The most spectacular and costly failure in Atlantic City’s 36-year history of casino gambling begins to play out Monday when the $2.4 billion Revel Casino Hotel empties its hotel.
Its casino will close early Tuesday morning.
Revel is shutting down a little over two years after opening with high hopes of revitalizing Atlantic City’s struggling gambling market. But mired in its second bankruptcy in two years, Revel has been unable to find anyone willing to buy the property and keep it open as a casino. It has never turned a profit.
Revel will be the second of three Atlantic City casinos to close in a two-week span. The Showboat Casino Hotel closed its doors Sunday, and Trump Plaza is closing Sept. 16.
So what killed Revel?
Analysts and competitors say it was hampered by bad business decisions and a fundamental misunderstanding of the Atlantic City casino customer.
“The timing of it could not have been worse,” said Mark Juliano, president of Sands Bethlehem in Pennsylvania and the former CEO of Trump Entertainment Resorts in Atlantic City. “The financial climate while Revel was developing and when it opened were completely different.”
Revel officials declined to comment.
The casino broke ground just before the Great Recession. It ran out of money halfway through construction and had to drop its plans for a second hotel tower while scrambling for the remaining $1 billion or so it needed to finish the project. When it opened in April 2012, it was so laden with debt that it couldn’t bring in enough revenue to cover it.
The idea behind Revel was to open a totally different resort, a seaside pleasure palace that just happened to have a casino as one of its features. That included Atlantic City’s only total smoking ban, which alienated many gamblers; the lack of a buffet and daily bus trips to and from the casino; and the absence of a players’ club. By the time those decisions were reversed, it was already too late. High room and restaurant prices hurt, too.
“If there had been a range of new attractions and potential customers with enough discretionary income, I think that Atlantic City could have absorbed the new capacity,” said David Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas. “That’s certainly what happened with Borgata more than 10 years ago. But the market that Revel foresaw for its property just didn’t materialize, partially because of the growing perception that the city wasn’t ready for that kind of customer. At the same time, Revel didn’t have a plan to successfully market to the traditional Atlantic City customer.”
It also started at a huge disadvantage by not having a pre-existing database of gamblers to solicit, in the way that casinos owned by nationwide companies like Caesars Entertainment or Tropicana Entertainment can.
Customers found Revel’s design off-putting as well, said Joe Lupo, senior vice president of the Borgata, whose upscale market Revel appeared to target. Entering from the Boardwalk, they had to take a vertiginous escalator up four flights to reach the casino floor. Once there, the property wound around a circular pattern instead of the linear layout of most other casinos.
“Revel struggled with the execution of plans to develop their market, as well as with their design and just a basic understanding of the Atlantic City visitor,” he said.
A huge power plant proved enormously costly. Some potential buyers in bankruptcy court reportedly were scared off by the ongoing expense of the heating, cooling and electrical plant, and they sought unsuccessfully to exclude it from their purchase offers. Juliano said Revel apparently hoped there would be additional development in the immediate area that it could sell utility service to, but that never materialized.
Revel still hopes to find a buyer for the property after it has ceased to operate as a casino.
Wayne Parry can be reached at https://twitter.com/WayneParryAC
Copyright © 2014 Capitol Hill Blue
Copyright © 2014 The Associated Press. All Rights Reserved
1 thought on “Another casino shutdown in Atlantic City”
I live On Absecon Island where REVEL is located. It was a fiasco from day 1 and many back then had predicted it would not only fail and fail badly , but that it would also take a few other weak Casinos with it and it did just that. The sad reality is the decline of the Gaming Industry in AC is not over yet. The four Casino closings in just 4 mos. though is the bottom. The next three failures will probably take place over the next two yrs. instead of all at once. By 2017 AC will probably be down to five or six Casinos. 8 K people lost their jobs this year in AC , this is roughly 30% of the Industry total, many more people will lose their jobs as well in the coming months as many other businesses that serviced these Casinos and lived off their customers and workers also close up. To say this year has been and will continue to be an utter disaster for the AC area is an understatement. Just to put this in some kind of perspective while 8 K private jobs are being lost not one public sector job in Atlantic County has been or will be lost. Property taxes though in AC alone have increased in one year by 30% !!
Comments are closed.