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San Manuel Economic Development profile and Analysis

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San Manuel Economic Development profile and Analysis

The Tribe

San Manuel Band of Mission Indians is an American Indian tribe that is fully acknowledged by the federal government as an independent political region. The tribe is found near the city of Highland in California. The San Manuel Tribe is part of the many clans making up the Serrano Indians. The Serrano are indigenous inhabitants of the San Bernardino highlands, valley, mountains, passes, and high deserts in San Bernardino County. They share a culture of similar language and practices. The region, recognized in federal terms as the San Manuel reservation has existed since 1891 (San Manuel Tribal Government, n.d.), and has been undertaking its political and economical operations as sovereign self-government.  The region community was named after a great tribal leader called Santos Manuel, who championed the talks with the federal government that led to the creation of a reservation of the 900 acres of mountainous land. The reservation has grown over time, driven by the policy of operating a sustainable tribal government that advances sovereignty, builds self-sufficiency, and champions culturally-sensitive exploitation of resources to serve the tribal community. With time, the community has progressed to attain a well-established economic and social unit. Among the most rewarding economic activity in the area is gaming, which but there are other enterprises within the region to supplement economic substance.

The Business

San Manuel Tribe seeks to capitalize in the Hotel/Gaming industry, which covers both the hospitality market and resort or gaming businesses. The industry entails hotel enterprises that own upscale and mid-level property, which can be classified as luxury, full-service, timeshare, and limited service.  The gross revenue or profitability in the sector comes from a wide range of services, including room bookings, product sales, rents from retail spaces, convention and meeting facility charges, gaming charges, and dining charges.

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The strength of the hotel and gambling business can be measured by occupancy, average daily rates, and revenue from every available amenity. The room rates and amenities charges are therefore adjusted depending on the booking and occupancy levels.  Liberalization of the gambling policies among the native tribes has allowed the San Bernardino region to be a market favorite for hotel and/ or gambling services. Since the San Manuel area has tribal sovereignty, the state of California has limited ability to forbid casino services there. With billions of dollars spent on luxury holes and casinos annually, this business venture is certainly an economic growth sector.

The Product

San Manuel Tribe owns the San Manuel Casino, which is a leader in casino operations in the greater San Bernardino County. The 465 000 square feet is situated 60 minutes from downtown Los Angeles and also neighbors the LA-Ontario International Airport (San Manuel Tribal Government, n.d.).  The entertainment facility has been a top entertainment destination in the region, with over a million guests coming in every year to enjoy thousands of gambling slots, including live poker, Vegas-style blackjack, and other incredible forms of gaming entertainment. Visitors to San Manuel have always cited exciting and memorable experiences, which is the underlying motivation for the current move by the owners to grow in standards by providing a world-class experience to everyone who visits the casino.

San Manuel Casino has therefore proposed to expand the facility to cover approximately 795 000 square feet of modern entertainment and hospitality space (San Manuel Tribal Government, n.d.). The project would cost an estimated $550 million from its ground-breaking in the year 2018 to its anticipated completion in 2021 (San Manuel Tribal Government, n.d.). All the proposed developments in the expansion of the facility should occur within the area occupied by the current casino- on the existing San Manuel Indian Reservation.

After completion, the project will contribute to high volumes of socio-economic developments in the area, with the promise to leverage the community’s history of innovation and growth in the following ways: (a) Modern Luxury- the visitors and casino patrons, will have the added option of extending their stays at the destination’s first onsite luxury hotel; (b) Higher entertainment- the amenity seeks to rival top entertainment destinations such as Las Vegas. San Manuel Casino’s new world-class entertainment venue will, therefore, provide the visitors with a premier experience; (c) Additional amenities- the expansion will see an upgrade to the existing dining options. Specifically, the new retail spaces, dining venues, and spa would add to its award-winning amenities; (d) Regional economic Growth- San Manuel Band of Mission Indians already boasts of being among the ten most recognized private employers in the County of San Bernardino. As of 2018, the region supported more than 4,900 employees and generated over $ 1 billion in annual economic productivity (San Manuel Tribal Government, n.d.).  Expanding the San Manuel Casino will add even more employment opportunities and more room for economic activity in the region.

