Biloxi has a great track record, mayor tells analysts

Here is the prepared text of Mayor A.J. Holloway’s presentation to two audiences of financial analysts in New York City, where he was invited to speak on Monday, June 19, 2006.

Thank you for inviting me here today, and I’m glad to see so many of you.

I hope that I can give you a good idea about what we’re seeing in Biloxi. And I hope that you agree with me that we have a compelling story.
We lost 6,000 homes and businesses in Biloxi as a result of Katrina. Between 3500 and 4,000 homes were destroyed in east Biloxi alone.
In the days after the storm, I told the national media in interviews that it looked like 85 percent of our tax base was wiped out. It was our tsunami.

Today, I come before you to say that right now in Biloxi we’re dealing with some issues that some cities in this country WISH they had to deal with. Well, some of them, anyway.

We have a ways to go, but a lot of people are coming to realize that we were making history before this storm, and we stand poised ready to make history again.

I’m sure that you have heard that the three casino resorts that re-opened in Biloxi in December have been doing about 70 percent of the gaming revenue that nine were doing before the storm.

I think that shows the demand is there. This is no fluke, and let me tell you why, and give you a little background.

I started my fourth term as mayor two months before the storm. I was a City Councilman before that, from 1989 to 1993.

I’ve spent my life in Biloxi and I’ve seen the good times and the bad.

And one thing I remember early on – and it’s something that I heard from you people in this room – is that we needed to establish a track record before we’d be taken seriously by Wall Street.

We were dealing with an unknown. In fact, a local development commission did a study in 1990 or so that said if gaming were legalized in our community, the entire Mississippi Gulf Coast could probably support three riverboat paddle wheelers, and they would employ a total of about 3,000 people.
People thought THAT was a big deal.

Nostradamus couldn’t have predicted what was happening in Biloxi.

In the decade or so before Katrina, we were enjoying the most prosperous and productive time in our 300-plus year history.

We oversaw 6 BILLION dollars worth of development in Biloxi. 10 casino resorts helped create 15,000 new jobs.

We saw the number of hotel rooms on the Coast grow from 6,000 to nearly 20,000. We went from a million visitors a year to between 8 and 10 million a year.

We were doubling the size of our airport and were getting ready to start on a project to double the size of our convention center.

Then Hurricane Katrina came along.

Entire blocks of neighborhoods were reduced to debris fields. Huge casino barges broke from their moorings and were pushed three-quarters of a mile and across a four-lane beachfront highway.

Our infrastructure was decimated. And, let’s not forget, 53 people lost their lives in Biloxi.

But months after Katrina, even as we were dealing with day-to-day issues of recovery, we came to realize something.

The decade of prosperity we were enjoying before the storm was only a glimpse of what our potential is today. We stand poised to reach even greater plateaus of prosperity and opportunity.

This is not just A.J. Holloway talking. The facts bear witness to what I’m telling you.

Like I said, you folks like to have track records to look at. You want to see trends.

By the end of this year, we should have seven casino resorts back in operation. Treasure Bay opens a small temporary casino today. Boomtown is looking to open in July.

That same month, Harrah’s, which plans to construct a billion-dollar resort in Biloxi, will open a temporary casino inside its refurbished 500-room Grand hotel.

And, of course, Beau Rivage opens 1,200 of its 1,740 rooms and other amenities on Aug. 29, the first anniversary of the storm.
Foxwoods Development Group is moving forward with its plans for a multi-million dollar casino on 16 acres at the Broadwater, and Hard Rock, which was scheduled to open the week after the storm looks to start work this week and re-open in July next year.

Why all of this interest? Because people like you in this room know what’s happening in Biloxi.

Three of the 10 casino resorts in Biloxi re-opened in December. IP, the Isle and the Palace.

I’m glad that you people look at the track record, because it will show you something very interesting about the Biloxi market.

Today, that 30 percent of our Biloxi  industry is generating nearly 70 percent of the pre-storm gross gaming revenue.

That’s because we’re seeing brisk business from daytrippers. We only have about 5,500 rooms online right now from an inventory of nearly 20,000 on the whole Gulf Coast.

Right now, we’re probably looking at a couple of thousand rooms coming online over the next several months. And, let me tell you what hotel rooms do in the Biloxi market.

Beau Rivage opened in March 1999. That year, we saw gaming revenue jump to 775 million dollars, which was a 35 percent increase over the previous year.

In 2004, the casinos in Biloxi grossed 911 million dollars. That’s an 18 percent increase in the five years since the Beau opened.

I’ve picked up a few things in that decade of prosperity I’ve been telling you about. As mayor, I make it a point to keep up with an industry that employs 15,000 people in my city and provides millions of dollars in revenue to our city and state.

