ATLANTIC CITY — The upscale Chelsea Hotel will operate only four nights a week through next spring because it cannot compete with the cut-rate prices offered by the Atlantic City casinos.
Guest rooms will be available only on a Thursday-through-Sunday schedule until the hotel resumes full operations in May, general manager Patrick Logue said in a statement. Rooms will be shuttered on Mondays, Tuesdays and Wednesdays, except during conventions or other special events that increase the demand for midweek lodging.
Curtis Bashaw, the Chelsea’s owner, said the hotel does not want to “waste resources by trying to swim against the tide of rooms dumped by the casinos at rock-bottom prices each midweek.”
Casinos, in a price war, have been slashing rates or giving away rooms for free as part of marketing promotions designed to stimulate midweek travel to Atlantic City in the weak economy. Bashaw said the Chelsea would not get swept up in the cost-cutting frenzy.
“The Chelsea has actually seen revenue growth in 2011 over 2010, just as it did in 2010 over 2009. However, we cannot be expected to compete midweek when casinos put rooms in the market at less than $50 rates,” he said.
Instead, the hotel will focus on its core business on weekends and in Atlantic City’s peak summer tourist season, Bashaw said.
“There is no danger of the Chelsea closing altogether,” he said.
Howard Bacharach, executive director of the Atlantic City Hotel & Lodging Association, said the hotel industry is coming off a strong summer season, but midweek business has declined heading into the slower fall months.
“It’s difficult for noncasino hotels to generate enough revenue Sunday through Wednesday to offset their costs,” he said.
Bacharach said he does not know of any Atlantic City hotels other than the Chelsea that plan to operate on a limited fall and winter schedule. He expressed hope that good weather would continue to attract overnight visitors to the resort town through the fall.
In addition to the guest rooms, the Chelsea will close down its restaurants, nightclub, rooftop bar and spa during midweek, Bashaw said. The hotel’s Fifth Floor entertainment area has become one of the city’s nightlife hubs.
Introducing a hip, South Beach-style vibe to the Atlantic City market, the trendy Chelsea opened its doors in the summer of 2008 — right before the national recession hit and just as Atlantic City’s casino industry slipped deeper into a slump that continues today.
The 330-room Chelsea was the first noncasino hotel to open on the Boardwalk since the 1960s. Bashaw’s company, Cape Advisors Inc., created the Chelsea by giving the old Holiday Inn and Howard Johnson hotels a $112 million makeover. Both hotels were gutted and combined into one luxurious property featuring retro-chic decor reminiscent of the 1950s and ’60s.
At one point, the Chelsea was seen as a candidate to become one of the new generation of smaller-scale casinos allowed in Atlantic City under a new state law. However, the original legislation was changed to require that the smaller casinos would have to be brand new hotels, which in turn eliminated existing hotels such as the Chelsea from contention.
Although Bashaw says the Chelsea has been able to increase its revenue in the past two years, the hotel has struggled at times along with the rest of Atlantic City’s lodging industry. In a July interview with The Press of Atlantic City, Bashaw said the hotel went through a restructuring with its lenders, but added that “the Chelsea is going to be around for a long time.”
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