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: