Tropicana filing for bankruptcy

Very poorly run company, even in an industry of poorly run companies they stand out.

Tropicana Entertainment to file for Chapter 11 protection

By WAYNE PARRY – 1 hour ago
ATLANTIC CITY, N.J. (AP) — The fallout from losing its New Jersey casino license will force the owner of Tropicana casinos in Atlantic City and Las Vegas to seek Chapter 11 bankruptcy protection, the company said Monday.
Tropicana Entertainment LLC said it plans to continue operating and will keep current staffing levels.
It was buffeted by a chain of events that began Dec. 12 when the New Jersey Casino Control Commission determined that the company was incapable of running the "first-class operation" required by state law and stripped the Tropicana in Atlantic City of its casino license after less than a year.
That touched off a funding crisis that the company desperately struggled to fend off until deciding to file for protection in U.S. Bankruptcy Court in Delaware, listing assets of $2.8 billion and liabilities of $3.3 billion. Company officials said they expected to file the petition Monday evening.
Scott C. Butera, the company's president, called the filing "an opportunity to take a breathing spell," get its debt under control, and move forward.
He urged current patrons of the Tropicana and the company's other casinos to keep coming.
"This is the first step in making things much better," he told The Associated Press in an interview Monday. "I'd encourage them to remain a customer of the Tropicana, and I'm sure the customer will be rewarded as we do better things and invest in our assets."
He said the company generates positive cash flow from its operations and has lined up $67 million in debtor-in-possession financing from Greenwich, Conn.-based Silver Point Finance LLC.
"We have more than adequate resources to meet our ongoing financial needs," Butera said. "We will continue to offer our visitors and players a full range of lodging, entertainment and gaming services."
The bankruptcy filing would cover nine properties: The Tropicana Casino & Resort in Las Vegas; Bayou Caddy's Jubilee Casino in Greenville, Miss.; Casino Aztar in Evansville, Ind.; Horizon Casino Hotel in Vicksburg, Miss.; Horizon Casino Resort and the MontBleu Resort Casino & Spa, both in Lake Tahoe, Nev.; the Tropicana Express Hotel & Casino in Laughlin, Nev.; River Palms Resort & Casino in Laughlin, Nev.; and the Sheraton Hotel and Belle of Baton Rogue Casino in Baton Rouge, La.
The filing would not cover the Tropicana in Atlantic City, which is in the process of being sold by a state-appointed conservator. The sale was mandated when the former owners lost their license in December.
The other Tropicana Entertainment property excluded from the bankruptcy filing is the Lighthouse Point Casino in Greenville, Miss.
Casinos owned by a corporate affiliate — the Amelia Belle Casino in Louisiana, and the Westin Casuarina Las Vegas Hotel Casino & Spa, are also excluded from the filing.
In an advance copy of the filing provided to the AP, Butera decried the decision by New Jersey regulators to wrest control of the Atlantic City Tropicana from the company, saying that led directly to the anticipated bankruptcy filing. He laid out a cascading series of problems that formed a perfect storm that befell Tropicana's owners almost from the moment they took over the property on Jan. 3, 2007.
When they bought Aztar Corp. for $2.1 billion after a heated bidding war, the company unwittingly violated a fundamental principle of business: buying high just before the market fell.
Using tactics they had successfully employed elsewhere, management began cost-cutting measures including nearly 1,000 layoffs in Atlantic City, prompting an uproar from unions.
A slowing national economy made gamblers more cautious about parting with their money, and real estate values plummeted as well. Then credit markets tightened, leaving Tropicana Entertainment "very little margin for error," Butera wrote in court filings. The company simply could not afford any significant setbacks, he added.
The company suffered a huge setback with the loss of the Atlantic City casino license. The company is appealing the license denial, but the bidding process is well under way and a new owner could be selected within a few weeks.
The company will receive the proceeds from the sale but is worried that a forced sale in a bad economy will result in a depressed price.
It is already selling its Evansville and Vicksburg casinos to help reduce its debt and could decide to sell other assets as the restructuring process unfolds, Butera said.
The filing asks the court's permission to continue to make wage and benefits payments to employees, honor customer loyalty programs, and pay critical vendors and suppliers while continuing to operate uninterrupted.
The privately held company and its affiliates have 11,000 full and part-time employees in five states.
Kentucky-based Columbia Sussex Corp., the hotel corporation founded by Tropicana owner William J. Yung III, shares administrative and business functions with the Tropicana affiliates but would not be involved in the bankruptcy filing.

