Tourism industry is expected to grow in 2017 and 2018
Posted in: In The News on Thursday, May 11, 2017
Positive economic factors, including declining unemployment and rising wages, could lead to a better tourism season this year and set the table for a banner 2018, when Hard Rock Casino and Hotel Atlantic City and Stockton’s Gateway Project open. “This is the first time in a decade that I can say that casino revenues and employment are both up,” said Joe Kelly, president of the Greater Atlantic City Chamber, during the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University’s ninth annual Jersey Shorecast tourism panel. Industry experts on the panel, held at the Carnegie Center, discussed the outlook for the upcoming season. “I’m a little more conservative on 2017. We expect growth, and we should be growing. I’m optimistic about 2017, but I’m bullish about 2018,” Kelly said. In summer 2018, Hard Rock is expected to open its new property at the site of the former Trump Taj Mahal.
Construction abounds, Atlantic City rebounds
Posted in: In The News on Friday, May 05, 2017
Casinos are turning profits. Plans were announced recently for a $375 million renovation and reopening of Trump Taj Mahal by Hard Rock casino and Stockton University just broke ground on a satellite campus. A luxury apartment complex, the first to be built in Atlantic City in decades, is under construction. The city's credit rating has improved. Atlantic City, left for dead for the last ten years, is having a revival. "I always say Atlantic City is like Dracula — you can't kill it, no matter how hard we try," quipped state Sen. Jim Whelan, who was mayor of Atlantic City from 1990-2001. It's all coming after a decade that featured a 50 percent drop in the city's casino revenues. Nearly half of the city's casinos closed and 10,000 people lost their jobs, leading to a massive spike in home foreclosures. The city's finances were so grim, the state took over control in November.
Atlantic City Casino Profit Is New Evidence of Stabilization
Atlantic City's casinos saw their gross operating profits increase by 7.3 percent in 2016. Figures released Friday by the state Division of Gaming Enforcement show the eight casinos that began the year collectively earned an operating profit of more than $587 million. The figures provide new evidence that Atlantic City's casino industry is stabilizing after a brutal three-year period in which five of its 12 casinos shut down. When the now-shuttered Trump Taj Mahal casino is removed from the equation, the figure rises to a 9 percent profit increase for the surviving seven casinos. The Taj closed in October. The Borgata posted the largest profit with nearly $245 million. Gross operating profit reflects earnings before interest, taxes and other charges, and is a widely accepted measure of profitability in the casino industry.
Atlantic City tries to turn its fortunes around
At its peak, Atlantic City had 12 casinos. Now, the Jersey Shore gambling and entertainment destination has just seven, the lingering result of the economic downturn as well as competition from neighboring states that have legalized gaming in recent years. But the city is hoping its fortunes will change, thanks to a few promising developments. This week, Hard Rock International unveiled plans to spend $375 million to renovate the shuttered Taj Mahal building. The new Hard Rock Hotel and Casino Atlantic City will reopen in summer 2018 on 17 acres of prime Boardwalk real estate. “I agree that the market has had challenges in recent years,” says Jim Allen, chairman of Hard Rock International. “But it’s still the second largest gaming market in the United States. And when you look at the asset … with more than 2,000 rooms and a lot of amenities—certainly it will need a renovation—but we believe the building on a long-term basis will have a tremendous opportunity to be successful.” The city finally saw an upturn in 2016. Internet gambling, which began in 2013, is what put them over the edge. Last year, revenue from internet gambling in New Jersey increased 32% to nearly $197 million. The city has also expanded into mobile gaming, skill-based games and fantasy sports play. That came after the state enacted legislation in 2011 that included sweeping deregulation and regulatory reform to help the Atlantic City casino industry cope with a competitive and saturated gaming market, says David Rebuck, director of the New Jersey Division of Gaming Enforcement. “It is important to emphasize that gaming is a growth market in the United States and in order for Atlantic City to remain competitive, it is crucial to stay on the leading edge of this evolving industry,” Rebuck says. It used to be that Las Vegas and Atlantic City were the only players in the gambling world. Atlantic City had such a storied history that the first version of the Monopoly board was based on the seaside town. They city inspired the hit cable show Boardwalk Empire. Founded in the 1850s, Atlantic City was a getaway for wealthy east coasters. To attract the elite, developers built high-rise luxury hotels with names such as Ambassador, President and Ritz-Carlton. President Ulysses S. Grant once vacationed there. By the 1920s, the movie stars and musicians started rolling in. Marilyn Monroe could be seen cavorting about town. Frank Sinatra had some of his first gigs there. Once he was famous, he returned with his Rat Pack buddies. The Miss America Pageant took place there every year. The gangsters also showed up—Meyer Lansky, Al Capone, and Lucky Luciano among them. Tourism reached its peak in that era, particularly during Prohibition because officials did not enforce the alcohol ban. Up until the 1960s, the town was also home to famous nightclubs such as the 500 Club, one of Sinatra’s favorites. The city’s run as a Boardwalk Empire ended in the mid-1900s, when improvements in transportation meant people who craved the beach could head to Florida. After years of neglect, gambling was approved in 1976, and the luxury hotels were torn down to make room for large casino resorts, such as Caesars Atlantic City. President Donald Trump once had casinos there, including the Trump Plaza Hotel and Casino. His venues became popular for hosting wrestling and boxing matches, including many of Mike Tyson’s. Even Sinatra returned, performing for 25 years at various casinos including the Sands. But by 1992, casinos began opening elsewhere as other East Coast states began to pursue legalizing