Revel, Atlantic City’s new $2.4 billion megaresort, is off to a slow start and all of a sudden a lot is riding on July numbers, judging by a note late last month from one analyst.
“Despite a tough opening, near-term liquidity is manageable,” said John Kempf of RBC Capital Markets. “However, Revel will need to turn positive in July if it hopes to service debt in the weaker shoulder-months of the Atlantic City market.”
The problem is gaming results, which is not a surprise. Atlantic City is attempting to remake itself in the face of intense regional competition that has seen bus trips drop from a peak of 14 million annually to 4 million, which was the whole idea behind Revel in the first place. A tour of the project after Memorial Day weekend made clear that Revel does provide Atlantic City with something it desperately needs: Fully differentiated supply. It is the first ever beach resort serving the northeast gaming market, and the beach will be ready for action starting with the 4th of July holiday. You could also argue that it’s also the first true 21st century casino resort, with its consistent attempts to make to the most of its surrounding natural environment; its clear segregation of gaming and non-gaming spaces and its decision to be smoke-free. Whereas old-school projects seem designed to keep you in a state of permanent agitation, Revel invites you to relax and look at the people. “See and be Seen” is the theme, and it is faithfully carried out throughout the resort. CEO Kevin DeSanctis, as well as lead architect Michael Prifti of Philadelphia-based BLT Architects, are to be congratulated on the results. It’s obvious Revel will serve its market well for many years to come, and, if you care about Atlantic City, you have to hope it gets every chance to work out the kinks and make the most of its considerable and impressive investment.
Here’s more on the project and the challenges it faces from DeSanctis:
• Use of the natural environment: “Opening up to the ocean is sort of a no-brainer. The most interesting thing to me is that folks have come in from other places and said, ‘Look at the view, and look at the ocean.’ My general reaction is it was always here, we just didn’t want anyone to see it.”
• Memorial Day weekend with its sold-out Beyonce concerts: “I think you can safely say we’re probably the only resort that had the governor of the state, the First Lady and her kids and Beyonce in one place at the same time. I’d love to tell you it was our plan, but we sorta got lucky. We saw a lot of people from places like Virginia and New York. They came because they wanted to see what it was like. Not everyone had a great experience but a lot of people did. What we heard was this was a place that they would revisit. Those people might go back and tell their friends, ‘Atlantic City really isn’t what I thought it was,’ and, hopefully, they ventured out and found something besides Revel that they liked. A big part of what we heard was, ‘We wish that the beach was in shape,’ and that’s a good thing because I think they’ll come back to see what that’s like.”
• Gaming results: “In the short-term, it’s really tough to get there. What we’re really trying to do is expand the market, and I don’t think you get there overnight. It really happens one guest at a time. When you look at our gaming revenues, one of the balancing acts that we have is, ‘Are you a resort or are you a casino?’ We’re both, but does the traditional Atlantic City customer feel that comfortable about that? That’s one of the real challenges that we face; do they feel comfortable in this environment? I think they can, but, initially, people are creatures of habit. It’s much easier for someone who has never been to Atlantic City to come here and try this product, as opposed to someone who has been coming here for 20 years to say, ‘I want to switch now.’ They’re comfortable where they are.”
• What he likes most about the project: “The decks are great; the pool areas are really fun. As a guest, this is the kind of place I’d like to come to. If you’re in the northeast and you want to get away but you don’t want to get on an airplane, this is the type of place that you’d want to come to.”