Reopening Showboat as hotel 'good news' for AC, gaming experts say

Philadelphia developer Bart Blatstein will be reopening the former Showboat casino in Atlantic City as an non-casino hotel, a move experts said is a good move for the troubled Shore town, which has seen a decrease in hotel inventory since 2014.

Blatstein's Tower Investments last Friday announced it would reopen Showboat in July as an 852-room hotel, representing "the largest non-casino hotel in New Jersey" — one that would create "hundreds of new jobs."

The developer acquired Showboat from Stockton University in October for $22 million.

"Tourists have been pining to visit this essential resort,” Blatstein said in a statement. “Tower's making it happen."

Gaming experts say the decision is a good one for Atlantic City, particularly since it lost a significant amount of its hotel-room inventory when four casinos closed in 2014.

"The last thing the city needs is more casino space," said Alan Woinski, president of Gaming USA Corp., "but the one bad thing about the casinos closing was that the hotel inventory was decreased."

"Even though you can still find cheap rooms midweek, they do need more hotel rooms for peak periods such as summer, teachers convention, special events and weekends," Woinski added.

The closures of Revel, Atlantic Club, Showboat and Trump Plaza resulted in the loss of more than 4,300 hotel rooms, according to a report by Stockton University's Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism.

"[It's] always good news when Atlantic City gets more rooms," said Roger Gros, publisher of Global Gaming Business Magazine. "To be even a minor participant in the meetings and conventions business, you have to have them."

Reopening as a hotel, however, still "doesn't really make sense," he said.

"Yes, [Blatstein will] do fine for the first two to three months, but even as a casino, Showboat had a very low occupancy rate in the off season," Gros said. "Rooms were going for $29 a night the last winter before it closed. Nothing much has changed since then, so I don’t really know how he’s going to do it. But he didn’t invest all that much, and with only 200 employees it might work."

Property taxes for non-gaming properties still remains a mystery, Gros said.

"The casinos are paying the stable PILOT amount for five years at least," Gros said "But what does that mean to a non-casino hotel that will continued to be assessed? Will their rate remain stable or increase?"

Despite the question, it's "good news" the casino will remain closed, he said.

"That would definitely not make sense," Gros said. "The market is stable now and any additional gaming space would be a huge negative to the other casinos."

A majority of Atlantic City's remaining eight casinos saw increased profits in the first quarter of 2016, according to a report by the New Jersey Division of Gaming Enforcement.

Woinski said he's waiting for the first developer to suggest apartments, condominiums or timeshares "for a closed casino resort or two."

"If Revel never opens or opens and has difficulty, the Showboat rooms will be absorbed," he said. "But if Revel fully opens their hotel rooms [and] Showboat does the same, we will once again be at that point where seven months out of the year, the casino resorts have to give away their rooms for peanuts."

Source: Philadelphia Business Journal