Making the News

Charlotte Observer

Originally Published:Tuesday, February 16, 2010
http://www.charlotteobserver.com/breaking/story/1250535.html

Cherokee to add resort to N.C. casino
Tribe investing $633 million for spa, hotel and convention hall to entice a new kind of visitor

By David Bracken
Charlotte Observer

Since it opened in 1997, Harrah's Cherokee Casino and Hotel has funneled $1.2 billion in gambling profits to the Eastern Band of Cherokee Indians.

Now, even as its gambling business is wilting, the tribe is investing $633 million in the idea that it can transform the state's only casino into something even more profitable: a classy resort where visitors can not only gamble, but golf, visit a spa and shop.

"People who are interested in gambling know us," said Darold Londo, the casino's general manager. "I don't think that's our opportunity."

The risks and rewards are great, particularly for an Indian tribe that has come to rely heavily on casino profits to pay for government services, as well as provide annual income for more than 13,000 members.

Attendance at the Cherokee casino is down 15 percent since the recession began. About 100 casino jobs have been cut as a result.

"As long as it comes back in 2012 we'll be fine," Londo said of the economy. "We've got a pretty conservative business model."

The $633 million project is one of the largest hospitality expansions now under way in the country. It will double the size of the casino floor and add 532 hotel rooms, a 3,000-seat events center, a spa, restaurants and retail stores.

But for it to succeed, the tribe will need to win back gamblers lost during this recession, while also attracting conventiongoers and groups that have not visited before. The goal is to expand the casino's appeal beyond the 3.5 million gamblers who now visit annually from Atlanta, Asheville, Charlotte, Knoxville and other cities.

The expansion is being paid for using traditional bank financing, which the tribe secured in July 2007 before the credit markets froze.

The tribe pays a 5 percent management fee to Harrah's, the Las Vegas-based gambling giant. The remaining casino profits are used to provide government services on the reservation or are paid to individual tribe members, who receive checks twice a year. Only about 390 of the casino's 1,600 employees are tribe members.

Casino profits total more than $400 million a year, Londo said. Last year, individual tribe members received checks totaling about $9,000, down roughly 10 percent from the previous year.

The Cherokee casino relies heavily on turnaround trips - customers who visit just for the day - but those have plummeted.

Evelyn and John Wyatt's Mocksville company, EzWay Travel, has been running bus tours to Cherokee since the casino opened. The company used to make 12 to 15 day trips a month, picking up between 50 and 55 people on the drive from Winston-Salem to Cherokee.

"Now we're not doing any turnaround trips at all," Evelyn Wyatt said. "In fact, we just sold our bus."

Evelyn Wyatt said of the casino's expansion "is going to be really nice... It's just that we're slowing down because our economy is slowing down. If (people) don't have a job, they're not going to take their money up there and play it."

Michael Pollock of Spectrum Gaming Group, a New Jersey company that tracks the gambling industry, said Cherokee's strategy isn't much different from what Las Vegas has been doing.

"The casino is the engine that drives much of the other amenities that you have on site," he said. "Having the casino on site allows you to price all your other amenities - from hotel rooms to your banquets to your restaurants to your entertainment - at a more value-oriented price."

Cherokee has already added two key amenities in recent months: golf and alcohol.

"It's an absolute game-changer for us," Londo said of the tribe's vote to serve alcohol.

 

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