With bankruptcy and restructuring firmly behind it, Donald Trump's casino empire has a shot at regaining its former luster. Doing so will take lots of elbow grease, however, and there will be little room for error. That's because the competition, which is already transforming Atlantic City, N.J., from a tour-bus destination into an entertainment mecca for the young, hip and rich, has a big head start. Even though Trump, the real estate mogul and reality-television star, has picked seasoned casino executives, not apprentices, to lead Trump Entertainment Resorts ( TRMP), they have their work cut out for them. "Despite years of industry experience, new management is faced with many challenges in turning around the Trump properties that include the stiff competition from Borgata, the expanded Tropicana and Resorts, and other Atlantic City operators upgrading their properties," Kimberly Noland, an analyst at bond research company Gimme Credit, wrote in a research report. Struggling under some $1.83 billion in debt before its prepackaged Chapter 11 filing last November, the business -- which owns three Atlantic City casinos and a smaller Indiana resort -- found itself without the necessary cash to renovate and expand its casinos, even as rivals were improving old properties and breaking ground on new ones. One symptom was hotel rooms in "dire" need of renovation, the company's new CEO James Perry acknowledged during the company's second-quarter conference call in August. From 2000 through 2004, total capital spending at Trump's Taj Mahal on the northern end of the Atlantic City boardwalk was $110.3 million, according to figures from the New Jersey Casino Control Commission. Over the same period, capital spending at Aztar's ( AZR) Tropicana was $374.4 million and $262 million at Harrah's Entertainment's ( HET) Showboat. That period also saw the July 2003 grand opening of the Borgata, a $1.1 billion joint venture of Boyd Gaming ( BYD) and MGM Mirage ( MGM) that upped the ante in Atlantic City. With 2,000 room and suites, 11 restaurants, 11 boutiques, a spa and theater, the Borgata draws well-heeled overnight visitors interested in a multifaceted experience.
The resort has vaulted to the top of the pack, with net revenue for the first six months of this year outpacing the closest competitor, Bally's Atlantic City, by $50 million. Bally's is owned by Harrah's.
Smith says if any management team is equipped to take on Trump Entertainment's challenges, the current one is. The company has already made some progress, having renovated all of its hotel rooms except for 300 at the Trump Marina, which like the Borgata, is located in Atlantic City's marina district.