$2.4 Billion (36%) Decrease in Casino Development Since 1999 / 2000 HREC Annual Casino Development Survey

SOURCE: Hospitality Real Estate Counselors, Inc. (HREC)
Denver, Colorado - September 8, 2000 - As of September 1, 2000, $4.3 billion in non-Indian casino development is currently under construction or slated for imminent development in the United States, an approximate 36% or $2.4 billion decrease from last year in terms of development cost. This is just one of the highlights from the 2000 HREC Annual Casino Development Survey, a study completed by Hospitality Real Estate Counselors, Inc. (“HREC”).
Additional highlights of the Survey include:

• An additional $3.9 billion in U.S. casino projects are categorized as highly likely or proposed. This is a $1.6 billion increase from 1999. In total (under construction/imminent and highly likely/proposed), this represents $8.2 billion in the pipeline, a decline of $800 million from the same time last year. Beyond the aforementioned, $6.1 billion in gaming development is classified as tentative/rumored.
  
  
• It is anticipated that the U.S. casino industry will continue to grow (albeit at a slower rate) and play a major role in the national entertainment business sector. If the total pipeline is developed, the total domestic gaming base will increase by over 1.5 million square feet of dedicated casino space. In turn, this would represent the potential for $4.9 billion in additional gaming revenues per year.

• Hotels continue to be an important component of a casino development. Of the sixteen casino development projects identified by the HREC Survey as under construction or slated for imminent development, eleven projects (69%) contain a hotel component. In aggregate, this totals 6,700 guestrooms.
  
  
• The development of mega casino complexes has remained strong. In the 2000 Survey, eight of 25 casino projects (32%) are estimated to cost $500 million or greater. In our 1999 Survey, nine of 27 projects (33%) were $500 million or greater.
• Over the last year, Nevada casino development has declined 72% as the new Aladdin and the remainder of the last batch of mega resorts has come on-line. Las Vegas, which accounts for the majority of the state’s casino development, has a limited number of quality sites available for the development of large-scale casinos and resorts.
• Indian gaming is anticipated to play an increasingly important role in the casino development business. The 2000 HREC Survey estimates that roughly 50 Native American casino projects are currently in the U.S. development pipeline, representing total aggregate project costs exceeding $8 billion and 1.9 million square feet of gaming space. California recently passed Proposition 1A, which allows Indian tribes to conduct Nevada-style gaming on their reservations. The State of California, alone, represents roughly 60% of anticipated Indian gaming development.
• Michigan continues to hold the non-Indian gaming lead among the eight active states since last year’s Survey, with under construction/imminent casino development of $1.8 billion. Michigan’s lead is related to the City of Detroit’s search for one site for three permanent projects (MGM, Motor City, and Greektown). Michigan is followed by New Jersey ($1 billion) and Nevada ($400 million).
• Since 1999, non-Indian gaming projects in the state of Missouri have increased approximately $242 million. It is speculated that the entrance of projects was stimulated by Missouri’s unlimited number of available riverboat gaming licenses as well as the new “open boarding policy”, which was implemented in November 1999. This policy allows continuous boarding of riverboat casinos rather than interval boarding (specific times prior to the two-hour cruises).

Hospitality Real Estate Counselors, Inc. (HREC) is a national casino and hotel consulting practice based in Denver, Colorado. HREC provides specialized consulting services exclusively to the gaming and lodging industries including real estate and business valuations, market, impact and feasibility studies, litigation support and investment analysis.


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Contact:
Michael Cahill, MAI, CHA,
President
Hospitality Real Estate Counselors, Inc. (HREC)
(303) 267-0057