Borgata Bob is Boyd's Point Man for Echelon - Monday 6th of February 2006
p>When Boyd Gaming executive Bob Boughner is asked to describe his company's planned $4 billion Echelon Place, he uses words like "energetic, sensual and international."
That may sound unusual coming from a casino boss. Then again, Boughner, the man tabbed by Boyd to develop Echelon Place, is not a typical Las Vegas suit.
The man who accepted his first casino job in 1976 as a timekeeper at Boyd's California casino in downtown Las Vegas responsible for clocking workers in and off their shifts is an avid reader and an art lover.
Boughner also has spent his entire career at Boyd Gaming, perhaps serving in more positions at the company than any other company executive.
"He may not have the last name of Boyd, but he is really a part of the Boyd family," said Joe Weinert, vice president of casino consultant Spectrum Gaming Group in Atlantic City.
Boughner rose up through Boyd's food department, serving as an assistant chef at the California and executive chef at Diamond Lil's restaurant when Sam's Town opened in 1979. He became assistant general manager at the Stardust and eventually became the company's chief operating officer spearheading Boyd's development projects for the next 20 years.
"When he was in the food department, he'd always ask questions about how the other parts of the (casino) worked together," Chief Executive Bill Boyd said. "He has a very curious mind."
And Boughner is ambitious.
"A number of years ago I said, 'What is your ambition at the company?' He said, 'My ambition is to have your job, Bill.' "
While other casino bosses are figuring out how to squeeze more money out of their customers while they are at their properties, industry watchers say Boughner is trying to figure out what will keep them coming back.
In an intensely competitive industry where tens of millions are spent on new attractions every year, that's an increasingly difficult job that requires creative thinking.
So when Boyd announced plans with MGM Mirage to build Atlantic City's first resort in 13 years, the company named Boughner, then a relative unknown in the resort business, to lead the project.
The man some have nicknamed "Borgata Bob" hit a home run in Atlantic City. The Borgata, which opened in 2003, triggered hundreds of millions of dollars in upgrades in a faded resort town that hadn't seen much growth in years.
The Borgata brought Las Vegas-style comforts and stylishness to Atlantic City in the form of major rock concerts, a hip nightclub and attractive cocktail servers known as "Borgata Babes."
"Bob Boughner did for Atlantic City what Steve Wynn did for the Las Vegas Strip in 1989," Weinert said.
Atlantic City was stuck in a low-growth mode until Borgata opened, he said.
"It was as good as it needed to be and not much more," Weinert said of the town, where casinos are more profitable but spend less on upgrades than Las Vegas' resorts. "Many operators at the time didn't believe that the Borgata would have a significant impact on the market. Bob Boughner proved them wrong."
"He could have built a nice place that was new and modern," he said. "But instead of looking at what Atlantic City is, he looked at what Atlantic City could be, found people who could come to Atlantic City, found out what they wanted and built it for them."
Boughner didn't skimp on appearances at the Borgata, personally selecting modern art and interior designs such as glass chandeliers by artist Dale Chihuly.
"He is a wonderful aficionado of art and artifacts," said Stuart Mann, dean of the William F. Harrah College of Hotel Administration at UNLV, where Boughner is an alumnus. "He's got a terrific eye for design and art. He's also very well respected. All the people who've worked for him absolutely love the guy."
Boyd Gaming is again putting its faith in Boughner with the company's biggest bet yet. Echelon Place, to be built on the Stardust site, is an ambitious project with 5,300 rooms, four hotels including the upscale Delano, Mondrian and Shangri-La brands, a convention center, two theaters, a 140,000 square-foot casino and 25 restaurants and bars.
Boughner says the project will create its own demand by offering "different experiences" for customers depending on their tastes and "service and comfort beyond what a 5,000-room resort could offer."
As for the hotel partners, Boughner calls them "A-list companies" who were among the many companies that wanted to be part of the project.
Boyd will own and manage the $2.9 billion Echelon Resort, which includes a hotel and a second, all-suite hotel tower. The Shangri-La, Delano and Mondrian will be owned by Boyd and managed by other hotel companies.
