Oct. 21, 2012--Admirers showered Revel with superlatives when the $2.4 billion luxury megaresort opened in April. Some paid Revel the highest tribute, calling it a game-changer that would revitalize the slumping Atlantic City casino market.

Six months later, the city's would-be savior is viewed dramatically different. Adjectives such as lackluster, disappointing, underwhelming and even abysmal are tossed around.

"Everyone hoped it would be a big lift for the city. People are disappointed," said Bryant Simon, a Temple University history professor and author of the book "Boardwalk of Dreams: Atlantic City and the Fate of Urban America."

Simon, whose book chronicles the city's early rise as a tourist resort, its decline and then its rebirth as a casino haven, said he counted himself as one of the early believers that Revel would rejuvenate the market. Now, he is shocked by its troubles.

"I think that most people who cared about Atlantic City wanted to see that Revel would grow the pie. I don't think that's happened," he said.

Wall Street casino analysts also say Revel has not expanded the market, as once hoped. Instead of being a game-changer, Revel has cannibalized business from other casinos, they maintain. Even in that area, Revel has struggled: Month after month, it has been mired near the bottom of the pack among Atlantic City's 12 casinos in gambling revenue.

"If you look at the numbers, it's obvious it hasn't grown the market," UBS Securities analyst Greg Roselli said of Revel. "They certainly haven't grown the market in terms of gaming revenue."

In his research reports, Deutsche Bank analyst Andrew Zarnett has described Revel's financial performance as "underwhelming." Zarnett has been among the most pessimistic analysts. He says "everybody is a loser" as long as Revel continues to take business from other casinos, especially in a market stuck in its sixth straight year of revenue declines.

Looking back on Revel's start-up period, Simon said he doesn't remember any other Atlantic City casino "that has done so abysmally." Revel's difficulties, he argued, expose the folly of banking on one casino to pull the city out of its economic plight.

"This has been the promise all along -- the promise of local trickle-down economics," Simon said. "It's amazing how often people who cheer for Atlantic City fall for this gambit."

Roselli believes Revel still has the potential to expand the market but cautioned that everyone must remain patient before the casino hits full stride.

"It's a beautiful property and definitely has the potential to have that kind of effect on the market," he said. "Unfortunately, things in Atlantic City are very challenged right now."

When it opened, Revel touted itself as a resort first and a casino second. Its posh surroundings, high-end restaurants and big-name entertainment were supposed to appeal to wealthier customers who wanted far more to do than just gamble.

"We think the future of Revel and, frankly, in many ways the future of Atlantic City, is all about being a more diversified model," said Kevin DeSanctis, Revel's chief executive officer.

However, DeSanctis acknowledges that some mistakes have been made and that now is the time to refine Revel's marketing strategy to focus more on gambling customers.

"Clearly, I had higher expectations from where we are right now," he said. "We just need to do a better job from a gaming perspective."

Overall, DeSanctis said he is pleased with Revel's efforts to attract the conventions and leisure customers who make up other critical elements of the casino's business model. But he stressed that Revel needs to revamp its marketing programs to "reconnect" with gambling customers and boost its revenue.

"If you ask me that question today or ask me that question five years from now, we're never going to be satisfied with our financial performance," DeSanctis said. "We want to do better."

Simon questioned whether Revel may be beyond the reach of typical Atlantic City gambling customers. In trying to distinguish itself as an upscale resort, Revel may have priced itself out of the market, he said.

Theresa Davis, a first-time visitor to Revel last week, complimented the way Revel's architecture embraces the oceanfront location but said the resort seems just too expensive for her.

"I love the fact that they have discovered the ocean, but it appears too high-priced. We looked on Revel's website, and it seems to be a place geared more toward extravagant younger people," said Davis, who said she lives in South Jersey but declined to give her hometown.

Davis complained about prices while pondering the menu at Revel's Central Michel Richard restaurant.

"I'm not getting that," she said of a $30 lobster burger. "That's completely out of my price range."

There has also been debate as to whether Revel's no-smoking policy has scared away business. Revel is the only Atlantic City casino that bans smoking, forcing customers to step outside to light up.

Revel customer Emily Bittenbender puffed on a Marlboro Light while taking a smoking break outside the casino's Boardwalk entrance. Bittenbender, a Hammonton resident who was at Revel last week for a business conference, said she believes some smokers are shunning Revel.

"Honestly, I think a certain segment of the population will not come here because of the no-smoking policy," she said. "I know of people who are going to the other casinos, where they can smoke."

DeSanctis has repeatedly said it is too early to know whether going smoke-free has helped or hurt business. He has been reluctant to blame the no-smoking policy for Revel's lackluster financial performance.

