LB: What were some of the challenges facing you in taking the helm of a property like Tropicana?

Mon: There were both problems and opportunities. There's a lot of new competition in town. This means new choices and exciting properties for customers to see, so the biggest challenge for us, as an older property, was to figure out how to keep up with this competition, how to keep our customers, and how to continue to thrive as a business.

LB: So what did you do to accomplish that?

Mon: The first thing was to look for the opportunities, which meant to look at our assets first. What are the things that make us different from all the new competition? What do we do better? How can we differentiate ourselves? For us, it's our great location, our tradition and heritage, it's being a smaller and friendlier property. Value is also important, as we're priced in the mid-level of the market. So all this is the nucleus around which we are building a position for ourselves in this market place.

Hector Mon

LB: What have you done to strengthen your position?

Mon: The first thing was to clarify that positioning in the minds of our team and improving our execution of that strategy. There was a lot of transition in this market in 1998 and '99 with new properties coming on board and I think there was still a little bit of confusion here about who we were. Were we a high-limit, table-game place? Could we compete with some of the themed resorts in town? Where is our future? There was even some talk of whether this property would go the way of the Sands or Hacienda and be redeveloped.

LB: Have you fixed a niche for the Tropicana, and if so, is it proving successful?

Mon: This property had a real casino orientation and was pretty singularly focused on casino and direct marketing. What we've done is to bring a little more intelligence and balance to that, so we've been really able to grow our leisure segment and cash revenues. We've improved our relationships with our wholesalers, and improved the rate we're getting from the wholesalers. If you compare our financials today as compared to two years ago, it's a much more balanced picture between casino and retail. Our growth and profitability last year far exceeded our peer group in the market.

LB: As an older property, there is always the need for, periodically, either refurbishing or renovating. Is there some capital expenditure needed either now, or in the near future, to keep the Tropicana competitive?

Mon: Here's our approach to the capital side of the equation. We are not going to be making any major capital investments in the property because clearly we still don't know what the long-term solution here is going to be. The executive team at the corporate level is trying to determine what is the best course of action. There's a lot more that needs to be digested as to how well the market is absorbing the new supply of properties that have come here in the past few years. And competitively, what might be the right strategy for us to insure that our shareholders get the highest possible return.

LB: Is there any indication as to what may happen?

Mon: Right now, there isn't a direction that's been established, whether to redevelop or to continue to operate in our current condition. The likelihood is that we're not going to do anything for at least the next two or three years. So we're not going to be making any major improvements, and by that I mean we're not going to be building a new hotel tower, add new restaurants, build new entertainment venues, that kind of thing. We have started, however, to spend more maintenance capital than we had in the previous two or three years, making sure we have new slot product and refurbishing the rooms throughout the hotel.

LB: Do you have any concerns about the future for Las Vegas casinos?

Mon: I'm very optimistic about our stability here, although we are going to be vulnerable to national economic trends, as well as any competitive threat that comes at us against any one of our significant market segments, i.e. California and Indian gaming. Those are things that could influence the market, but I think what you're talking there is a two, three or four percent kinds of influences. What you have underneath that is a generally upward trend for the long run, which is based on the demographics of Las Vegas and the fact that Las Vegas continues to broaden its appeal.

We're going more international, we're going more into more segments like conventions, high-end leisure travel, high-end restaurants, entertainment seekers, shoppers, so the market is becoming more and more diverse and more appealing to different types in the leisure segment. That's the underlying dynamic here and that trend will continue.

The innovation and creativity of the players in Las Vegas will continue to improve our product and we'll be able to continue to grow the market. Those hiccups we're likely to experience, whether it's a short-term economic recession or a decline in the visitor volume from California, I think will be short-lived as compared to a long-term success story here.

LB: Does that mean you expect, and are in favor, of more megaresorts being built in Las Vegas?

Mon: I absolutely think it's essential. The development pipeline in Las Vegas is a critical component in our long-term evolution and I think the minute that new development stops, we should start to worry about our future. What happens is that you get into a status quo mode and there's nothing new to create excitement for the city.

LB: At the same time, won't this development hurt or destroy some properties?

