Atlantic City Casino Resorts See Profits Decline Nearly 12 Percent, But Optimism Remains
Posted on: May 23, 2018, 09:15h.
Last updated on: May 23, 2018, 08:18h.
Atlantic City casino resorts saw gross operating profits fall 11.7 percent in the first quarter of 2018.
The New Jersey Division of Gaming Enforcement (DGE) reports this week that operating profits plummeted to $123.6 million, a loss of about $16.3 million compared to the first quarter in 2017. Gross operating profit reflects earnings before interest, taxes, depreciation, and amortization (EBITDA), and is a widely accepted measure of profitability in the Atlantic City gaming industry.
Casino Control Commission Chairman Jim Plousis said 2017 was a very successful year for Atlantic City where profits soared more than 22 percent. The state’s chief gaming regulator opined that keeping pace would be difficult to begin 2018, but he is “optimistic going forward.”
“Sports betting will start soon, we licensed Hard Rock which will open next month and Ocean Resort will be before us for a license so it can open this summer as well,” Plousis said in a statement to the Press of Atlantic City.
“Those three factors will enable the industry to draw new customers to see new casinos, try new forms of wagering, taste new restaurants, and enjoy new entertainment,” Plousis concluded.
Total land-based gaming win is down 6.1 percent through April. Brick-and-mortar gross gaming revenue is short $46.7 million compared to where it was this time last year.
Atlantic City casino resorts are charging far more for their hotel rooms, but at the same time keeping them far less occupied.
The 2018 Q1 report shows that casino rooms were occupied at a rate of 77.9 percent, 3.2 percent lower than in 2017. But the average nightly rate between January and March was $121.47, more than 17 percent higher than the going $103.42 rate in the three-month period a year prior.
The rate increase has more than offset the decline in room stays. Atlantic City casinos generated over $97 million in guestroom revenue, a 16 percent premium on 2017.
Borgata snags the highest nightly rate at $175 and change, while a room can be had on the cheap at Resorts for a measly $71. Caesars led the way in terms of occupancy at 82.4 percent on $121.59 nightly charges. Golden Nugget saw the most rooms go unused with an occupancy rate of just 68.9 percent.
The number of casino guestrooms increased by 322 due to the Tropicana acquiring the adjacent Chelsea boutique hotel. Atlantic City casinos offer 11,773 total rooms, but that will soon change.
The total number of hotel rooms will balloon by 3,399 when Hard Rock and Ocean Resort open their doors on June 28. Atlantic City will also become a nine-casino town.
Hospitality and tourism experts, as well as the companies and investors behind the hundreds of millions of dollars being poured into Atlantic City, are betting on an influx of new and returning visitors. Hard Rock says it will be an entertainment-first property, and has promised to hold 300 live concerts and shows in its first full year.
Stockton University Hospitality Professor Bryan Tyrrell said recently the new casinos will put pressure on the seven existing ones to “upgrade their product.” Like Plousis, he says he’s “very optimistic.”
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