants, shops and other amenities along the way. Now, with table games providing a rich new revenue source, casinos have the financial wherewithal to expand.

"The evolution of Pennsylvania into more of a regional (gambling) market that includes hotel rooms, Sands Bethlehem being the prime example, is to a great degree a function of the success of table games in Pennsylvania," said Michael Pollock, managing director of Spectrum Gaming Group in Linwood, N.J. "I doubt very much you'd see those plans being pursued if Pennsylvania remained a slots-only market."

Las Vegas Sands Corp. resumed construction on its recession-delayed hotel in Bethlehem shortly after Pennsylvania lawmakers legalized table games early last year. Adding poker, blackjack, roulette and other games led to a 25 percent increase in foot traffic at Las Vegas Sands' smallest casino, and fourth-quarter revenue surged 45 percent. Sands Bethlehem had 5 million visitors in 2010.

"Table games did give us a real push to complete the integrative resort concept," DeSalvio said.

Sands' entrance into the hotel market comes as U.S. casinos are getting more of their revenue from nongambling offerings, including hotel rooms, restaurants and entertainment. And those services can be more profitable.

In Nevada, a state report shows the 256 largest casinos got more than half their combined revenue from nongambling services in fiscal 2010, and the profit margin was higher in offerings other than gambling.

In Pennsylvania, casino executives and analysts say gambling remains the prime economic driver, but amenities like shopping, restaurants and hotels can be important profit centers, and they have taken on added importance in a suddenly crowded gambling market that includes Atlantic City, New York and Delaware.

"You have to continually reinvent yourself, bring new concepts to the table. People are fickle these days. There's always something new and exciting happening," said John Culetsu, general manager of Mount Airy Casino Resort in the Poconos.

Mount Airy opened in 2007 as Pennsylvania's only full-service casino resort, with a 188-room hotel, high-end dining, golf course, spa and entertainment. Culetsu said the hotel is 95 percent full all year long, prompting a serious look at expansion.

"We are maxed out from an occupancy perspective, which is a good problem to have," he said.

Mohegan Sun, the first Pennsylvania casino to open in 2006, plans to break ground on a 230-room hotel this year.

"It certainly allows us to increase length of play for our patrons," President and CEO Robert Soper said. "It also provides an opportunity to capture business from farther distances."

SugarHouse Casino in Philadelphia also said it's considering a hotel as part of its long-range plan.

"I think hotels are the next obvious step in this market. In order to compete, we need more amenities," Wendy Hamilton, SugarHouse's general manager, told an industry conference last month.

The Sands hotel is slated to open in time for Memorial Day weekend. It'll be the largest full-service hotel in the Lehigh Valley region, which includes the cities of Allentown, Bethlehem and Easton.

Next door to the Sands, the unrelated SteelStacks complex of venues for music, art, festivals and culture is taking shape. The first building on the SteelStacks campus, a $26 million performing arts center, opened this month. SteelStacks, which is also built on part of the former Bethlehem Steel plant, expects to draw 750,000 people a year -- many of whom could be customers for the Sands.