Mon: The thing is, the city has now reached such a critical mass. We have some 125,000 hotel rooms, so what if Steve Wynn builds 3,000 more rooms? You're talking a two percent increase in supply. Yes, the people that are at the bottom of the food chain may experience some weakened demand because a customer may be migrating to a product that's fresher and more exciting. But in the total sense, I think it's essential for the city to continue to reinvent itself. That's why people like Steve Wynn are so important to Las Vegas, because he, as well as others, are willing to step up and say, "I'm going to put my money where my mouth is."

LB: At the same time, although most operators feel like you about growth, some would rather see rooms, attractions, restaurants and retail, but are hesitant about more casino space. How do you feel about that?

Mon: I think there's a good point there. Increasingly, Las Vegas is attracting visitors whose primary reason for coming is something other than gaming. What I see happening in the future, is that properties will be less casino-intensive, which means the casinos will become smaller in size. Casinos, however, will always remain an integral part of the visitors' experience.

LB: Lots of talk these days about Internet gaming. You're feelings on it and is the Tropicana making plans to enter that arena when and if it's legalized in the U.S.?

Mon: It's still early in the game. We are not, as a company, involved in any kind of a venture currently, or looking at entering any kind of a venture regarding Internet gaming. Obviously, we're studying the situation and my opinion is that ultimately, the strong brands will have value in the Internet realm. As the future of Internet gaming becomes clearer, both from the standpoint of regulation and how those businesses are going to be structured financially, we'll take a serious look. We own a very valuable brand franchise in the Tropicana and some day that may be an opportunity for us. Right now, we're taking a wait-and-see attitude. We don't see ourselves as pioneers in that segment of the business.

LB: Any plans to look for new markets?

Mon: No. Our corporate focus right now from a growth standpoint is Atlantic City. We have announced a $225-million expansion to our Atlantic City property, that includes the addition of hotel rooms, parking, a 200,000 square foot retail, dining and entertainment complex, which will be the first of its kind there. It's an attempt to bring some of the non-gaming concepts of Las Vegas to Atlantic City. We believe there is an untapped demand there for that type of experience. We're looking at a completion date of mid-2003.

LB: Since most of the properties in Las Vegas are now publicly-traded, has the scrutiny by Wall Street affected the way you do business?

Mon: It certainly has had a tremendous influence on it. I remember when Harrah's went public, which was a landmark event in the industry. Over the past 20 years, this industry has gone from an entrepreneurial-driven industry managed by people who had worked their way up through the ranks, to a multi-billion dollar industry where there is access to greater capital and management resources. So in the final analysis, it's a bigger, more sophisticated, more complex industry and it's been good for the most part. You do worry that bigger corporations and a Wall Street environment may result in a stifling of some of the creativity and innovation and some of the risk-taking that you have when there are more entrepreneurs involved. I believe, however, that it was a necessary evolution for the industry.

LB: Do you not feel, however, that the need to produce a solid quarterly report puts undue pressure on yourself and your staff?

Mon: One of the benefits to this is that you have to report your earnings on a quarterly basis and your performance gets scrutinized. I think that's good. I think that forces you to keep your eyes on the road. It forces management to stay awake, be assertive and make sure your performance is as it should be and that you're not falling asleep at the switch. By the same token, I believe every executive has the responsibility to make long-term decisions, even it means doing something that might cause your earnings in the next quarter to not be as good as they might have been if you'd taken a more short-term view.

LB: Recently, Gov. Kenny Guinn suggested that the hotel/casinos contribute to a fund to promote Las Vegas around the world, an idea that doesn't seem to sit well with casino executives. What's you're reaction?

Mon: I think it's totally unnecessary. The Las Vegas Convention & Visitors Authority has a marketing budget of around $150 million a year, if I'm not mistaken. That money comes all from the room tax that generated by the hotel/casinos. We have a very aggressive marketing effort to promote Las Vegas, including field offices and representatives throughout the world. LVCVA is doing a great job and always looking for new ways to get more bang for the buck, but I think the idea of creating a separate kitty doesn't make any sense.