Funworld October 2007

Countering Katrina

by Jeremy Schoolfield

JON LUCAS AND THE IP CASINO HELP LEAD RECOVERY EFFORTS ALONG THE MISSISSIPPI GULF COAST

Highway 90 runs parallel to the beach on the Mississippi Gulf Coast in Biloxi. Along this stretch of road stand the twisted remains of what were once beautiful oak trees, sheared off nearly to the stump. Here signs advertise for businesses whose buildings simply no longer exist. The hulking, wrecked shells of hotels loom empty and lifeless; elsewhere, a few scant pilings signify where a condominium complex once stood.

A little more than two years ago, almost every square foot of this highway was developed in one way or another with everything from restaurants to condominiums to historic homes that dated back two centuries. Now much of this land is empty. Most of those structures are just … gone, nothing left but a concrete slab, if that. And emergency trailers still dot the landscape, housing thousands waiting for insurance money to rebuild their homes.

These are the scars of Hurricane Katrina, the massive storm that in August 2005 laid waste to the entire Gulf region with its 125-mile-per-hour winds and 27-foot-tall surge of water. They are physical reminders for a community whose emotional wounds run deep and wide.

And yet … while the devastation remains almost incomprehensible in scope, this is a community of people who refuse to quit, people whose ties to the land span lifetimes, and whose primary thought after the storm was simple: rebuild. Nowhere is this more apparent than the Gulf Coast’s 11 casinos, where more than a billion dollars has been spent turning them into gleaming oases among a desert of detritus.

“We really got the stew beat out of us,” says Rick Carter, a lifelong Gulf Coast resident and co-owner of the new Island View Casino Resort in Gulfport, just west of Biloxi. “We weren’t just flooded—we were blown away and then flooded. You can still see the devastation just driving up and down the coast. Everybody was in shock for so long, and worried to death about whether it was ever going to be rebuilt.

“But we knew the Gulf Coast would come back,” he says. “There are strong people here. When things like this happen, our mentality is you get up, brush yourself off, and get busy building it back. That’s exactly what we did here. Now we have a bigger and better property.”

“I’ve never seen a more resilient or more committed group of people than the people of the Gulf Coast,” says Jon Lucas, president and general manager of the IP Casino Resort Spa located on the Biloxi Back Bay, the first casino to reopen after the storm. “We had people who came back here the next day who had lost everything and just started working like it was nothing.”

Gulf Coast tourism officials agree the region’s casinos have been the driving force of the recovery effort in several ways: creating jobs, drawing visitors back to the area, helping spur other businesses, and simple, straightforward charitable donations. Rebuilding will continue for years, but hopes for the future are high here for re-creating the region bigger and better than ever. Sparked by the resurgent casino industry, officials predict a transformation into a top-tier destination within the next decade that would include non-gaming amusements and attractions.

“Casinos are the economic engine for the Mississippi Gulf Coast,” says Nicole Learson, director of marketing for the Mississippi Gulf Coast Convention and Visitors Bureau. “There is no question we could not have rebounded as quickly had the casinos not come back.”

Marcia Crawford, information specialist for the Harrison County Development Commission, puts it simply: “Thank goodness for the casinos.”

The Story of the IP Casino
By sheer coincidence, the IP’s Lucas was in Ari zona visiting family when Hurricane Katrina made landfall on the morning of Monday, Aug. 29, 2005. He was able to fly as far as Memphis, Tennessee, that day, then drove the rest of the way to Biloxi on Tuesday.

“It was quite a mess, like nothing I’ve ever seen,” Lucas recalls.

“Just total destruction, like a nuclear bomb went off down here,” confirms Brandon Boudreaux, captain of the Biloxi Schooners, a charter and tour boat operation on the Coast.

Lucas had only been on the job for two months prior to the storm. The IP’s Las Vegas-based private ownership group hired the industry veteran to give the property a complete facelift and improve its quality in every possible way. With Katrina, Lucas’ two- to three-year refurbishment plan was condensed into about 100 days.

“If there is such a thing as a silver lining to a hurricane it certainly occurred here, because [Katrina] enabled us to expedite the process and totally reposition this property,” he says. “It was the equivalent of a startup. The only difference was you had to clean up a mess before you got started.”

Lucas says “it never entered our minds” to give up. “It was just, ‘OK, what do we do to reopen? Let’s get focused and cleaned up.’” He got on the radio—about the only method of communication available in the immediate aftermath of the storm—and put an open call out to all of his employees, asking them to come back to work as soon as they could. Of the 1,250 workers he had prior to Katrina, about 250 returned in the first week; at the end of the first month, that number swelled to 800.

“Obviously they weren’t going to be serving cocktails and dealing cards, but they pitched in and helped us clean up,” Lucas says. “They did everything and anything. We worked sunup to sundown.”