The first thing is that casino hotel rooms are what drives the gaming revenue figures.

Those 1,800 hotel rooms that the Beau opened in 1999 are what drove the business.

And that 18 percent jump we saw in the revenue between 1999 and 2004 is the result of the different casino properties in Biloxi ramping up to remain competitive.

The hotel rooms have a direct impact on the traffic at the airport, too. Over the last 10 years, east new first class hotel room has created 150 new total passengers, that’s 75 arrivals and 75 departures per room per year. Do the math on that when you add thousands of rooms.

Now, let me say this. I think we would be overly optimistic to think that gaming revenue will increase 35 percent like the last time Beau Rivage opened.
You have to realize that today we’re looking at attracting people to what is either perceived as a disaster zone or a construction zone. People with disposable income to go anywhere they want, may not have a disaster or construction zone at the top of their vacation list.

You also have to consider that the 70 percent figure on gross gaming revenue might be a ltitle misleading.

You’re looking at thousands of entertainment-starved volunteers and FEMA workers in town, so you have to add that to the mix. That 70 percent is not coming from 70 percent of the pre-Katrina visitors.

I say these things because I’m conservative by nature, and I wanted you to know my thinking on these numbers.

But there’s no mistake to this: When we get more hotel, rooms, when we get more restaurants, when we get more of our amenities like the beach, and the golf courses and the museums back in operation we’ll start seeing a steady and sustainable level of growth.

In Biloxi, we were known for providing a level of service and an experience that encouraged visitors to return again and again.

The demand was there before Katrina and it will be there again.

In fact, if you look at the revenue figures in other southeastern cities like Vicksburg, Natchez and New Orleans, you’ll see that they’re all up because of the lack of gaming opportunities in Biloxi.

But that’s going to be changing soon. Real soon.

In the eight months since then we’ve seen concrete proposals for nearly 3 billion dollars.

That’s in the casino industry alone. That doesn’t count the tremendous interest in condominiums.

We had proposals for about 3,000 condo units before the storm, and that number stands at nearly 10,000 today.

Our airport expansion will be completed in 2007.

We believe the number of hotel rooms will increase by 10 to 15 percent between now and 2007, and we might be looking at having as many as 30,000 rooms by 2010.

The casino operators, condo developers, our local community and our loyal customer base are all seeing the same thing in Biloxi: a promising and exciting future.

That’s something that we were delivering to the people of Biloxi before the storm. They’ve seen how we’ve used gaming revenue and the thriving economy to improve their quality of life.

We invested tens of millions in public education, public safety and recreation, we invested in our heritage and culture and preserved historic neighborhoods, and we cut our tax rate in half along the way.

We established ourselves as a city with small-town charm and a host of amenities. A city with a colorful history and a great future, and we realized the importance of the gaming industry.

I want to thank all of you for the support and encouragement that you’ve shown to me and to the citizens of Biloxi. You have a role in that promising future I talk about.

Private investment will be the catalyst fueling our momentum.

Private investment will provide a sustainable rate of growth and a promising long-term recovery.

Private investment will help us provide a quality of life that will surpass that which we enjoyed pre-Katrina

Governor Barbour has said he wants to see a renaissance created as part of the rebuilding process.

We couldn’t agree more. In fact, in Biloxi, we’re going about reviving the renaissance we were enjoying prior to Katrina.
Following up on the governor’s words that it’s going to be up to the local communities to determine how their respective cities will look, we are planning for the components that will be so vital to our long-term recovery.

I launched the Reviving the Renaissance initiative, which will help address issues like affordable housing, public education, streets and drainage, historic preservation, and, of course, the new challenges from the FEMA flood elevations.

Nearly 200 of our residents have volunteered to take part in this movement. They’re addressing these complicated and challenging issues.
How are we going to do it? We’re going to look at the things that made us successful in the past. We’re going to build on those qualities to help make us even more successful in the future.

Our role in city government, as I see it, is to set the table for economic development. To provide the essential services and infrastructure that pave the way for the creation of jobs and growth.

And to provide an environment where our residents will find the excellent quality of life they deserve, and where our visitors will re-discover a place they want to visit again and again.

The people of Biloxi have shown time and again that we’re up to this challenge, and I’m confident that we will not only endure but we will prevail, to steal a line from the Nobel Prize winning Mississippi author William Faulkner.

Many of you in this room share that view. You realize the opportunity that exists in Biloxi.

I thank you for your support in the past, and I look forward to working with you as we make history. Again.
That’s the Biloxi story, based on a track record, just the way you like it.

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