ATLANTIC
CITY, N.J. (AP) - 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.
Source: Philly.com
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