Lucas says due to its location tucked away from the brunt of the storm on the Biloxi Back Bay, the IP “received the least amount of damage of any casinos in the area. The bad news was it was still pretty significant.” About 12 feet of water flooded the hotel’s first floor, wiping out everything inside—the front desk, snack bar, retail shop, fitness center, and all back-of-house functions like boilers, chillers, and offices. There was no running water, no electricity, and no sewer system (it was backed up and destroyed by Katrina). So Lucas brought in portable toilets while his vice president of food and beverage established a makeshift kitchen in the hotel’s parking garage using every grill he could buy from nearby areas. Soon thereafter the United States Federal Emergency Management Agency (FEMA) arrived and used the IP as a base of operations, since it was the only major housing facility open in the area; emergency personnel from the city, county, and state did the same.

Within a week, the IP had 800 of its nearly 1,100 guest rooms in use. Amazingly, the hotel lost only six windows to Katrina, but there was significant leakage throughout the structure. At night, the staff set candles in the stairwells, and everyone carried either a candle or a flashlight to get around. “I stood in the tub and poured a bottle of water over my head to shower,” Lucas says.

Even as he was assessing and removing the damage, Lucas was planning for the future. On Sept. 6, 2005, a mere eight days after Katrina made landfall, he sat down with his design and construction firms to set the IP’s course for the future. Lucas wanted to be up and functional for New Year’s Eve, so he picked Dec. 20 as the target reopening date, figuring his staff would need about a week to get the kinks out before a big end-of-the-year bash. “There was no magic to the date, other than I thought New Year’s Eve would be a good time,” Lucas says. “Then we pulled off miracles.” Rather than trying to do everything at once, though, the team focused on what the IP absolutely had to have to reopen: a front desk, a restaurant, a player’s club, a sundries shop, elevators, and, of course, a casino.

In a bit of luck, the IP’s casino barge was one of the few on the Gulf Coast to survive Katrina (see “Gulf Coast Casinos: A Brief History” for more information on casino barges). While several either collapsed or broke free of their moorings, the IP barge “did what it was supposed to do,” Lucas says. “It rose up with the water. Had the water come in any higher, there would have been no more room to go and it would have come off its moorings. You have no appreciation for how big a barge is until you see it out of water. To have seen those huge barges moved hundreds of yards from where they were [moored] was a sight I’ll never forget. That tells you the power of a hurricane.”

The most serious damage at the IP was caused by the ramps leading from the hotel to the casino. They detached by design, but Lucas says they rammed into the side of the barge, causing significant damage; the flaw has since been rectified during the refurbishing process, he says.

On Dec. 20, 2005, the IP opened only for employees, local officials, and other volunteers who helped in the recovery effort; the next night, the casino hosted a private party in preparation for its grand reopening.

“When we opened on the 22nd, forget a slow period—it was just mobbed,” Lucas says. “People were pent up. I called it being in lockdown. There was no place to go, and you’re just working your butt off. They needed an outlet.

“It was an amazing experience,” he says of the rebuild. “It was certainly nothing I’d want to go through again, and I wouldn’t wish it on anybody, but something I’ll never forget.”

New Visitors, Changing Perceptions
Now more than two years after Katrina, tourism and gaming officials are suffused with excitement over what they see for the future of the Gulf Coast. Even with one less casino open and only 11,000 hotel rooms available compared to 17,500 pre-hurricane, gaming revenues in 2007 are higher than ever (in July, Gulf Coast casinos set a new monthly benchmark with $122.4 million).

Officials say the hundreds of thou sands of volunteers who poured into the region (and continue to do so) have been a tremendous help, not just in the rebuilding effort but by becoming “voluntourists” who visit the casinos and spend money in the evening after the day’s work is done (for more, see “‘Voluntourists’ Flood Gulf Coast in Katrina’s Wake”). Those people then become Gulf Coast word-ofmouth advocates when they return to their homes.

“People who maybe had not visited before came in to help us, and now we have a lot of people that will come back one day,” says Larry Barnett, executive director of the Harrison County Development Commission. “They’ve experienced the people here and the beauty of the place. We have to rebuild so those people will come back again.”

“The Southern Hospitality down here is as good as it’s ever been,” says Island View’s Carter, whose previous riverboat Copa Casino was destroyed in the storm (he used the insurance money to purchase Island View from Harrah’s Entertainment). “People down here truly appreciate visitors, because it’s helping us build back.”

The recovery work has also enhanced the casinos’ standing within the community. Gulf Coast officials say the gaming establishments have long been respected and appreciated for the economic benefits they bring to the area, but Hurricane Katrina allowed casinos an opportunity to showcase how truly involved they are with the region. Not only did they put thousands of people desperate for income back to work after the storm, but they have participated in charitable endeavors, too. The IP, for instance, donated $500,000 to the City of Biloxi to replace municipal vehicles, contributed another $500,000 to rebuild the Catholic Diocese of Biloxi’s Nativity BVM Elementary School, and gave $200,000 to Habitat for Humanity to sponsor five new homes in Biloxi. The casino donated wheelchairs and furniture, and brought in truckloads of clothing after the storm for its employees.

