Atlantic City Outlook for 2008

Atlantic City's facelift to begin in 2008
By Mel Evans, AP

Part of the way Atlantic City is dealing with the revenue downturn is by adding hotel rooms. Three new casino hotel towers will open this year, adding more than 2,500 rooms to a city where it can be difficult to book a room at a casino hotel on a weekend.

ATLANTIC CITY (AP) - In the facelift that will gradually transform the way Atlantic City looks, 2008 promises to be the year the surgery begins.

The new year will see three new hotel towers open, the Tropicana Casino and Resort will get a new owner, work will pick up on a new $2 billion casino, details on yet another new casino will be unveiled, and gambling halls may finally start to recover from the beating that out-of-state slots parlors put on them last year.

It's an era of change in Atlantic City, as it struggles to reinvent itself as a hipper, national destination resort, and to fight off competition from New York and Pennsylvania slots parlors.
"My only fear is that with all that happens in '08, there's not a lull in '09 and 10," said Kim Townsend, CEO of Pinnacle Atlantic City, which will build a new $1.5 billion to $2 billion casino on the site of the former Sands Casino Hotel, which it imploded last October.

"The momentum of this type of progress is important to changing Atlantic City into a full-fledged destination," she added.

Figures to be released Thursday will formalize what everyone here knew since about last March: that 2007 was a year best forgotten in terms of casino revenue. It will go down as the first in the 30-year history of casino gambling here that revenues did not increase from the previous year.

That's due largely to out-of-state slots parlors cutting into the most profitable part of casinos' revenue base, and stealing customers who for decades have belonged exclusively to Atlantic City. A partial smoking ban that restricts patrons from lighting up 75% of the casino floor didn't help, either.

Many observers expect the overall decline in revenue to be in the range of 4% to 5% for the year.

Part of the way Atlantic City is dealing with the revenue downturn is by adding hotel rooms. Three new casino hotel towers will open this year, adding more than 2,500 rooms to a city where it can be difficult to book a room at a casino hotel on a weekend.

The Borgata Hotel Casino & Spa will open its Water Club tower with 800 rooms and a host of amenities; Harrah's is opening a second tower with 941 rooms, and the Trump Taj Mahal Casino Resort is adding nearly 800 more in its second tower.

Construction work will pick up this year on the $2 billion ocean-themed Revel casino at the end of the Boardwalk next to the Showboat. And by spring, Pinnacle Entertainment will reveal details about its Atlantic City casino.

The new casinos, and expansions of old ones, encourages Joe Corbo, president of the Casino Association of New Jersey.

"This is establishing a favorable cycle in which success begets additional investment and further success," he said. "This is reminiscent of the incredible winning streak that Las Vegas has enjoyed for the last generation."

The Tropicana will soon have a new owner. The state Casino Control Commission stripped its previous owners, Columbia Sussex Corp. of their license last month, ruling that they did not have the ability to run the type of first-class facility required by New Jersey law. More than 900 job cuts led to embarrassing revelations about cleanliness and service levels at the casino, which includes the state's largest hotel at 2,129 rooms.

A state-appointed conservator is fielding offers from more than a half-dozen potential buyers, and a sale could be made within a few weeks.

What else might happen in Atlantic City this year?

There has long been talk of yet another new casino project on land next to the Atlantic City Hilton Casino Resort, but no plans have been unveiled. And the city and state are studying the possibility of allowing casino development at Bader Field, nearly 150 acres of undeveloped land that used to be an airport.