New Casino Brings Hope of an Atlantic City Comeback
With a stiff and chilly breeze coming off the ocean, state lawmakers, customers, employees and management raised a morning toast to Atlantic City's first new casino to open in 12 years.
A lot rests on the Revel, a 47 story property with a mirrored facade reflecting the sand, sea and sky right at its doorstep. New Jersey lawmakers are hoping the 20 acre resort casino will attract the new clients and added gambling revenue Atlantic City so desperately needs.
"We want it to be a family destination," New Jersey's Lieutenant Governor Kim Guardagno told CNBC "We want it to be a destination that tourists come to. We want them to see that there's 127 miles of beach in New Jersey and most of them are right here in Atlantic City."
Beyond its water views and the huge wraparound decks patrons can wander between games, Revel is completely smoke free. Its has also eschewed the traditional gambling environment of dark rooms and neon lights placing some of its 150 gaming tables near windows so patrons can enjoy the property's water views.
And it is not just the gaming experience Revel is looking to makeover, it wants to change the Atlantic City experience. Its two nightclubs, 14 restaurants 32,000 square foot spa, beach-based workouts and a 5,000 seat amphitheater called Ovation Hall were all designed to give the city's typical day trippers a reason to extend their stay
"What we really did was we said okay, if you had a day where you had a lot of time on your hands, what would you do?" Revel Entertainment CEO Kevin DeSanctis told CNBC. "We just filled that in."
Revel's "soft open" Monday has been a long time coming. The $2.4 billion dollar project halted during the recession after Morgan Stanley , a former partner, pulled out. DeSanctis had to fine new financing and in the process found a willing supporter in New Jersey Governor Chris Christie. The privately-owned Revel received $261 million in tax credits to be used for economic redevelopment efforts in Atlantic City. DeSanctis said the fact Christie showed a commitment to Atlantic City, helped convince his partners to restart Revel.
Whether Revel can revitalize its hometown is a big question surrounding the 1,900 room facility when it officially opens on Memorial Day. Atlantic City's gaming revenue has dropped five years in a row. After peaking at $5.2 billion in 2006, last year's take of $3.3 billion marked a 36 percent decline from those lofty levels.
Atlantic City has been hard hit by the recession, and increased competition from casinos in the neighboring states of New York and Pennsylvania. In fact, some forecasts call for Atlantic City's gaming revenue to decline again this year, providing Pennsylvania with an opening to surpass it as the nation's second largest gambling destination behind Las Vegas.
To help stem the outflow of old clients and bring in new ones, Revel's included 160,000 square feet of indoor and outdoor meeting space in its layout. With a ballroom capable of seating 1,800, four executive boardrooms and 20 meeting rooms the resort hopes to more attract conventioneers who spend more money on average than the many customers who drive in for a day.
"Generally if you look at the convention business in this town, I think the typical occupancy from this group of customers is about six percent," said DeSanctis. "We're going to run, our goal is to run 21 percent.
While analysts are optimistic about the Revel's success, they do not see it spilling over into neighboring casinos or Atlantic City's neighborhoods.
In a March 2012 note to clients, Deutsche Bank analyst Matt Zarnett wrote, "..we do not believe new capital investment by itself [Revel] will be a game changer for this market."
In fact, analysts say Revel could eat into other casinos revenue, specifically Boyd Gaming's Borgata, a high end casino that's showing rare growth in the slumping market.
Analysts say Revel might also pull enough traffic in from other neighboring casinos. The weaker ones will be forced to close.
It could be a winning strategy for the city. In as mature market, weaning out the weaker players may make Atlantic City healthier in the long run and improve the chances it can end this long term losing streak.
Follow Mary Thomspon on Twitter: @MThompsonCNBC