ATLANTIC CITY, New Jersey—Revel, a sprawling beachfront resort, marks its “preview opening” Monday, providing hope this historic vacation city can become more of a Las Vegas-type destination and overcome challenges from nearby gaming venues that have diminished the city’s tourism and revenue prospects.
“You can see and feel the excitement and energy building in town,” said Jeff Albrecht, GM of the Sheraton Atlantic City Convention Center Hotel. “We need to focus on customers who come for a few days for a lifestyle experience and not just day players. Everyone is raising the bar on quality, and Revel will really help us kick-start our comeback.”
Revel will hold its grand opening 25 May, with the first performances by Beyoncé since her first child was born earlier this year. All of the hotel’s 1,898 rooms and many of its facilities are available Monday, but more restaurants and other facilities will open during the next eight weeks.
Joe Lupo, senior VP of operations for Borgata Hotel Casino & Spa, which raised the luxury bar in Atlantic City when it opened in 2003, said Revel will speed Atlantic City’s goal to shift from a gaming town to a destination resort town. “The Las Vegas-style approach of the 1990s and early 2000s, which we helped bring from Las Vegas, has shown that Atlantic City can be a resort destination. The city used to be 90%-10% gaming revenues to non-gaming revenues; that has come down to 80%-20% and we want to get to 65%-35%.”
Occupancy in February in the Atlantic City market was down 7.6% year-over-year to 39.2% and RevPAR declined 11.4% to $37.77. Summer and weekend metrics, however, are climbing slowly but steadily. In July 2011, year-over-year occupancy was up 3.9% to 71.9% and RevPAR up 2.5% to $94.01.
According to a recent article in the Press of Atlantic City, casino hotel rooms were recently available for as little as $19 a night. One non-casino hotel, the Chelsea, even closed during midweek, opening only on weekends.
Revel, in contrast, is offering rates starting at $239 for a standard room. The 47-story, 6.3-million-square-foot Revel came with a total project cost of $2.4 billion. It has 1,898 guestrooms and is entirely smoke free, a first for the city. Revel features 14 restaurants, several with celebrity chefs such as Michel Richard and Marc Forgione. It houses a 31,000 square-foot spa; 55,000 square feet of retail space; two theaters; two nightclubs; 10 swimming pools and a 130,000-square-foot casino. It also features The Think Tank, a 160,000-square-foot conference center.
The property struggled to open. Developed by Atlantic City-based Revel Entertainment Group, construction was halted in 2010 when chief financial backer Morgan Stanley withdrew, according to The Press. In 2011, the company secured an extra $1.1 billion in funding from a consortium of lenders headed by JPMorgan Chase. The New Jersey Economic Development Authority helped by approving $261 million in state tax reimbursements over a 20-year period.
Revel’s effects
Nearby properties are aiming to keep up with the new levels being set by Revel. Borgata recently invested $50 million in a total room refurbishment, Lupo said. Conceding the “convenience gaming market” in Pennsylvania has damaged Atlantic City, Lupo said, “We were the only property that saw an increase in gross gaming revenue last year.”
Outside gaming, Borgata is emphasizing entertainment, nightlife, dining and its spa services. Lupo believes Atlantic City will be able to distinguish itself from gaming venues in Pennsylvania and New York because New Jersey has “a different and more favorable tax-rate structure for gaming resorts” that allow for resort amenities nearby states won’t have.
“We have created a destination at Borgata,” Lupo said. “We added Water Club (a lifestyle hotel within Borgata) a few years ago. People can come in, see a great show and have a wonderful spa treatment and a superb meal. We’re hoping visitors will come to see Revel and give Atlantic City another look.”
A new Atlantic City Alliance non-profit organization was created by the state to help market the destination. Those marketing dollars will be focused on non-gaming amenities; the fund is spending $30 million on a campaign with the slogan “Do AC.”
The city also will seek to attract more meetings to help with challenging midweek periods. “Meetings have been coming back,” Lupo said. “We used to have all these rooms for gamers and now with new hotel rooms and updated amenities we can go back to the meeting groups.”
Sheraton’s Albrecht agreed meetings are crucial to the city’s success. “Our hotel gets about 60% of its business from meetings, and we would like to see that grow.”
And there may be more to come for Atlantic City. Hard Rock International announced in late 2010 plans for a boutique hotel-casino, but last month developers AC Gateway asked for a six-month extension on its license application as it tries to get state environmental permits, according to The Press.