|By Suzette Parmley, The Philadelphia
InquirerMcClatchy-Tribune Regional News
Aug. 11, 2012--ATLANTIC CITY -- For a luxurious $2.4 billion casino that was supposed to grow the market and bring in scores of new tourists, Revel has fallen way short.
Hopes of turning things around for this sluggish resort faded with Revel's disappointing casino revenue released on Friday: It generated $17.5 million in July, and the threat of an early bankruptcy has increased, according to industry observers and gaming analysts.
July revenue figures from the New Jersey Division of Gaming Enforcement showed Revel placed eighth among the dozen casinos here -- just slightly better than the tiny Atlantic Club, Golden Nugget, Resorts and Trump Plaza.
The overall Atlantic City gaming market, which had hitched its fortunes to Revel, remains in trouble. Every property reported a revenue decrease, from 30 percent at Bally's to 0.6 percent at Tropicana. Among the reasons cited were having one less weekend than July 2011 and the Fourth of July falling midweek this year. Total casino revenue for the seaside resort last month was $308.2 million, down 9.5 percent from a year ago.
The $17.5 million that Revel generated from its slot machines and table games was a tad better than the $14.9 million it made in June, but still significantly below the $25 million to $30 million per month that Wall Street projected that it needs to stay solvent and pay its bonds.
Market-leading Borgata generated $54 million last month.
"With the number less than $20 million, I would say unless Revel can dramatically increase their gaming revenue, it will be hard for them to generate free cash flow and therefore, make their debt service payments," said Andrew Zarnett of Deutsche Bank AG. "More revenue generation is needed, and time is running out as summer is nearly over."
Revel chairman and chief executive Kevin DeSanctis put a positive spin on what has become an increasingly grim story.
"Two months after our premiere, we are continuing to see steady increases in our business volumes across both our gaming and non-gaming segments," DeSanctis said in a statement. "Taking a step back, we have built a great product, our operations are improving, and we remain confident our economic model will result in significant value creation for our stakeholders."
He said the $17.5 million in gambling revenue in July was up 17 percent from June; non-gaming revenue from food and beverage, rooms, nightclubs, and retail was up 15 percent; occupied room nights were up 27 percent; and average occupancy was up from 58 percent to 71 percent in the casino's 1,800-room hotel.
But casino revenue pays the bonds, and Revel has some hefty interest payments coming up in the fall. Gaming analysts have said it needed to generate big numbers over the summer -- A.C.'s peak season -- to help shoulder it through the long winter.
"They are just not making any money right now," said one analyst, who asked not to be identified. "In one of the biggest months, they are not even close."
Revel -- the first all-nonsmoking casino in Atlantic City and the only one without a buffet -- also placed eighth among the 12 casinos in April, May, and June. The casino made $13.9 million in total gambling revenue in May and $13.5 million in April.
Revel was viewed as a critical piece in a strategy to sell the seaside resort as a non-gaming destination, with its celebrity-chef restaurants, retail galleria, giant spa, and 10 pools.
Of its $2.4 billion price, Gov. Christie provided $261 million in state tax credits in 2011 toward its development and called Revel "crucial for Atlantic City's future."
The Republican governor is behind a five-year state-run overhaul of Atlantic City -- backed by the Legislature -- in which a new tourism district was created, and a half-decade-long, $30 million-a-year marketing campaign to tout the resort is underway. Christie declined comment Friday on Revel.
But Assemblyman John Amodeo (R., Atlantic) said Revel "is an absolute, integral part of our plan and focus with the new tourism district, marketing effort and deregulation of the casino industry in Atlantic City."
Other casino operators are anxious.
"We were expecting better and everyone was hoping for better," said Joe Lupo, senior vice president of operations at the Borgata.
The Atlantic City gambling market is taking a beating from regional competition. July marked the one-year anniversary of the arrival of table games to Pennsylvania.
Contact Suzette Parmley at 215-854-2594 or firstname.lastname@example.org.
(c)2012 The Philadelphia Inquirer
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