Wednesday, July 25, 2018 | 9:38 a.m.
San Manuel Casino will break ground today on a $550 million expansion that will elevate the former San Bernardino County bingo hall into a major player in the ultra-competitive Southern California casino resort industry.
The development project comes soon after the Inland Empire casino upped the number of slot machines on its gaming floor to 4,800, far exceeding the gambling capacity of nearly every casino in the SoCal market -- or even Las Vegas.
In building its first hotel, 3,000-seat entertainment venue, pool complex, spa and restaurants, San Manuel will directly offer the burgeoning casino customer base an alternative to its direct competitors, which it identifies as Temecula's Pechanga Resort & Casino -- now the largest casino resort on the West Coast -- and Morongo Casino Resort & Spa and Agua Caliente Casino Resort & Spa, both in the Palm Springs area.
The ripple effect of this latest salvo in the casino expansion arms race -- costing an estimated $1 billion price tag in the San Diego-area alone, including $300 million at Pechanga -- is already reverberating locally.
Pala Casino Spa & Resort has deferred construction of a new 349-room hotel tower as part of its $170 million expansion, taking a wait-and-see approach to how the industry changes shake out.
"There's been movement in the market, with Pechanga's expansion and San Manuel doubling up on gaming," said Hassan Abdel-Moneim, vice president of hotel operations for Pala.
"We're still deciding with the new tower when to start building and how much to build," he said. "We'll revisit it in full after we see how the summer goes. So far, it's been very, very busy."
Abdel-Moneim said Pala has the architectural and design plans ready to go for the hotel, which was originally scheduled to be completed in May 2019. The resort recently unveiled its new, swanky pool area, several renovated restaurants and additional non-smoking casino floor space. A floor-by-floor remodeling of the existing 500-plus room hotel will launch in October.
Loren Gill, general manager of San Manuel Casino, said building a hotel was essential in not just attracting new customers from LA and throughout Southern California, but keeping current guests happy.
"San Manuel has always been a locals and regional casino and we don't have a hotel. ... It's something very obviously missing from our casino experience," Gill said.
"There are people who tell us 'we prefer to go somewhere else' because they want to spend the night," he said. "That has really been the No. 1 item our guests have spoken to us about -- why don't you have a hotel and when are you going to have a hotel?"
He couldn't estimate how many of those guests from LA, Orange, Riverside and San Bernardino counties who now travel to San Diego-area casinos but would instead stay at San Manuel in Highland.
"Yes, our numbers show we'll pick up customers but we don't hear a lot of comments about trading off San Manuel and going to San Diego," he said. "Might they come give us a shot? The answer is yes. ... I do think we share customers -- the greater Los Angeles area market is strong."
Gill added that the relatively modest size of San Manuel's hotel, at approximately 450 rooms, wouldn't have the same repercussions on Pala -- or other North County casinos -- as Pechanga's massive enlargement to 1,090 rooms.
"It would be different if we were building 1,000 to 2,000 rooms," he said. "I certainly see how Pechanga's expansion would impact Pala."
Pechanga acknowledged its footprint on the casino landscape looms large north and south of it.
"The competition is evolving. We are seeing more tribal facilities augment their gaming offerings to include more amenities like what we have provided for the last 15 years," said Christina McMenamin, Pechanga Development Corporation board member.
"We are constantly improving and raising the guest experience at Pechanga to stay ahead of the market. Because of our most recent expansion, no other gaming resort in Southern California offers a luxury hotel, a magnificent pool, luxury spa, and golf all at the same property."
A dynamic industry coupled with a healthy economy have been good for Indian casinos across the state, which are thriving.
The National Indian Gaming Commission's most recent figures on gross gaming revenue in fiscal year 2016 to 2017 went up 7.3 percent in the California and Northern Nevada reporting area, compared to a 3.9 percent increase nationally. The commission doesn't break down gross revenue within California, which last year constituted about $9 billion, or more than a third of the $32.4 billion total revenue.
Howard Stutz, executive editor of the Las Vegas-based industry publication CDC Gaming Reports, said San Manuel is clearly seeing an opportunity.
"It may be that San Manuel sees what Pechanga has done, what Harrah's (Resort Southern California, with 1,065 rooms) has done and they've said, 'OK, what do we need to do to compete?'" Stutz said.
"If they've got all those slots now, you've got to give your customers something else, you need more restaurants, you need entertainment space, you need hotel rooms. It's a huge market, so it makes sense that they do that. Whether it's oversaturation, time will tell."
Gill said the exact dimensions of San Manuel's high-end luxury hotel are still being determined; it will have 14 to 17 stories, with between 400 and 500 rooms, including penthouse and corner suites. He said a state-of-the-art entertainment venue will draw top acts and one of the new restaurant concepts will focus on health and wellness.
"We're really excited about that," he said. "It will feature local and indigenous food, vegetarian, vegan, natural juices."
The $550 million construction budget stems in part from the engineering challenges of building in a somewhat landlocked parcel, with mountains on one side and residences on the other, Gill said. A long, large water pipe, 8 feet in diameter, also has to be moved.
"We're landlocked on where we can go," Gill said, "we're trying to maximize a small footprint here."