gambling. Foxwoods Resort Casino ushered in the era of gambling outside of Atlantic City when it opened that year. And in 2006, the first Pennsylvania casinos opened, providing even more competition for Atlantic City, which drew much of its clientele from that state. That year was the first time Atlantic City saw its revenues drop. “Atlantic City was built up during a period when it had a monopoly in the East,” says Doug Walker, who specializes in the social and economic impact of gambling as a professor of economics at the College of Charleston. “Since casinos began spreading outside of Vegas and Atlantic City, it was inevitable that they would see more regional competition.” So far this year, the city is reporting that revenues are continuing to increase. But it remains to be seen if more casinos will join the Hard Rock in making an investment in the city. “Revenues at surviving casinos have increased since a few years ago,” Walker says. “This is how markets work; the weakest firms may go out of business or are replaced. It seems particularly drastic in Atlantic City … It would have never been built so large if casinos had always been a more competitive market.” The competition for Atlantic City will continue to increase as states such as New York consider opening more casinos. Already in Massachusetts, Wynn Resorts and MGM Resorts International are developing properties. But Allen of Hard Rock says he's not concerned about what's happening elsewhere. He points out that the tax rates in surrounding states are much higher than Atlantic City’s and that investors will be more willing to invest in Atlantic City properties and bring more jobs to the city. “It's Atlantic City that has a competitive advantage,” he says. “It’s a very welcoming area to do business." Top U.S. casino and racetrack markets 1. Las Vegas Strip, $6.3B total revenue in 2015 2. Atlantic City, $2.4B 3. Chicagoland, $2B 4. New York City, $1.4B 5. Detroit, $1.4B 6. Baltimore/DC, $1.3B 7. Philadelphia, $1.2B 8. Miss. Gulf Coast, $1.1B 9. St. Louis, $1B 10. The Poconos (Pa.), $965M
Atlantic City casino revenues remain stable in 2016 despite Taj Mahal closure
Casino revenues remained stable last year despite the closure of the Trump Taj Mahal Casino Resort in October, according to casino gaming numbers released by the state Department of Gaming Enforcement Friday afternoon. Total casino revenue, including internet, gaming and hospitality, totaled more than $3.71 billion in 2016 compared to $3.70 billion last year, an increase of less than a percent, according to the report. Gross Operating Profit for the industry increased 7.3 percent for the year to $587.4 million. "The casino industry was able to grow net revenue and improve its cost efficiency, which led to a 7.3 percent improvement in gross operating profit," said David Rebuck, director of the Division of Gaming Enforcement. It is significant, in my view, that every casino hotel was able to show improvement in gross operating profit in the historically slower fourth quarter of the year." Taj Mahal ownership closed the facility, once known as the “eighth wonder of the world,” in October. The casino’s management had accused striking Unite Here Local 54 members of preventing a “path to profitability.” The occupancy rate in the city’s casino hotels in 2016 was 81.5 percent, a 0.7 higher than 2015.
Christie celebrates some good news for Atlantic City
Posted in: In The News on Wednesday, April 05, 2017
Things are starting to look up in Atlantic City, and Gov. Chris Christie is embracing it. The governor showed up to a press conference announcing the planned Hard Rock Hotel and Casino on the boardwalk, which will occupy the tower left vacant by the closing of the Trump Taj Mahal in October— the fifth and most recent Atlantic City casino to close its doors since 2014. Hard Rock’s reopening of the shuttered tower was cited in a report last week by the South Jersey Economic Review, which said the city is “digging out from a lost decade.” It also comes as a state takeover of the city — led by Christie confidant Jeff Chiesa and spearheaded in the Legislature by Senate President Stephen Sweeney — is underway despite fierce local resistance. The state is in court with the city’s police and fire unions over layoffs and unilateral changes to their contracts. “Before Steve [Sweeney] and I started working together in 2010, only easy things were being done in Atlantic City. And that was not only from the state level but from the local level as well,” Christie said as Atlantic City Mayor Don Guardian, an opponent of the state takeover, looked on from the audience. “Hard Rock’s willingness now to come in and invest in Atlantic City shows you that they appreciate the hard things that have been done to restructure the city and to make it a place where investing makes sense.” It was a celebratory atmosphere at the Hard Rock Café at the casino’s base, where a Springsteen cover band played and where E Street Band member Steven Van Zandt mingled. “It’s always easy to say yes to people and give them what they want, and then you wind up with what we had,” Sweeney said. “We made tough decisions. We made the right decisions. And Atlantic City is alive and well.” Hard Rock is partnering with developers who are politically connected in New Jersey: Jack Morris and the Jingoli family. Hard Rock CEO Jim Allen is an Atlantic County native. The company is promising 1,000 construction jobs and 3,000 permanent jobs when the casino is slated to open in 2018. The project is expected to cost more than $300 million. “We recognize that there are those who are still a little skeptical about what the next step is,” Allen said. “We’ve closed on the project and funding is in place to move forward. So we are out designing, we are moving forward.” Christie ducked out of the press conference early. As he talked to staff outside of his SUV, a reporter from a New York City television station tempered the good news by asking the governor if he had anything to say to NJ Transit commuters, who have been enduring delays since a derailment Monday at Penn Station in New York. NJ Transit has suffered funding cuts under Christie, and this was its second minor derailment at Penn Station in two weeks [the first involved an Amtrak train]. The delays have also provided a stark reminder of the state’s outdated infrastructure and Christie’s 2010 decision to cancel a new rail tunnel into New York City. Christie ignored the reporter’s question.