A new study from the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Richard Stockton College suggests the profile of Atlantic City tourists is changing: Fewer visitors are coming to the city, but those who are stay longer and spend more time outside casinos.
While local casinos lament that a greater portion of the resort’s convenience gambling market is shunning Atlantic City for other regional gambling destinations, there are indications that those still choosing Atlantic City are doing so while finding other activities beyond gambling, said Brian Tyrrell, an associate professor of hospitality and tourism management at Stockton and the author of the study.
“I think what’s going on is you’re getting fewer day-trippers coming down just to gamble. In effect, the quality of the visitors is going up,” Tyrrell said. “You’re getting visitors who are coming longer and doing more. They’re eating; they’re shopping; they’re staying overnight.”
Tyrrell tracks those trends through what the institute refers to as tourism performance indicators. That includes tracking Atlantic City’s luxury tax and parking fee as well as Atlantic County’s hotel occupancy fee. While the city’s parking fees decreased in the third quarter of 2013 compared to a year ago, luxury tax and hotel occupancy fees both saw modest increases as a result of spikes in August 2013.
Atlantic City’s luxury tax is levied at 3 percent on the sale of alcoholic beverages and 9 percent on other retail sales, including entertainment charges, room rentals in hotels, rolling chairs, beach chairs, cabana rentals and other admission charges in the city. In August, the city collected $5 million in luxury tax, up 13 percent from the $4.4 million collected in August 2012.
The $5 million also marks the best month for luxury tax ever recorded in the city. The previous high was $4.5 million collected in July 2012. Overall, in the third quarter, which traditionally represents the city’s strongest quarter stretching from July through September, the city collected $12.2 million in luxury tax. That’s up from $12.1 million in the third quarter of 2012.
Tyrrell noted that the quarterly increase might sound insignificant but pointed out that the increase was seen in the first summer following Hurricane Sandy, which many believe kept tourists from visiting the shore.
“Both luxury tax and hotel occupancy tax were trending positively until Sandy hit. Then we had a really miserably cold and wet June and July, so it’s possible there was some pent-up demand as people considered coming back to the shore,” Tyrrell said. “Hopefully, it’s a sign that any declines are in our rear-view mirror.”
Declines were seen in Atlantic City’s parking fee. By law, the casinos must charge at least $3 per car, with 50 cents going to a casino revenue fund and $2.50 going to the Casino Reinvestment Development Authority. Any markup beyond the $3 is profit for the casinos.
In the third quarter, Atlantic City collected $8.4 million in casino parking fees, down 6 percent from the $8.9 million collected in the the third quarter a year ago. It’s also down nearly 21 percent from the city’s high experienced in the third quarter of 2006, when the parking fee generated $10.6 million.
That’s the same year that the state’s gambling revenue peaked at $5.2 billion as the first competing casinos opened in neighboring Pennsylvania. Since then, the resort’s gambling market has shrunk by 44 percent, with the state seeing $2.9 billion in gambling revenue in 2013.
Israel Posner, executive director of the Levenson Institute, said there’s no reason to believe that pattern will change any time soon. The results, however, confirm that marketing efforts of the casino-funded Atlantic City Alliance are on the right track. The alliance has sought to redefine Atlantic City’s image, launching an annual $30 million marketing campaign. This year, the campaign will highlight Atlantic City’s nightlife and market specific events throughout the year that can bring tourists to the city for extended stays.
“People who are coming here are coming for a broader experience. Casino gaming is simply not unique to Atlantic City and the region. If all you want to do is gamble in a casino, there are many many options,” Posner said. “As far as quantity, there are plenty of numbers that tell you that. The parking fee tells you that, and the Atlantic City Expressway traffic tells you that.”
The Atlantic City Expressway, the main corridor into the city, saw 52.1 million toll-paying vehicles in 2013, a 2 percent decline from 2012. Expressway traffic has declined for five consecutive years.
The new study points to hotel occupancy fees collected as a reason for optimism. The fee, however, is tracked against the entire county. State law imposes a 5 percent occupancy fee in most areas. Special provisions were made for Atlantic City and other areas such as the Wildwoods, where hotel occupancy fees were already charged. In Atlantic City, the additional tax is 1 percent.
Increases in both July and August contributed to the positive third quarter in 2013. Again, Tyrrell said, August was a record month as the tax resulted in $762,600 collected, up 7 percent from $713,400 a year ago. It was the most successful month ever recorded in Atlantic County, and the first time a record had been recorded since 2008.
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