Although it’s not quite an epic shift yet, the local economy is making a slow turn away from being a purely gambling-centric town to one offering more Las Vegas-style diversity, the latest casino statistics indicate.
“It’s validating what we have been saying all along — that the nongambling amenities are continuing to grow,” said Larry Sieg, vice president of marketing for the Atlantic City Convention & Visitors Authority. “I think it’s showing that the overall tourism market in Atlantic City is on the upswing. I think we’re seeing a turn.”
Year-end figures released Wednesday by the New Jersey Division of Gaming Enforcement reflected modest growth in revenue from such things as hotel rooms, food and beverage, and entertainment. Nongambling attractions generated $1.26 billion in revenue in 2012, or 29 percent of the casino industry’s $4.3 billion in total revenue.
For the first time, the division added nongambling revenue to its annual report on casino gross operating profits to give a clearer indication of the overall health of the city’s tourism and casino industries.
As expected, casino operating profits plummeted. For 2012, operating profits were down almost 28 percent, to $360.7 million, compared with $497.6 million in 2011. The fragile economy, competition from casinos in surrounding states and the lingering effects of Hurricane Sandy were blamed for the decline. Casino revenue from slot machines and table games fell 8 percent in 2012, to $3 billion, compared with $3.3 billion in 2011. It was the sixth straight year of declining gambling revenue.
City officials, however, are encouraged by 2012’s growth in nongambling revenue, up almost 3 percent from 2011. The bulk of the money came from hotel rooms, restaurants, bars and entertainment. Casinos grossed $519 million from their hotel operations, $551 million from food and beverage sales and $193 million from entertainment.
Fine dining, nightclubs and deluxe hotel rooms are a huge part of the Las Vegas business model. A research report by Bank of America Merrill Lynch shows that nongambling revenue accounts for 64 percent of Las Vegas’ total revenue mix. Atlantic City derives about one-third of its total revenue from nongambling attractions.
Tony Rodio, president and CEO of Tropicana Casino and Resort, said that while Atlantic City will never become Las Vegas, the growth in nongambling revenue suggests the town is becoming a more appealing tourist destination.
“I think we’re taking steps in that direction,” said Rodio, who also serves as president of the Casino Association of New Jersey, an industry trade group. “I definitely think we’re taking steps in the direction to be a regional destination for the whole Northeast corridor.”
Rodio said the push for more diversity is reflected in a number of new nongambling amenities that will open this year or are expected to get under way. Among them are the $35 million Margaritaville-themed restaurant, bar and casino expansion at Resorts Casino Hotel, a $134 million conference center proposed at Harrah’s Resort and a new Chickie’s & Pete’s restaurant and sports bar at Tropicana.
Rodio said he believes nongambling revenue will continue to grow this year. He predicted that the popularity of nongambling amenities could help turn gambling revenue higher late in the year, especially when it is compared to the hurricane-hampered fourth quarter of 2012.
“I definitely feel that in the latter part of the year the trends will be positive, especially as we get to the year-over-year trends compared to Sandy,” he said.
Hotel rooms are key to drawing more higher-end customers, who stay longer and spend more money than the typical day-trippers. Casinos set a record in 2012 with more than 5.2 million occupied room nights. The $2.4 billion Revel megaresort, the city’s newest casino, helped to boost the hotel business.
Sieg said the average stay for visitors has increased to about two to 2½ nights, compared with just one night in the past. Overall, though, the number of visitor trips to Atlantic City decreased to 27.7 million in 2012, from 28.5 million in 2011, he noted.
“While the number of visitors is down, we are seeing longer stays,” Sieg said. “I think that is predominantly due to nongaming amenities — the dining, the entertainment and the nightlife.”
Starting in May, the convention authority plans to release a broader “tourism barometer” that will incorporate statistics from the city’s restaurant and retail operations. Concert figures will be added later. Sieg said the nongambling figures will give a more complete picture of the tourism industry.
“It’s extremely important to show the overall landscape of tourism in Atlantic City,” he said.
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