Boughner moved to Atlantic City in 1998 to lead the development of the Borgata. What was intended to be a short-term stay turned into a seven-year position when Boughner requested the job of running the property as its chief executive. He stayed through 2005, when the job went to Borgata's chief operating officer Larry Mullin.
When the time came to consider the top executive to lead Echelon, Boyd didn't hesitate.
"The first person I thought of was Bob Boughner," Boyd said. "I don't think there's a better person in the industry to lead this project."
Borgata has impressed skeptics of all stripes, from urbanites who wouldn't have dreamed of vacationing in Atlantic City to Wall Street experts who weren't convinced that Boughner could pull it off.
"I was skeptical that Boyd would be able to deliver," said Dennis Forst, a stock analyst with McDonald Investments. "Bob has made a major believer out of me. He has proven more than once that he knows how to put together a team."
Borgata has impressed the money men by generating a return of more than 20 percent on the original $1.1 billion investment. Las Vegas resorts are lucky to generate returns in the 15 percent range.
The property generated just over $700 million in revenue last year, 11 percent over 2004, and helped boost New Jersey's 2005 casino revenue above $5 billion for the first time.
But that's Atlantic City.
Las Vegas is home to the world's toughest competition for high-end casino customers and convention business the likes of Wynn Las Vegas, Bellagio, MGM Grand and Venetian, to name a few.
Some on Wall Street are concerned about the size and scope of Echelon Place, wondering how the company will be able to sell that many expensive rooms as more than $10 billion in other hotel projects and thousands of rooms are added to the Strip by 2010.
New competitors like Wynn Las Vegas have grown the market in spite of continued concerns about overcapacity as evidenced by the Strip's recent 24 percent jump in gaming win in November versus a year ago. But that hasn't come without some pain for less competitive operators.
Even Boyd's track record at the Borgata and its recent spot on Forbes' list of best-managed companies hasn't silenced critics.
Boyd's stock has fallen nearly 8 percent since the company announced details of Echelon Place.
Boughner isn't concerned by recent skittishness, saying the company is "focused on developing for the long term." Forst calls the stock drop "the usual skepticism" from Wall Street during a particularly strong growth cycle in Las Vegas.
"It's not just Boyd," he said. "There are concerns about competition among the established players," including Wynn's upcoming Encore resort and MGM Mirage's Project CityCenter.
"Vegas is evolving. I was skeptical when Venetian opened, whether they would be able to do the convention business they were projecting," he said. "Whenever a good operator adds capacity in Las Vegas, it's a plus for them and the city."
The proof of that lies in the exceptions to that rule such as the Aladdin, a badly designed resort that went bankrupt a few years ago, Forst said.
"The Aladdin was built by amateurs," he said. "It was wrong and it was a huge financial disaster. It makes it more difficult for an outsider or a newcomer to get into the Las Vegas market."
One financial expert who declined to be named said it will still be "very tough for Boyd to compete at the high end of the market( given the relationships competitors have already cultivated with high-rollers and convention-goers worldwide.
Boyd, a relative newcomer at the high end of the market, is nevertheless receiving praise from its Borgata business partner the company that will be-come one of its toughest competitors in Las Vegas.
MGM Mirage Chief Executive Terry Lanni calls Echelon Place a vision of "what's happening in the future of Las Vegas."
MGM Mirage will be building its own version of the future just down the Strip. The $5 billion-plus CityCenter will be a densely built collection of hotel towers, condominiums, retail space and other attractions.
Lanni said he was quickly impressed with Boughner during Borgata's planning stage, calling him "thorough" and a "Renaissance man."
"It's great to see people with that vision and looking for something outside the box," Lanni said. "I'm one who can agree that competition is good for us. CityCenter will grow the market. Echelon Place will grow the market. As long as that pie is getting bigger, those of us who are aggressive and committed with great brands will do well."
Boughner "is more than capable" of competing in Las Vegas, Lanni said.
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