You know GD, I've been going to Vegas yearly for the last 25 years or so and I believe that is one of the few casinos I have never been in.

they never seem to have a plan.they anoouce ideas but never follow thru

Was in AC last year. Stopped by there. What a total dump.

The Wolf said:

Was in AC last year. Stopped by there. What a total dump.

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The Tropicana seemed just to gimmicky for me I guess.

The Wolf said:

Was in AC last year. Stopped by there. What a total dump.

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The Trop in AC was actually the first casino I ever gambled at, the sad thing is I think it's one of the better casino/hotels in AC.

always funny how gamblers complain about a legal establishment where they can gamble. it isnt like the trop is only casino in vegas or AC.

Belle of Baton Rogue Casino in Baton Rouge, La

Ill join in...Only card room within 65 miles and its a frickin armpit!! 4 tables crammed together surrounded by slots and a few of the dumbest damn dealers you ever wanted to meet..
Cheap bastards but....its the only game in town

Tropicana in Laughlin? I didn't even realize there was such a thing . . . speaks to their marketing efforts.

Hope the Trop has been saved:

http://www.vegasinc.com/news/2011/may/27/tropicana-renovations/



5-27-2011:

Tropicana’s $180 million renovation turning*heads
Opening of Nikki Beach pool club indicative of change at iconic Strip*resort
The history of the Las Vegas Strip has been a tumultuous one, defined as much by the wrecking ball as by the construction of some of the world’s largest and most expensive resorts.

That economic model, the primary force driving decades of tourism growth for Las Vegas, came to a crashing halt in the downturn as financing for new resorts dried up, leaving casino owners with two options: do nothing or renovate.

Alex Yemenidjian opted for the latter when he bought the Tropicana out of bankruptcy in 2009, elevating it to a competitive mid-market property. The tactic seemed questionable in a town that has razed most of its mob-financed casinos and replaced them with lavish megaresorts tailored for newer and more profitable audiences.

Critics questioned whether the Tropicana brand, which had long been known for dingy rooms, tacky décor and iconic Folies Bergère showgirls, could be salvaged.

Now, nearly two years later, the Tropicana bears little resemblance to its former self. Besides renovating all available rooms and public spaces into a South Beach theme, the Tropicana has changed restaurants and entertainment, including the recent arrival of Gladys Knight in the main showroom.

The property’s most extensive attraction opened Thursday, just in time for the big Memorial Day weekend crowds: a nightclub and attached outdoor pool lounge under the Nikki Beach brand. The Tropicana's five-acre pool area has long been one of the resort's signature areas, making its upgrade one of the cornerstones of the property's redevelopment.

To put the size of of the Tropicana's five-acre pool complex into perspective, the Strip's newest resort -- Cosmopolitan -- sits on just eight acres.

The Las Vegas Weekly -- which knows a thing or two about the Las Vegas pool and club scenes -- described the area's all-white linen experience, Nikki Beach's trademark teepee tikis and the sprawling four-poster natural wood Opium beds raised on stilts as "ground zero for the revived vibe" at the Tropicana. The Weekly is a sister publication of the Sun.

The transformation is remarkable, especially to those with longtime relationships with the iconic Vegas resort. Tennis legend Andre Agassi grew up playing on the courts at the Tropicana. Looking out at the renovated pool area on Thursday, Agassi’s eyebrows arched. “It’s great to see the Trop come alive again,” he said, shaking his head. “It’s really incredible.”

