New owner Penn National Gaming has been cagey with regard to its intentions for the Tropicana, although Penn executives have been quoted on several occasions as being impressed with the current state of the facility. In the near term, Penn is concentrating on integrating the Trop into its Marquee Rewards program. Between that and an upgrade of the slot machines (which had already been replaced back in 2010), Penn expects to spend $20 million on Phase One of its incorporation of the Trop into the Penn fold.
Presently, this is evident on the slot floor. Deutsche Bank gaming analyst Carlo Santarelli toured the Trop this week and reported that "progress is becoming more and more evident. Work continues throughout the casino floor in the gaming pit area and slot floor work remains in the early stages, as does some general layout / traffic flow work." Santarelli added that the Trop will replace 160 of its 803 slot machines and upgrade 140 others, using excess slot inventory from other Penn casinos rather than buying new machines. When completed, the slot floor will be five percent smaller, even though it represents 75 percent of total casino revenue.
Penn also wants to reduce the number of hotel guests who are booking rooms at the Trop through online travel agencies. Currently, OTAs account for at least 40 percent of Trop room bookings and Penn would like to get that number down to 10 percent. The company has also made noises about improving the restaurant mix at the Trop but has announced nothing definite at this point.
Physical changes to the hotel-casino were off the table until 2017 or 2018, but a decision has now been moved up to the second half of this year. Penn might revive the retail-mall idea, having expressed dissatisfaction with such retail as the Trop has to offer – i.e., not much (although the flop of the Grand Bazaar up the street at Bally’s Las Vegas could put a chill on executing a similar concept at the Trop).
Penn has also floated the idea of a third hotel tower – probably on the east side, adjacent to Hooters Casino Hotel and currently occupied by surface parking -- although it has been very firm that whatever it invests in physical improvements will cost in the range of only $200 million.
The barrel-vaulted, Tiffany glass ceiling in the casino has survived a couple of near-death experiences. Previous CEO Alex Yemenidjian was going to remove it as part of Onex Corp.’s 2010 "South Beach" makeover of the Trop, but sentiment appears to have saved it that time around. However, it was again to be a casualty of Yemenidjian’s 2013 plan to bolt a retail mall onto the front of the Trop, extending the complex out to the corner of Tropicana Avenue and the Strip.
(Technically, the skylight isn’t "Tiffany glass," because Tiffany Studios got out of the stained-glass business in 1933. The so-called Tiffany ceiling at the Trop dates from 1979, when the casino commissioned architect Tony DeVroude to design it, at an estimated cost of $1 million.)
As to the future of the stained-glass ceiling, the prospect of a retail mall and the possibility of the Trop dropping its resort fee, we put all those questions to both the Tropicana itself and to Penn National corporate headquarters. Innumerable requests for comment were met with stony silence. Our best guess is that Penn itself hasn’t decided what physical changes to the property it will make. That is ratified by Santarelli’s remark that it "remains a topic of discussion … and a decision as to the nature of the spend remains a 2H16 event."
As to the resort fee, we are pessimistic, if only because one of Penn’s goals is to increase cash flow at the Trop and a resort fee is a path-of-least resistance means of doing so. We hope we’re wrong but Penn has been very candid about the financial goes it has set for itself at the Trop and we don’t think rescinding the resort fee will help accomplish them. On the other hand, now-sister property M Resort debuted with a resort fee, then promptly saw the light and quietly axed it (they simply upped the standard room rate to compensate) and has never reinstated a fee, even after being purchased by Penn, so there is a hopeful precedent. Also, Penn's aversion to working with OTAs also may come into play, since more than one hotel has explained to us that one of the key reasons for implementing a resort fee is that this is revenue that they are not forced to share with the Expedias of this world: If the Tropicana is able to keep more of the basic hotel-room revenue than other properties, this may negate the need for a resort fee. Time will tell...
