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ATLANTIC CITY - For the second time this year, Borgata Hotel Casino & Spa will shutter most of the 800 rooms at its posh Water Club hotel during midweek nights because of sagging business in the weak economy.

Borgata has begun taking rooms out of service on Tuesdays, Wednesdays and Thursdays, but will keep them open on weekends, when bookings are stronger, the casino said.

"During the summer months, demand was great," Borgata spokeswoman Noel Stevenson said in a statement Tuesday. "Now that we're in the shoulder season, with the schedule adjusted based on demand, on most Tuesdays, Wednesdays and Thursdays, the Water Club will primarily cater to butler and guest suites, group business and special events."

Stevenson noted that all other guests will stay at Borgata's main 2,000-room hotel tower when the Water Club is closed. She did not say when Borgata plans to completely reopen the boutique-style hotel. A hotel reservations clerk said the property would remain closed midweek through the spring or summer, with occasional openings for busier holiday weeks.

Borgata also closed the Water Club during midweek nights last March in response to declining business. It was reopened in May to coincide with the start of Atlantic City's peak summer tourist season.

The $400 million hotel, including its trendy spa and swimming pools, made its splashy debut in the summer of 2008 just as the faltering economy was lurching closer to a full-blown recession. Boasting weekend rates of between $500 and $700 per night, it represented a new level of luxury for the Atlantic City casino market.

Stevenson said the Water Club's limited schedule was no more unusual than any other business adjusting its operations entering the slower fall and winter months. No layoffs have been made at this time, she added.

Howard Bacharach, executive director of the Atlantic City Hotel & Lodging Association, said he wasn't aware of any other casinos in town closing their hotels during midweek. However, he said it was understandable for Borgata to want to cut its operating costs during what is traditionally a challenging time of year.

"You don't want to be sitting there with that many rooms and no one to fill them," Bacharach said.

With consumers holding onto their wallets in the recession, Atlantic City has struggled to book hotel rooms and generate enough business for high-end retailers. The owner of The Pier at Caesars, the upscale shopping mall on the Boardwalk, announced in September it would allow its lenders to take over the property because it was no longer producing enough cash to pay its $135 million mortgage.

"Atlantic City is clearly enduring the most difficult period since gaming was introduced more than 30 years ago," said Paul Chakmak, chief operating officer of Boyd Gaming Corp., Borgata's parent company. "But we believe that Borgata's market-leading product, strong free cash flow and reputation for exceptional customer service places us in a unique position to weather these difficult times."

Boyd reported third-quarter earnings for Borgata on the same day the casino confirmed the Water Club's limited schedule. One gaming analyst, Robert A. LaFleur, of Susquehanna Financial Group, said Borgata's earnings generally were strong despite the rest of the Atlantic City market continuing its "slow bleed."

"The Borgata, essentially the nicest house in a declining neighborhood, continues to lead the Atlantic City market," LaFleur wrote in a report Tuesday to investors.

Borgata increased its market share to 17.7 percent in the third quarter compared to 16.6 percent in the same period last year, Boyd reported. It is tops among Atlantic City's 11 casinos in market share and gaming revenue.

In the third quarter, Borgata's net revenue fell 7.2 percent to $222.6 million, but the casino was able to boost its cash flow by 13 percent to $67.6 million by operating more efficiently and holding down expenses, Boyd said.

Borgata's operating income nearly doubled to $77 million, thanks in large part to a $28.7 million insurance settlement for a fire that damaged the Water Club while it was under construction in 2007.

Contact Donald Wittkowski:

609-272-7258

DWittkowski@pressofac.com

9 comments:

• VoiceOfReason (2) posts 11:44 am

  American Gaming Guru stated; "Borgata will not give away or reduce room rates because they want to uphold their reputation and be known as the classiest place in town. They attract a high-paying and respectful customer and want to keep that reputation intact whether in good economic times or in bad." I hope that the Borgata 'suits' remember that when several of them are let go because of a downturn in business due to low hotel room occupancy when they could have done something to address the problem.

• Lew Carroll (124) posts 12:28 pm

  Niky: clean it up, etc., because MAYBE the patrons will return?? you got a better chance of seeing Clark Kent and Superman out bar-hopping together. And in time, the same complaints will be made about Yonkers, Monticello, etc., once the novelty wears off.

• Nikynewark (75) posts 11:55 am

  Here we go again with the lame "recession" excuse. Funny, I don't hear Yonkers complaining. It's still clean, smoke free and spending a lot on advertising. Monticello, clean, smoke free and paying off better than AC. I don't hear Pennsylvania whining. From here in north Jersey/NYC area with a 16,000,000 populataion why spend money for the toll increase, god awful smoke/bad housekeeping stench in AC? Clean it up, bring back the high payout slots/video poker and MAYBE, people will rediscover AC.

• American_Gaming_Guru (128) posts 9:41 am

  Don seems to have a real knack for writing real uplifting stories about AC. This is OLD NEWS and something Borgata has already talked about. Why make a big article out of it again? On another note, Borgata will not give away or reduce room rates because they want to uphold their reputation and be known as the classiest place in town. They attract a high-paying and respectful customer and want to keep that reputation intact whether in good economic times or in bad.

• VoiceOfReason (2) posts 8:52 am

  I know that today's economic climate is not what it was, but it wasn't too long ago that the casinos (and non-casinos) were being encouraged to invest in more hotel rooms so that additional airline carriers would be attracted to fly out of A.C. International Airport. Well, the casinos responded ... and now they are unable to fill their inflated room inventory. Perhaps as one reader has posted before me ... if the Borgata would reduce their room rates to a more reasonable level, more rooms would be occupied. More hotel room guests translates to more casino and restaurant action and more people will remain employed as a result. As for the city elections coming up. I don't see any of the elected city council members doing much to help the A.C. casino industry ... which employs so many of the city's residents and taxpayers.

• FLYBYNITE (2) posts 8:24 am

  I want to rent a room,not buy it!Evidently AC & Borgata have never heard about Hotwire.com.In Las Vegas,for that price,I can get a Tower Suite & limo transportation in a Maybach.

• JerseyDevil (395) posts 5:56 am

  That's because I stopped going there.

• Lew Carroll (124) posts 5:17 pm

  Always Turned On - May to September. Is that Miss America I hear sniggering?

• BernieSchwartz (464) posts 4:25 pm

  Are they hiring? You would think the City and the Casinos would try to talk with one another, we're all in this together. Also, you would never know there was a mayorial election next week. Why so quit, I guess Langford feels he's a shoe-in and if he speaks he may put his foot in his mouth i.e. K-9s, Public service director, firehouse, etc.... I bet he'll feel like he just one the mega millions when and if he wins.

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