Even parts of the property visitors never see got a full makeover, including the first upgrade under Yemenidjian: a $1 million employee dining room.

For a property that had changed little from the 1980s, the $180 million transformation is dramatic — and swift. (Not included in the $180 million figure is the $25 million spent by private investors to open the new 26,000-square-feet "Las Vegas Mob Experience," which tells the story of the city's mafia past using artifacts, actors and interactive technology.)

The makeover has little parallel in Las Vegas.

The 54-year-old Tropicana is one of only four remaining hotels dating from the Strip’s early resort era still in operation. Of those, the Riviera — which, like Tropicana, recently emerged from bankruptcy post-recession — has not announced major renovations under new ownership. Like its pricier sister property, Caesars Palace, the Flamingo has been renovated periodically over the years to maintain its appeal.

Tropicana, by contrast, had gone to seed under at least three owners as strategies to upgrade the property came and went. Plans to tear down the building and erect a major new resort had been discussed more than a decade ago. During the height of the economic boom, different owners proposed the most ambitious expansion in Las Vegas history, including plans to build multiple hotel towers onto the existing resort for a total of up to 10,000 rooms.

The facelift made sense because of Tropicana’s location at the bustling south end of the Las Vegas Strip and one of the busiest intersections in town, Tropicana President Tom McCartney said. The original structure, which opened as a luxury resort in 1957, had been well preserved over the years, with mature landscaping and reasonably-sized rooms, he said.

The resort has yet to earn a profit from its upgrade, though losses have narrowed as the now-renovated property is generating more revenue from all types of customers, including tour groups, last-minute tourists and business customers.

Though renovated rooms and service upgrades have so far been well-received, financial analysts such as Jacob Oberman say it’s too early to tell whether the face-lift will pay off, especially given that business has been somewhat disrupted over the past year while work was under way.

Rising room rates are a big help, he said, as every $10 improvement in rate likely translates into a few million dollars in pretax earnings per year, said Oberman, director of gaming research and analysis for CB Richard Ellis’ Global Gaming Group.

The arrival of Nikki Beach and its Club Nikki nightlife venue — high-margin businesses drawing crowds of young customers in the downturn — could further lift earnings, he added.

Midmarket hotels have suffered more than higher-end properties in the downturn as visitors could afford discounted rooms at the more luxurious hotels.

“It costs about the same amount to service a room and check you in whether you’re at Bellagio or Tropicana,” Oberman said.

Despite optimism about improving tourist traffic and spending patterns, CB Richard Ellis estimates revenue from nonluxury Strip hotels open for at least a year to be flat this year.

McCartney doesn’t sound worried. Instead, he sounds relieved.

The timing of the downturn worked in Tropicana’s favor, yielding an upgrade at much less cost than the boom years and allowing the property to pass on those savings to customers in the form of affordable prices, said McCartney, a Strip veteran who formerly ran the Planet Hollywood resort.

Casino operators in Las Vegas have discussed the negative consequences of lowering room rates to the point where they attract customers who go elsewhere for cheap entertainment because they can’t afford to eat in a property’s restaurants or see its shows.

The opposite is happening at Tropicana because it has achieved a pricing balance among its new offerings, which were designed for post-recession consumers seeking value, McCartney said.

“People can afford to stay here and participate in other activities while they’re here,” from the 24-hour Starbucks to the casual Italian restaurant by noted Chef Carla Pellegrino, he said.

“We’re not competing at the high end. There’s a very large middle market in Las Vegas.”

In years past, the Tropicana served as a conveniently located dorm offering cheap rooms for budget seekers who spent money elsewhere. Tropicana is now a “net importer” of customers, McCartney said.

Tropicana executives use the catchphrase “aspirational yet accessible” to describe their business model — buzzwords that happen to be all the rage in boardrooms across the country.

