Detroit’s three casinos are banking on added entertainment, conventions, and a new hockey arena to drive future growth.
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Revenue at each of Detroit’s three casinos took an unusual turn in 2015 compared with recent years. While an increase of 3.3 percent in total revenue isn’t quite a surge, it does represent the first reversal of the three casinos’ revenue decline since 2011.
All three shared in the upswing. As reported by the Michigan Gaming Control Board in January, MGM Grand Detroit recorded $582 million in 2015, an increase of 3.7 percent compared with 2014; MotorCity Casino revenue totaled $464.5 million, or 4.4 percent better than the previous year; and Greektown Casino- Hotel’s revenue rose 1 percent to $329.9 million.
Before anyone gets too excited, though, a few things are worth recognizing. For one thing, the winter season in 2015 was appreciably better than 2014, when the region experienced unusually cold weather highlighted by the Polar Vortex (-14 degrees). But even adjusting for the weather, overall revenue bounced back strongly enough to suggest at least a stabilization — if not a resurgence — of an industry on which the city relies heavily for tax revenue.
While all three casinos can point to improvements they’ve made to help draw new business, they acknowledge that, to some degree, the most important factor is outside of their control: The casinos thrive when downtown Detroit is vibrant and attracting people from throughout the region and outstate on a regular basis. And that, in the city’s post-bankruptcy era, may well be the thing that keeps the casinos prosperous for the foreseeable future.
MGM Grand Detroit CEO Steve Zanella says the recent expansion of Cobo Center in Detroit will drive added revenue for the casino’s game floor, restaurants, and hotel rooms.
To that end, several factors now appear to be working in the casinos’ favor, including some that might appear at first glance to represent competition. The recently completed $279-million renovation and expansion of Cobo Center opens up much larger banquet and convention space than any of the casinos offer. And the burgeoning District Detroit project will not only provide a new home for the Detroit Red Wings, but will offer a great many new destinations for those who visit from the suburbs or outside the region.
Casino executives believe their success is driven more than anything by the vibrancy of downtown Detroit — and that means anything that draws a crowd. “All of us are extremely competitive,” says Steve Zanella, CEO of MGM Grand Detroit, “but let’s do everything we can to get the business here first, and then compete for the business.”
Jason Gregorec, CEO and general manager of Greektown Casino-Hotel, agrees. “Any time there’s new development or new venues, it’s a win-win all the way around,” Gregorec says, “because our goal is really to develop Detroit and especially the downtown area.”
Cobo’s renovation and expansion, completed last year, appears to be a particular case of “competition” that helps more than it hurts. With more than 720,000 square feet of convention and banquet space, along with more than 100 meeting rooms, Cobo can accommodate far more — and far larger — gatherings than the three casinos combined.
“Cobo is another tool to get those bigger types of events here,” Zanella says. “If the city wasn’t going through the transformation it’s going through now, it would be a lot more questionable (to renovate and expand Cobo) if you’re just stagnant and you’re redoing the hall. But you don’t have that high level of concern now, with the (city’s successful) bankruptcy (exit) and what’s going to happen.”
When a major event comes to Cobo, Zanella says his team doesn’t lament that it didn’t go to MGM. Rather, it focuses on the opportunity to fill hotel rooms and restaurants. Greektown and MotorCity take the same view.
“More people are coming downtown, and that increases our business,” Gregorec says. “They’re saying, ‘Let’s see what our other options (for entertainment and lodging) are.’ And it also increases our room rate. We were over 90 percent occupancy last year, and we were in the high 80s (in 2014), so it’s been creeping up.”
According to Gregg Solomon, CEO of MotorCity Casino, the Cobo expansion presents an opportunity — but the benefits may lag because of the lead time event planners usually require.
“If you’re an event planner and Detroit is in bankruptcy, you’re trying to plan an event that’s three to five years out,” Solomon says. “So it’s only now that serious event planners for large business events are considering Detroit. That’s what we refer to as the booking window. There are events being booked now that will be very important to us as they’re coming on line just as District Detroit is coming to fruition.”