The Hard Rock Casino & Resort Biloxi was just days away from opening when Katrina struck (see “Tumbling Dice” for more), but still paid its 1,430 employees up to 12 weeks’ salary after the storm, depending on seniority. It clearly wasn’t going to open right away (that had to wait until June 30 of this year), so Hard Rock hosted a mini-job fair by bringing in representatives from its sister Hard Rock properties and other casinos; about 400 employees found jobs that way.

“Nobody understood FEMA or any of that stuff at that time, so we started putting out messages for how we could get people checks and some benefits that they might need. We weren’t thinking about anything else except trying to help folks through that time. A lot of people were pretty desperate,” recalls Joe Billhimer, general manager of Hard Rock Biloxi. Billhimer has been in the Gulf Coast casino industry since its inception in the early 1990s, and he’s noticed a change for the better in the relationship between gaming and the community since the storm.

“I think people started to realize we’re not just about slot machines and table games, we’re about helping to rebuild this community,” he says. “They realize a little more that we’re not concerned about just us. We’re concerned about this whole area, the tourism as an industry, and the quality of life for our staff.”

“The whole perception has significantly improved,” agrees Lucas. “Whether you liked gaming or not, the community couldn’t have been any more supportive or encouraging when we reopened. I’m sure it was that way with everybody. When grand openings happen, the community comes out in full force.”

Amusements and Attractions in the Cards for Gulf Coast
So as tourists new and old continue to visit the Gulf Coast, they’ll be looking to do more than just play poker or the slots. If there’s one positive to be found amongst the devastation of Hurricane Katrina, it’s this: The area’s slate was essentially wiped clean and is now ripe for development like the coast has never seen. Local officials are focused on bringing complementary family-oriented attractions to the region, such as restaurants, massive retail centers, and maybe even an amusement park.

“We’ve reached pre-Katrina levels as far as business volume, but if you don’t rebuild the non-gaming attractions, amenities, and activities, it will stall the opportunity to become a true destination resort,” says Lucas, who hopes to see an amusement park on the Gulf Coast someday. “I believe strongly in what I call the ‘Vegas Model’—non-gaming amenities that allow you to broaden your market.”

While the Gulf Coast is home to several varying types of attractions (see “Gulf Coast Casinos: It’s Not Just Tourism,” below), currently there is only one traditional amusement facility in the area: Gulfport’s Gulf Islands Waterpark. The park opened in July 2005 just six weeks before Katrina; originally, says Vice President of Operations Glenn Haggerty, ownership wanted to tap the market of casino employees’ families looking for something fun to do with the kids during the summer. Post-Katrina, however, Haggerty believes the region’s broader and bigger projects in the works will make the Gulf Coast more appealing to family tourists.

“Katrina has done a lot of damage and set a lot of things back, but it’s allowed for more development,” he says. “All along the Gulf Coast you had 200-yearold homes that were untouchable—and should have been. But it’s hard to restore something that’s not there. They’re just gone. So what do you do? In the next 10 to 15 years, the coast is going to go through a complete redevelopment. Everything’s on the drawing board.”

“There’s a tremendous opportunity for a nice, upscale theme park down here,” adds Carter.

“A lot of property is now vacant, and a lot of property is for sale. Eventually we’re going to see different types of structures on those sites than we saw before,” says Barnett, whose development commission joined IAAPA this summer to start learning more about the amusement industry, specifically how to effectively recruit the association’s members to the region. “We’ve always been a good place for people to come, but we have our sights set on being a top-tier destination.”

Casinos will always be the driving force, though, and the Gulf Coast is virtually bursting with new projects, spurred by a stable, accommodating tax structure and the advent of on-land gaming. Not only are there billions of dollars promised in new projects (see “Tumbling Dice”), several of the coast’s current facilities are working on expansion plans. The Island View, for instance, is already in the third phase of its development, which will renovate an adjacent hotel and make it part of the resort; building a marina is also on the table. The IP’s long-term plan, meanwhile, calls for another 500- to 700room hotel tower, another parking garage, a retail/mall component, a 1,200- to 1,500-seat entertainment venue, a convention center, and a movement toward on-land gaming.

These new and expanding ventures are key to the future of the Gulf Coast, creating jobs and opportunities for a community of people just starting to return to normal.

“It was a terrible ordeal and a lot of people are still suffering on this coast, but people are starting to get their lives back together,” Carter says. “The Gulf Coast is going to be back bigger and better than ever. Everything’s been wiped out, so everything that will be built back will be new. It’s given us an opportunity to build from scratch. Mistakes we made before, we were able to improve on and make a better experience for our customers. We’re back in business—big time.”