“Watch the transformation!” was the slogan hospitality juggernaut Landry’s emblazoned all over Trump Marina when it bought the struggling property in 2011 and embarked on a $150 million renovation to turn it into Golden Nugget Atlantic City.
It might be time to break that signage out again, because another transformation — the one playing out on Golden Nugget’s income statement —appears to be taking hold.
Last year, Golden Nugget generated $179 million in net revenue — a 36 percent increase from 2013 — and posted its first annual gross operating profit. The property is on track for a boffo 2015.
It took some time for the seeds planted during the renovation to sprout, said Golden Nugget General Manager Tom Pohlman.
Tourists initially confused the property with now-defunct Atlantic Club, site of the original Golden Nugget that Steve Wynn opened in 1980, Pohlman said. Until Atlantic Club closed in January 2014, “people didn’t really associate that it was a brand new Golden Nugget,” he said.
Meanwhile, Golden Nugget assembled a crack marketing team to attract more high rollers and offers free parking to everybody, Pohlman said. “We give people the opportunity to see the property without having to pay,” he said.
Golden Nugget’s net revenue was $127.16 million in 2012, Landry’s first full year as an Atlantic City casino operator.
That number, which includes revenue from casino, hotel, restaurant and nightclub operations, ticked up 3.2 percent the next year.
Then, in 2014, it exploded, and has continued surging so far this year.
Golden Nugget reported $100.4 million in net revenue for the first half of 2015 — a 26.7 percent increase from the same stretch last year.
Net revenue is a reliable measure of true revenue growth because it excludes promotional dollars, or “comps,” spent by customers.
The effect of Golden Nugget’s top-to-bottom renovation, including the addition of recognizable restaurant brands such as Vic & Anthony’s Steakhouse, may simply have taken a few years to percolate, said Michael Pollock, a managing director of Spectrum Gaming Group, of which Landry’s is a client.
“Golden Nugget has historically had the potential to generate a lot of revenue from new customers as well as to attract customers from other properties simply because of its core business model, which includes a cadre of really popular and well-operated restaurant offerings,” Pollock said.
Gross sales from food and beverage operations grew 87.2 percent, to $29.1 million, between 2012 and 2014. Gross gambling revenue grew 40.7 percent, to $181.5 million.
Both figures include comps doled out by the resort, which last year were $66.6 million property wide, up 39 percent from 2012.
The big gains in revenue are having a profound impact on Golden Nugget’s bottom line.
Atlantic City casinos use several metrics to gauge profitability, but the industry’s go-to measure is gross operating profit – earnings left over after wages, supplies and other immediate expenses are deducted, but before accounting for payment of taxes, debt and other long-term expenses.
Between 2012 and 2014, Golden Nugget’s gross operating profit increased 139.9 percent, to $4.55 million.
The eye-popping turnaround at the property has continued in 2015.
Golden Nugget reported an $11.85 million gross operating profit through June, a far cry from the $8.6 million gross operating loss it reported for the first half of 2012.
“It took us a while to get on the map,” Pohlman said. “But we’re there.”