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The Honolulu Advertiser
Posted on: Tuesday, September 25, 2007

Borgata fire may give Harrah's an edge in Atlantic City market

By Wayne Parry
Associated Press

Hawaii news photo - The Honolulu Advertiser

A fire of unknown origin damaged The Water Club, a new $400 million tower of the Borgata Casino Resort and Spa early Sunday in Atlantic City, N.J. The Borgata's owners run Las Vegas hotels popular with Islanders.

VERNON OGRODNEK | via AP

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ATLANTIC CITY, N.J. — Early next year, the Borgata Hotel Casino & Spa was expected to open its new 800-room tower called The Water Club — a $400 million addition designed to help it keep pace with a flurry of high-end expansion in Atlantic City's casino market.

But a fire early Sunday that damaged the second tower, which was still under construction, may change that timetable. And timing is important with rival Harrah's Atlantic City planning to open a new 941-room hotel tower next February that will be even taller than The Water Club and will compete for the same customers.

"While we have been planning for an early 2008 opening, it is too soon to know what impact this will have on the development timeline, if any," the Borgata said in a statement released yesterday.

The Borgata is owned by MGM Mirage Inc. and Boyd Gaming Corp., operator of downtown Las Vegas hotels popular with Hawai'i residents.

The casino said it is still working on an assessment of how much of the 43-story building was damaged. Atlantic City fire officials did not immediately return a call seeking comment yesterday.

Michael Facenda, a Borgata spokesman, said most of the fire damage was to the exterior of the building in a foam and plaster surface. Interior sections sustained some smoke and water damage.

No one was injured in the fire, which was reported at 7:45 a.m. and brought under control about 20 minutes later. The cause of the fire was under investigation.

The fire did not affect the original Borgata hotel and casino building, which opened in 2003 and has dominated the Atlantic City market ever since.

The Water Club was Borgata's plan to keep things that way in the coming years, even as many rivals expand; two to four new casinos will be built in the city, grabbing the attention as the new players in town.

The Borgata held a "topping off" ceremony for The Water Club in July, hailing it as part of the next generation of luxury hotels in Atlantic City. It will not have casino space, but is designed to add more badly needed hotel rooms to the market.

It is due to include five tiers of rooms, 18,000 square feet of meeting space, five indoor and outdoor pools, six retail shops, and a two-story "spa in the sky."

When it is finished, it will bring the total investment in Atlantic City by Borgata's owners to $1.7 billion.

Morgan Stanley analyst Celeste Mellet Brown said the fire will probably cause some delay in The Water Club's opening, but she could not guess by how long.

"Long-term, we do not think the fire will impact Boyd or MGM because insurance should cover costs incurred by the accident, as well as the business interruption," she wrote in a report issued yesterday. "However, we view the opening of The Water Club as one of several important near-term catalysts for Boyd, and a delay could disappoint investors."