Atlantic City's most recent revenue report shows that Revel took a step backward after months of modest growth. For September, it won just $16.9 million from gamblers, compared with $20 million in August. In April, Revel's slot machines and table games generated $13.4 million in revenue, followed by $13.9 million in May, $14.9 million in June and $17.5 million in July. Each month, Revel has placed eighth in the casino industry for gambling revenue.

"I acknowledge we would all like to see Revel's numbers be a little stronger than they are. We all want them to be stronger moving forward," said state Sen. Jim Whelan , D-Atlantic, a former Atlantic City mayor.

Whelan said he remains encouraged by Revel's progress in the nongambling aspects of its business, including hotel sales and restaurant revenue. Revel used to publicly release data for its nongambling operations each month but stopped in September, saying premature disclosure could violate federal securities regulations governing the casino's bonds.

The next key set of figures for Revel will be contained in the third-quarter profits report released by the New Jersey Division of Gaming Enforcement in mid-November. The report will show the gross operating profits for all of the Atlantic City casinos. It also will give a breakdown of the casinos' hotel occupancy rates, room rates, and food and beverage sales.

Revel suffered a nearly $35.2 million gross operating loss in the second quarter, its first three months in business. For that period, Revel's hotel occupancy rate was just 45 percent, compared with the industry average of 84 percent. Revel's average room rate of $211 per night was more than double the industry average of $101.

Revel has been gradually bringing more hotel rooms online. It now has about 1,400 rooms, about 500 less than the capacity of its 47-story hotel tower. Originally, Revel was supposed to build two towers containing a total of 3,800 rooms.

April's opening was the culmination of an often turbulent five-year development cycle for the project. A 2008 plane crash killed three senior Revel executives. Revel also had to overcome the recession and the withdrawal of its chief financial backer. Revel ran out of money when Wall Street giant Morgan Stanley walked away in 2010, leaving DeSanctis with a half-completed building on his hands.

Yet DeSanctis persisted, securing an additional $1.1 billion in construction financing in February 2011 to finish the project. Gov. Chris Christie took a big gamble on the project by having the New Jersey Economic Development Authority approve $261.4 million in state tax breaks for Revel over a 20-year period, aiding the casino's financing package.

"The worst thing would have been having Revel standing there uncompleted as a monument to our futility," Whelan said while justifying the need for state involvement.

In August, Revel created more breathing space for itself by securing an additional $70 million in financing to help pay its operating costs through 2013. DeSanctis said the extra funding should erase any doubts about the company's financial condition, although questions remain about Revel's ability to pay its bills.

Millions of dollars in construction liens have been filed against Revel by contractors that built the project. David Edelberg, a New Jersey attorney representing Stone Concrete Inc. of Pleasantville, said close to 30 contractors have filed liens since Aug. 1. Revel is also facing older construction liens in the millions of dollars, including a $15 million claim by Stone Concrete.

"I don't think they have the money," Edelberg said of Revel. "I think they have a high debt level. If you're not filling the rooms, and when the monthly figures come out and you're in the back of the pack for casino revenue, it's not enough to pay debt service, let alone the contractors out there."

DeSanctis has been saying for the past two months that Revel will pay contractors everything they are owed, once his company completes a final audit of all construction bills.

"Every one of these trades will be paid a fair amount for the job that was done," DeSanctis said. "We want to pay every dime that is owed, but we don't want to pay one dime more."

Revel, meanwhile, remains locked in a bitter court fight with Stone Concrete over the contractor's claim for payment.

"That particular vendor is a very special case," DeSanctis said. "I wouldn't spend a lot of time listening to that vendor. I think they have zero credibility."

During its construction, Revel was the largest private project in New Jersey. Its glossy, cutting-edge architecture and soaring hotel tower brought raves. At that time, Revel was viewed as a challenger to Borgata Hotel Casino & Spa's supremacy in the Atlantic City market. But six months later, Borgata remains the city's top-grossing casino, while Revel is languishing near the bottom.

The revenue gap between Borgata and Revel remains vast. For September, Borgata had $55.3 million in gambling revenue, compared with Revel's $16.9 million. Joe Lupo, Borgata's senior vice president of operations, said Revel has definitely taken business away from other casinos in town, but in Borgata's case, the amount has been small.

"We expected to maintain the bulk of our base," Lupo said. "We have an aggressive plan in place. We're certainly not going to take our foot off the pedal and ease up."

Borgata was Atlantic City's first Las Vegas-style casino resort when it opened in 2003. Revel is seen as the next generation of ultra-luxe, ultra-hip casinos. Simon, the Temple history professor, said Revel must stabilize its finances and operations before it entertains any aspirations of being the next Borgata.

"It's hard to see how this gets turned around," he said.

Contact Donald Wittkowski:

609-272-7258

[email protected]

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