Atlantic City 2018 Casino Profits Still Lag Last Year

Atlantic City 2018 casino profits still lag last year DAVID DANZIS Staff Writer ATLANTIC CITY — Casino operating profits and net revenue bounced back in the second quarter of 2018, but year-to-date numbers were all down through the first six months of the year. After seeing operating profits drop nearly 12 percent and net revenue dip 3 percent in the first quarter of 2018 compared to last year, the resort’s casino industry had increases in both areas for the year’s second quarter, according to a report released Wednesday by the state Division of Gaming Enforcement. The full effect of the late-June openings of Hard Rock Hotel & Casino Atlantic City and Ocean Resort Casino are not seen in Wednesday’s release, said Bob Ambrose, a professor of casino management at Fairleigh Dickinson University and a gaming consultant. “As the changes continue in Atlantic City, I want to see a true year-over-year analysis to judge the impact of the two new properties, as well as how collectively the industry in Atlantic City has met both citywide resort competition and the surrounding eastern region,” Ambrose said. Gross operating profits for Atlantic City’s casino industry in the second quarter, which includes April, May and June, were $171.4 million, an increase of 1.6 percent from the same quarter in 2017, when that figure was $168.7 million. For the first six months of 2018, gross operating profits were $294.5 million, a 4.6 percent decrease from the $308.6 million reported for the same period last year. The $694 million reported in net revenue for the second quarter of 2018 is up 2.4 percent from the $678 million for the same period in 2017. Through the first six months of this year, the net revenue of $1.302 billion was down slightly from last year’s $1.306 billion. David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas, said the year-to-date decreases in operating profits and net revenue were “not what anyone wants to see.” But Schwartz said there were positives in the second-quarter report, including that five of the casinos that were open in 2017 increased their gross operating profit. Bally’s Atlantic City, Golden Nugget Atlantic City, Harrah’s Resort Atlantic City, Resorts Casino Hotel and Tropicana Atlantic City all saw increases in gross operating profit for the second quarter of 2018 compared to 2017. Resorts, which celebrated its 40th anniversary May 26, realized a nearly 64 percent increase in operating profits over 2017’s second quarter. Borgata Hotel Casino & Spa, the market’s most profitable property, saw double-digit decreases in gross operating profit for both the second quarter (-20.6 percent) and the first half of 2018 (-23.7 percent) compared to last year. Schwartz said the falling numbers may indicate Borgata’s “unopposed run at the top of the city could be coming to an end.” The June 27 openings of Hard Rock and Ocean Resort added an additional 3,689 hotel rooms in the resort. However, the occupancy rate for both the second quarter and the first six months of 2018 decreased compared to comparable periods in 2017. For the first half of this year, the casino hotel occupancy rate was 81.4 percent, which represents a 4.4 percent decrease from last year’s 85.8 percent. In the second quarter of 2017, the occupancy rate was 90.3 percent, compared with this year’s 84.8 percent. One positive note for the first half of 2018 compared to last year is that average rate per occupied room increased significantly. For the second quarter of 2018, the average rate was $136.01 compared with last year’s $107.43. Through the first half of 2018, the average was $129.23, while the average for the first six months of 2017 was $105.56. Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University, said the strong numbers for hotel rooms’ average daily rate translated to an increase in revenue per available room, a primary indicator of the industry’s strength. RevPAR is calculated by multiplying a hotel’s average daily room rate by its occupancy rate. “Hotel operations realized a RevPAR of $115.34 for the quarter and $105.19 for the year-to-date, a significant increase over 2017 with $97.01 and $90.57, respectively,” Pandit said. “These large increases in RevPAR clearly indicate a strong and healthy lodging demand.” Third-party sales were down 0.8 percent to $88.8 million through the first six months of 2018. .

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