Atlantic City Looks to Reinvent in Face of Collapsing Casino Industry
July 14, 2014
After being hit hard by increased competition with legalized gambling proliferating throughout the East Coast, Atlantic City, N.J., which used to be one of the very few places to play the slots or tables in the U.S., is going through a major reinvention. The past few weeks have been filled with tough news for the city, with the storied Showboat Casino slated for closure, as well as the just-announced Trump Hotel and Casino and the possibility of the two-year-old, $2.4 billion Revel casino property as well, if it doesn’t find a buyer. “The fact is that Atlantic City is a destination in transition,” said Don Guardian, the city’s mayor. He added, “Atlantic City, which used to be one of only two U.S. jurisdictions with legalized casino gaming, is currently in the midst of an aggressive, multi-year effort to broaden its appeal among non-gamers.” Casinos popped up in several nearby states, such as Delaware, Pennsylvania and Connecticut, and led to the demise of the Atlantic City industry, as people shifted to places closer to home. To stem the tide, though, city officials said there is a continued effort underway that started with state legislation passed a few years ago that has helped to not only shift the reliance on gaming revenue to non-gaming revenue with restaurants, hotels and entertainment options, but also tap more into the meetings and conventions market. Even with the casino closures piling up and several thousand people losing their jobs, nongaming revenue has steadily risen, giving hope to a city once dependent on gambling. “In Atlantic County, non-gaming revenues have increased by $240 million, from $4.72 billion in 2010 to $4.96 billion in 2013,” said Casino Reinvestment Development Authority (CRDA) Executive Director John Palmieri. He added, “Within Atlantic City, non-gaming revenues have increased by more than $160 million in just the last two years and are now approaching $1 billion annually.” The CRDA has attracted more than $700 million in capital investment, with more than $290 million in process, to continue to grow the market’s non-gaming amenities, Palmieri said. The meetings and conventions market represents a possible untapped goldmine for the city as well. Currently, the city’s group occupancy rate at hotels hovers around 6 percent, while the national average in other cities is nearer to 25 percent, according to Liza. Even with the low numbers, there have been successes. Since 2009, group bookings at the core group travel properties has grown from 274,000 room nights to more than 361,000 room nights – an increase of more than 22 percent. As part of an effort to draw in more groups, the city recently formed Meet AC, a new convention sales organization. “We spun off the sales functionality from the CDRA,” said Atlantic City Alliance CEO Liza Cartmell. “We’re looking to grow (the meetings and conventions) business.” Meet AC also recruited Jim Wood, who used to head the Louisville Convention & Visitors Bureau, to lead the Atlantic City team. “(He) has a very successful record of (bringing groups to) Louisville,” Cartmell said. The city also is getting more convention and meetings space, with Caesars Entertainment, the largest casino operator in Atlantic City, investing $126 million in a new, state-of-the-art convention center at its Harrah’s property in the Marina District. In addition, venue management firm Global Spectrum was brought in to oversee the Greater Atlantic City Convention Center and Historic Boardwalk Hall in the beginning of this year. Guardian admitted that Atlantic City had put all of their “eggs into one basket, and now we know how foolish that was.” He also warned that the city’s transition would not happen overnight, “but as we continue to diversify our offerings, attract new investment, maximize our material assets and identify new and innovative ways to promote our differentiating characteristics, Atlantic City will grow stronger and stand taller for having experienced its recent challenges.”
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