As recently as last February, it was unclear if Revel would ever open. But after a $261 million pledge from New Jersey, investors stepped in and revived the abandoned development. If it opens as scheduled in May it will be the first new casino here since the Borgata in 2003 — and probably, analysts say, the last project of this scale for the foreseeable future in Atlantic City, where gambling revenue is down to about $3.1 billion from its peak in 2006, when the casinos took in $5.2 billion.
The Revel’s supporters hope the 6.3-million-square-foot resort will usher in a new era for Atlantic City, one modeled after Las Vegas-style entertainment. Revel intends to cater to a younger, well-heeled clientele looking for a lavish weekend getaway that focuses less on gambling and more on fine dining, luxury spas and lavish nightclubs, as the Borgata does.
“It’s going to be a game-changer,” said Jeffrey Vasser, the president of the Atlantic City Convention and Visitors Authority. “It’s going to reach a whole new group of folks who haven’t been to Atlantic City in a very, very long time, if at all.”
The risk, however, is that the resort will not bring new visitors to Atlantic City but instead drain traffic from the casinos already here.
“When you have additional capacity in a saturated market, that doesn’t bode well for a market that is already losing customers,” said Michael Paladino, a gambling analyst at Fitch, whose report speculated that at least one Atlantic City casino would fold because of Revel.
Deborah Howlett, the president of New Jersey Policy Perspective, an advocacy group that opposes state financing of Revel, said: “There was a reason that the private sector wasn’t stepping up. If they believed there was an opportunity to make money, they would have funded this.”
If not for state support, there is little doubt that Revel would still be a vacant, 47-story glass and steel shell sitting on the beach. Morgan Stanley, the original investor, walked away from the development in April 2010, deciding that a $1.4 billion loss was a better alternative to finishing the project.
Kevin DeSanctis, Revel’s chief executive, was unable to secure new financing until the state stepped in last Feb. 1 with a $261 million tax credit and a pledge from Gov. Chris Christie, a Republican, to invest in the flailing tourism industry.
Within days, investors got in line behind the project and delivered $1.1 billion needed to finish it.
“The tax credit showed Wall Street that the State of New Jersey was going to stand behind Atlantic City,” Mr. DeSanctis said. “It was a huge boost in financing, and I think it would have been very difficult to do without it.”
Atlantic City has been in decline since 2006, when Pennsylvania opened its first casino, beginning a slow bleed of gamblers that have never returned. With rival casinos opening in Connecticut, Delaware, Maryland and upstate New York, there is little Atlantic City can do to stop the loss of its primary customer: the so-called comp guest who gambles, eats at the hotel buffet and stays free.
Hurt by the recession, gambling revenue was down nationally 1.7 percent in 2008 and 3.5 percent in 2009, according to PricewaterhouseCoopers. By 2010, the national decline had largely stopped and revenue edged up 0.2 percent, to $57.5 billion. The company says the positive trend will probably continue, with 2015 revenue projected to be $73.3 billion.
In Atlantic City, by contrast, revenue fell by 6.3 percent in November from the same time last year, according to the state. And the numbers will most likely get worse. PricewaterhouseCoopers predicted in a December report that Atlantic City would be the only market in the country to continue to lose gambling revenue into 2015, with revenue falling to $2.8 billion, a 46 percent drop from its 2006 peak.
Pennsylvania is expected to generate $2.27 billion in revenue in 2011, a 20 percent jump from last year, according to a report by Fitch Ratings.
With Atlantic City’s comp guests and day-trippers largely gone for good, Revel hopes to lure regional conferences and wealthy, younger vacationers.
“That is just significant untapped potential,” said Mr. DeSanctis, who projects that 14,000 guests will stream through the resort’s facilities every day.
Visitors entering the Revel will not step into a casino but into a striking hotel lobby with 140-foot ceilings and ocean vistas. The theatrical gambling floor has vibrant red carpeting, curved wooden chandeliers and a dance club in the center. The company restricted photographs of the rooms, which have panoramic ocean views.
Article source: http://feeds.nytimes.com/click.phdo?i=a97ed0e57ba207ea5664a7751dbe2ae3
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