The new rooms are one example, with plantation shutters made from synthetic white material rather than cloth that can easily wear out or look outdated. Save for an iPod docking station with an alarm clock and a 42-inch flat-screen TV, there are no objects d’art or high-tech features in the rooms, which have a muted tropical theme to match the property’s South Beach-inspired design. Like each new design element of the hotel, the furniture was selected by Yemenidjian for its balanced appeal between modern and casual — an intended departure from the generic minimalism or trendy opulence favored by many hotel chains.

“Some hotels don’t know what they want to be,” said Tropicana Service Excellence Manager Kennon Wolff, who formerly worked at a four-star hotel. “People want a look they can recognize, without it being stuffy or ostentatious,”

The new entertainment lineup may seem a confusing mishmash for younger and older audiences. That’s all according to plan, as the Tropicana casts a wide net in its effort to attract Baby Boomers alongside Generation X and Generation Y customers who weren’t necessarily frequenting the property, McCartney said.

“It’s important to have diverse entertainment offerings available at different times of day. It doesn’t make sense to be too narrow.”

After a building boom of luxury hotels many people can no longer afford, the middle market is “definitely the place to be” for Las Vegas hotels, gaming industry consultant Daniel Shumny said.

Still, budget hotels have a rough road ahead as high-end properties use discounted rooms to compete for customers, he said.

The Tropicana, meanwhile, is a brand that has outlived its expiration date, Shumny said. The new owners would have been better served by tearing it down and waiting to rebuild when the economy recovers.

“It has this image as the place where my grandparents used to go,” he said.

Anthony Curtis, publisher of the Las Vegas Advisor newsletter, calls the makeover a successful effort to bring the property up to par with newer competitors.

“They’ve followed through on what they said they would do,” Curtis said.

The property has been ramping up its advertising efforts, using the slogan “We’re changing everything” to get the word out. Online customer reviews are helping those efforts, as the renovation included retraining staff in the standards of luxury hotels, McCartney said. Among other things, employees must walk customers in need of directions to their destination and be able to explain resort amenities in detail.

On Tripadvisor.com, Tropicana has moved from a No. 80 customer ranking of top Las Vegas hotels before the renovations to No. 20, ahead of many higher-end hotels. Tripadvisor, a travel website known for extensive customer reviews that have become required reading for hotel managers nationwide, features mostly positive comments about the Tropicana, including the following post from a visitor last week: “I had stayed there a few years back and it was not a great experience. They have really turned things around ... The staff is really nice, helpful, knowledgeable and excited about the new direction of the hotel.”

Such comments mark a change from years past, when customers shared horror stories about dirty rooms and service that was lacking.

Occupancy and room rates have crept up over the past several months, resulting in higher gambling, food, beverage and entertainment revenue, according to company earnings reports. After previous management stopped selling rooms to convention groups in anticipation of major renovation work, the Tropicana’s convention business has been reborn, with remodeled convention facilities and a new group sales staff, McCartney said.

“All the indicators are moving in the right direction.”

Nostalgia may sell books and movies but isn’t an effective marketing tool for Las Vegas hotels.

“You will hear people grousing that they want the old prices but they also want the best,” Curtis said. “If you want to compete on the Strip you have to be new. They couldn’t do that with the old Tropicana.”

Columnist John Katsilometes contributed to this*story.

Good read!

just got home from vegas and wa blown away by the trop remodel...i didnt stay there but the casino was excellent..very impressed

apparently they avoided selling properties as well....i live 5 minutes from their casino here , and when i was reading that article, i ddint realize it was 3 years old, and thought, damn, they are gonna be sold....but if that was 3 years ago, then it was avoided, cuz its still a "trop" property here, even though they kept the original name of Casino Aztar

juice said:

The Trop in AC was actually the first casino I ever gambled at, the sad thing is I think it's one of the better casino/hotels in AC.

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it is not one of the better casinos in AC ...borgata, harrahs, taj, caesars... trop is in the lower tear with ballys and trump marina