Tropicana AC May Go To Auction, While the Owners Want to Rebrand It
When will this ordeal with the Tropicana in Atlantic City ever be finished?! What was supposed to be an orderly process to sell the resort/casino has turned into one debacle after another. And its mainly the economy’s fault.
Today it was announced that the judge overseeing the resort is unable to come up to a deal with the Cordish Companies – although they are still negotiating – and wants to put the property up for auction. The problem with that is no one really knows how much the property will fetch at auction, leaving the creditors on the property nervous their loans will not be paid and the holders of the loans – Columbia Sussex – nervous that the problems of the Tropicana may pull them under, even though they have no control over day to day operation, or any say in the selling process.
What a predicament!
I also read today in my local paper – the Asbury Park Press - that Columbia Sussex has hired a branding expert whose job it will be to rebrand the Tropicana as a low-cost, yet high service operation. The hope is that those who are being hurt by the economy will not be intimidated by the high costs of a room in Atlantic City or a $75 a plate dinner in the casino’s restaurants. It doesn’t seem to mean any renovations or major physical changes to the property – only an advertising campaign.
It’s a risky proposition, not the least because “low cost, yet high service” is almost a contradictory statement, but also because they risk the permanent loss of customers who are going to the Tropicana and expect to be in a luxury resort – not an aging, yet low-cost resort similar to the Golden Nugget is in Las Vegas. It also risks lowering the revenue per customer – requiring an even greater amount of customers to visit the casino/hotel, book rooms and eat in the restaurants in order break even or even show a profit.
It’s not too often that you hear of a company that is looking to cheapen an existing brand, most of the time thats seen in the retail industry for a particular product, a clothing brand, or a food brand – rarely is it ever seen in a company whose brand is contained within its walls and real estate.
What happens when this economic downturn reverses? Is the Tropicana suddenly going to go upscale again? Will prices rise while the hotel and casino’s interior stays as-is? There will always be a market for a low-end casino, not everyone wants to (or is able to) go to The Borgata or Revel (once it opens) every time and spend their money on higher-rate rooms and expensive restaurants, but at the same time the last thing anyone wants is the Tropicana to become a casino version of a K-Mart or Dollar Store.
The company that Columbia Sussex has hired is Hornal Anderson – a marketing company located out of Seattle that has come big customers, T-Mobile, Microsoft, Weyerhaeuser to name a few, and it remains to be seen if the court appointed trustee for the Tropicana will even allow Columbia Sussex to take over the day-to-day operations of the Tropicana thus allowing the rebranding. Columbia Sussex has seemed to go through a regime change – primarily motivated by the loss of the Tropicana and the damage its done to the company – but it would have to go through the entire re-licensing process again, causing more delays, and you know that the re-licensing proceedings would be worse than when they first lost their casino license; Columbia will have their work cut out for them.
One thing that iss for sure is as every day goes by the situation for the Tropicana gets worse. Even though the property is in full operation, its in stand-by mode. Meaning if a pipe breaks, it will be fixed, but ongoing construction progression that occurs in almost every major venue such as the Tropicana has been stopped. After my experience in the Trop a few weeks back – there is alot of work to be done. I hope that the Cordish Companies are able to make a deal to purchase the property soon, they have committed a certain amount of money for immediate renovations and it needs new life brought into it, otherwise it will end up like the Hilton Atlantic City to the south.
Related posts:
- How Tropicana’s License Woes Will Help Atlantic City
- Atlantic City’s Tropicana Hotel Is Pathetic
- Colony Capital Places First Bid on the Tropicana in Atlantic City
Category: atlantic city, branding, casino, design, Hotels, las vegas, marketing
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I have to correct one thing you’ve said. Columbia Sussex no longer has anything to do with Tropicana Entertainment. As soon as Trop Ent. comes out of bankruptcy, Bill Yung (the owner of CS) will have his equity interests in Tropicana Entertainment extinguished. He will be a cancer that has finally been excised. Trop Ent. and Scott Butera want to get Trop AC back as it’s a whole new company with a whole different set of corporate values.