Significant casino operating profit gains seen in the fourth quarter of 2013 were not enough to save the city’s dozen casinos from a 35 percent earnings loss last year.
Data released Monday by the New Jersey Division of Gaming Enforcement show that the market posted a $235 million gross operating profit last year, compared to $360 million in 2012. The year-end numbers reflect a 73 percent operating profit increase seen in the last three months of the year, reflecting the fact that casinos were closed for several days in 2012 due to Hurricane Sandy.
“Listen, everybody would like the numbers to be even better, but we had a lot of factors last quarter that didn’t allow that. We were also dealing with a ton of snow,” New Jersey Casino Control Commission Chairman Matthew Levinson said.
In addition to the 6 percent gambling revenue loss seen in 2013, statistics released Monday show that non-gambling revenue, including casino food and beverage and entertainment revenue were also down, while room revenue held steady.
But while gambling and non-gambling casino revenue declined 5 percent to $4.1 billion, third-party business sales, grew by 18 percent. Those sales include business done by outside restaurants contracted to operate at casinos.
That’s significant, Levinson said, noting that the restaurants in the new Margaritaville complex at Resorts Casino Hotel are among those whose revenue is counted in the category. Since the inception of the Atlantic City Tourism District in 2011, there has been a state-led push for added non-gambling amenities, such as as the Jimmy Buffett-branded attraction. Third-party business sales accounted for $289 million in 2013, up from $245 million a year earlier.
“It’s a shame we can’t better capture those numbers in the casino data,” Levinson said. “These businesses wouldn’t be coming here if they thought they weren’t going to make money.”
Meanwhile, one key data source industry analysts have pointed to as an indicator of the resort’s health didn’t see any growth for the first time in four years, stumping at least one industry expert as to the reason.
Luxury tax, levied at 3 percent on sale of alcoholic beverages and 9 percent on other retail sales in the city, remained nearly flat at $35.5 million,
“I’m surprised the luxury tax isn’t much stronger,” said Israel Posner, executive director of the Lloyd D. Levenson Institute for Gaming, Hospitality and Tourism at Richard Stockton College. “I find it very hard to figure out what’s really going on aside from the continued story of Hurricane Sandy.”
The Levenson Institute examines several indicators of resort’s tourism economy each quarter with a particular focus on luxury tax, hotel room fees and parking fees.
Data released Monday show that the hotel room fee held steady at $15.6 million, while Atlantic City’s parking fee fell 3 percent to ?28 million. Analysts have said that the overall trend of declining parking revenue likely reflects the loss of day-trippers, who are choosing other more convenient gambling destinations over Atlantic City.
Gains in room revenue instead suggest that tourists who do come to the resorts are staying longer, Posner said.
Widespread divergence was seen in the gross operating profits and losses of the 12 casinos operating in Atlantic City last year, with Posner noting that the discrepancies were wider than he’s ever seen.
Seven of the resort’s 12 casinos posted profits, but their earnings in comparison to 2012 varied immensely. Tropicana Atlantic City Casino and Resort saw its profits increase by 47 percent to $26 million. Borgata Casino Hotel & Spa saw a 2 percent increase with earnings rising to $122 million. Golden Nugget Atlantic City cut its losses by nearly 9 percent to $10.4 million.
Trump Taj Mahal Casino and Resort posted $19.6 million in profit, down 55 percent from its 2012 earnings. Resorts Casino Hotel’s losses widened by more than 54 percent to $12 million. Revel Casino Hotel, which has been mulling a sale since last year saw its losses grow by 17 percent to $130 million. Trump Plaza Hotel and Casino fell from a 10 million operating profit in 2012 to a $5 million loss in 2013.
Posner said some of the discrepancies may be related to one-time non-recurring events such as settled tax appeals.
“What I take away from profit losses as a whole is that they conceal more than they reveal because the numbers are so far apart at this point,” Posner said. “When numbers are so divergent, the average at times is not a very good indicator of what’s really going on.”
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