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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

New leadership hopes to revitalize Revel in Atlantic City

20 May 2013

ATLANTIC CITY, New Jersey -- The opening of the $2.4 billion Revel Casino Resort on the northern end of the Boardwalk in April 2012 was one of the most anticipated events in the market since 2003, when the Borgata was unveiled.

Revel, with 1,898 hotel rooms, a 130,000-square-foot casino, 14 restaurants from award-winning chefs, indoor and outdoor pools and gardens, a 32,000-square-foot spa, nightclubs, theaters, retail and a smoke-free environment, was viewed as a market game changer.

The state awarded the resort a tax incentive of $261 million and tax rebates over a 20-year period.

Atlantic City insiders hoped the glimmering 47-story hotel-casino would revive the community by attracting new customers to the Boardwalk and bringing back players who migrated to new casinos in other states. Analysts hoped it wouldn’t cannibalize the competition.

Within eight months, however, Revel was in trouble.

The casino’s futuristic design was criticized and the property’s layout was deemed confusing. Both the hotel lobby and gaming space are midtower, above the Boardwalk. High-end play didn’t materialize at the casino’s 130 table games, while 2,400 slot machines sat idle.

The property had an operating loss of $110 million at year’s end, and Revel is one of the city’s worst-performing casinos. In April, Revel collected $8.1 million in gaming revenues. Only Trump Plaza, at $6 million, took in less.

In March, Revel filed a pre-packaged Chapter 11 bankruptcy in New Jersey.

Last Monday, a judge approved the restructuring plan, which gives 82 percent ownership stake to the property’s lenders in return for canceling $1.2 billion in debt. It also provides new money for it to operate. On Wednesday, state gaming regulators signed off on the deal.

Revel employs 3,300 workers directly; another 1,300 work for the property’s restaurants and shops.

Prior to the bankruptcy filing, consultant Jeff Hartmann, a former CEO of Connecticut’s Mohegan Sun resort who advised Revel’s lenders, was named interim CEO.

Since that time Hartmann has been living at Revel and developing a new strategy to move the casino forward in time for summer. Last week Las Vegas-based Fine Point Group was hired to oversee activities related to marketing.

“I am confident that we can develop new marketing initiatives that contribute to our growth and improved financial performance,” Hartmann said in a statement.

In an interview last month, Hartmann said Revel’s revenues and expenses didn’t support its capital structure. The bankruptcy would “right-size” Revel’s balance sheet.

Hartmann said Revel’s business model would shift to “a dynamic, new seven-day programming” to encourage more midweek visits.

“As we seek new avenues to drive business growth, we are excited to introduce a number of new amenities and special offers that will better cater to our gaming audience,” Hartmann said. “For a meeting planner, this is a perfect destination.”

As a new property, Revel must build a customer base in a challenged market.

“Clearly, we need to grow revenues,” Hartmann said. “I think the breadth of amenities allows us to draw from a great reach.”

Atlantic City gaming and tourism leaders said they’re hopeful Revel’s fortunes will change. New Jersey Casino Control Commission Chairman Matthew Levinson, who must approve the reorganization, said Hartmann’s Mohegan Sun experience is a plus for the Boardwalk.

“He’s got a game plan that we all expect to work,” Levinson said. “We all want to see it succeed.”

Even the competition is cheering for Revel’s recovery. Tropicana Atlantic City President Tony Rodio, who also serves as the president of the Casino Association of New Jersey, the industry’s lobbying arm, said all the operators were hoping Revel would help improve the market, and that a Revel recovery is important to Atlantic City.

“We were hoping that the gaming revenues would go from declines to improvement,” Rodio said. “Kind of like ‘rising tides lift all ships.’ That just hasn’t been the case.”