Gaming numbers down, but destination focus paying dividends

Atlantic City seeing some success from Revel’s model, which aims to create Las Vegas-style resort that doesn’t rely solely on gaming revenue to bring in crowds.”Different properties have different business models. Caesars still has a very large percentage of total revenue from gambling — and Caesars will still focus on gambling — while Revel has major entertainment revenue,” said Israel Posner, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton College. “The fact that they all have casinos doesn’t mean they mix amenities and marketing in the same way, so you can’t assume everyone is willing to decrease gambling to increase their nongaming percentages.”

Excluding Revel, industry-wide net revenue fell 8.1 percent in the second quarter of the 2012 compared to the previous year, according to a report by the state Division of Gaming Enforcement. However, a 13.3 percent spike in revenue from rooms, food and beverage, retail and entertainment — 11.5 percent of which was attributed to Revel — offset the loss in gaming revenue, since including Revel in the data yielded a significantly smaller 1.7 percent decrease in net revenue.

Though a spokesman for the Atlantic City Alliance said it’s unclear how much of an impact the “Do AC” campaign had on the data — since it launched at the start of the second quarter of the year — he noted it has “certainly expanded upon what the casinos themselves do to market nongaming activities.”

“Our job is marketing the overall destination, not just marketing particular properties. But we work with each independently to ensure our objectives align with theirs,” the spokesman said. “With the Rock of Ages experience at Caesars we’re marketing through social media right now, it’s a real mixture between branding Atlantic City as a destination and shining a spotlight on what the casinos have to offer.”

While the spokesman said the casinos “get a lot of the attention,” he noted the goal is to increase revenues for all of Atlantic City, including retail shops and entertainment venues.

“The nongaming component of revenue has been increasing steadily in Atlantic City for the last 10 years. Right now, it’s at 20 percent citywide, but a decade ago, it was half that,” Posner said. “I think that percentage is going to continue to increase, and it has been, since Revel has been ramping up their nongaming revenues to around 40 percent of their total revenue. I don’t think Atlantic City will be any different than the Las Vegas strip — which was once known for gambling, but is now known as a retail, entertainment and gaming destination. … Atlantic City as a whole is definitely becoming that.”