Notable details of the expansion include:

  • Construction of a 15-story tower
  • A -room hotel of a resort-style quality
  • A larger casino space fitted with luxurious and state-of-art amenities
  • A performance venue with approximately 400 seats
  • Additional spaces for meeting and events
  • New modern amenities in the class of a spa, ultra-modern restaurants, and several retail shops
  • An expanded parking structure that can take up to 2200 vehicles. This should include the parking garage, surface parking lots as well as pedestrian bridges.
  • Utility infrastructure for power supply.

The construction of the project is a reflection of San Manuel Tribe’s intention to excel at high quality construction projects, which is of utmost importance in driving economic stimulation in the community. The expansion project is estimated to generate more than $200 million in economic growth over the subsequent two years after the ground-breaking through new construction and architectural partnerships, project vendor relationships, and job growths (San Manuel Tribal Government, n.d.). The community eyes to deliver up to 1,400 workers at the peak of the construction.

Value to the Community

The most significant contribution of San Manuel Casino to the community is in the creation of employment and steering of economic resurgence. Today, the casino offers employment opportunities for about 5,000 employees.  These employees receive competitive pays, with comprehensive benefits such as health insurance, paid time off, matching 401k, and add-on bonuses based on performance (San Manuel Tribal Government, n.d.).  Cumulatively, these factors have led to improved living standards of the residents of the county.

To understand the significance of the San Manuel Hotel and Casino expansion to the economy of the inland empire, it is appropriate to review the economic performance of the region over the just-completed decade.  In 2012, San Bernardino city became following the great economic recession of 2009. The city has struggled to recover from the bankruptcy, with more input coming from San Manuel Band of Mission Islands- the owners of the expansion project. By the year 2016, San Manuel had delivered $750 million to San Bernardino to meet its economic rebuild. That very year, San Manuel was the largest employee in the region, with 4000 workers, mostly from San Bernardino County. 27% of these workers come from Bernardino city while the remaining 77% came from the rest of San Bernardino County (San Manuel Tribal Government, n.d.). These figures indicate just how San Manuel is determined to raise the economic performance of the inland empire. San Manuel has also offered philanthropic donations to residents and non-profit organizations in the aboriginal territory to make the community prosperous. Such has been contributions of San Manuel to the neighboring community, and with the hotel and casino now expanding, the same contributions are expected to continue on a larger scale.

Viability

From a personal perspective, the viability of the hotel and gaming industry is dependent on the economic cycle and consumer spending culture. I have arrived at such a conclusion considering that the operating earnings in this industry often fluctuate depending on the economic time- they tend to shift widely between good economic times and bad economic times.  During a severe economic downtime, there is a huge and rapid drop in the volume measures of success, such as low occupancy and negligible revenue per available room. At such times, the hotel will be forced to sacrifice occupancy so as to maintain room rates and protect the net profits. When the periods become even more severe, the industry will be forced to cut room rates. This makes it difficult for hotels to raise room rates again when business activities recover. A similar effect of recession is felt in the gaming resort sector, where tighter consumer budgets negatively affect the frequency of gambling, leisure activities, conventions, and luxury. Such tough economic times would force San Manuel Hotel and Casino to implement steps that free up money, including laying off of workers, reducing capital spending, and selling non-core assets.

However, during an upswing of economic activities, the company will benefit from increased leisure activities and corporate event spending by consumers and companies. The company will experience strengthened profits and improved product-service developments. It would require a risk-tolerant investor to take a look into the industry. Therefore, in light of these factors, and considering the steadiness in the performance of the US economy over the last decade, the decision by San Manuel Tribe to focus on the hotel and gaming is economically viable and promises a lot in return.

References

San Manuel Tribal Government. (n.d.). https://www.sanmanuel-nsn.gov/

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