A.C. has been open for business, but business is weak

A.C. has been open for business, but business is weak

The Boardwalk , seen here from North Carolina Avenue, was deserted before Hurricane Sandy's arrival. GREGG KOHL / For The Inquirer

Suzette Parmley, Inquirer Staff Writer

Posted: Sunday, November 11, 2012

 

ATLANTIC CITY - To all appearances, the physical damage inflicted here by Hurricane Sandy was minimal. The casino towers are intact. At night, their lights still line up like pearls strung on a necklace.
 

But the storm and its aftermath could prove more damaging financially than had been anticipated for the Shore resort as it attempts to re-brand itself as more than just a place to gamble.

Driving through town last week, one could easily see the lingering effects of Sandy's tour de force: Dunes in front of the Boardwalk were leveled. Restaurants along Atlantic Avenue were missing signs. Shoppers were few at the downtown outdoor mall called the Walk.

But perhaps most telling was this: Parking garages at the dozen gaming palaces were virtually empty, though the casinos had reopened days earlier, having escaped serious structural damage along with much of the Boardwalk.

"I haven't seen any buses," said Tropicana cage cashier Barbara Popek, 55, a 24-year veteran of the gambling floor. "A lot of them come from New York. I've seen none this week."

Twice before, Atlantic City had been shut down: for two days in the summer of 2006, during a budget impasse in Trenton that sent so-called nonessential state employees, including gaming inspectors, home; and for three days last year, because of Hurricane Irene.

Both times, the gamblers returned immediately. With Sandy, it's been different.

Nearly half of Atlantic City's customers come in from North Jersey and New York, where many are preoccupied with rebuilding their homes and their lives right now. Complicating matters are gasoline shortages, power outages, and closed roadways in hard-hit areas.

The financial hit comes at a particularly vulnerable time for Atlantic City, which hopes for a renaissance with help from the new state-run tourism district. TV ads have been running in New York, Philadelphia, and Baltimore since mid-April, selling the resort's shopping, dining, and nightlife as part of a $30 million-a-year re-branding campaign.

That's by necessity: Relying solely on gamblers has become a dead end. Casino revenue here has plummeted nearly $2 billion over the last six years because of new casinos in Pennsylvania and other nearby states.
How much of a setback Sandy poses to that transformation remains to be seen.

"We need to recalibrate," Atlantic City Alliance president Liza Cartmell said Nov. 2 behind Boardwalk Hall, just hours after Gov. Christie lifted his evacuation order and reopened the resort to visitors. "We have many great things that are happening in Atlantic City. We're moving full steam ahead."

That could be seen Friday, as the alliance unveiled a $3 million public art project, Artlantic, on schedule. Sandy spared the art-installation sites, former vacant lots along the Boardwalk that were eyesores.

"Resilience is part of our character," Atlantic City Mayor Lorenzo Langford said. "When we get knocked down, we always get back up."

But that could take a while, given still-fresh TV images of pieces of the Boardwalk toppling into the ocean (in the Inlet area, away from the casinos) and flooded streets.

"The thing we are finding from our customers and my counterparts is that so many are under the impression that Atlantic City was devastated," Tropicana CEO Tony Rodio, president of the Casino Association of New Jersey, said Friday. "Nothing is further from the truth. It is an absolutely gorgeous day out here today. I'm looking out at the Boardwalk. It is intact."

Figures released Friday by the state Division of Gaming Enforcement showed total gambling revenue down nearly 20 percent compared with October 2011, mainly because of the closures brought by Sandy. Every casino reported a revenue hit. Rodio estimated that the casinos collectively lost an average of $5 million per day Oct. 28 to Nov. 2.

Wall Street gaming analysts and credit-rating agencies such as Moody's are predicting Atlantic City's total losses could be substantial, putting already-struggling casinos like Revel on even shakier financial footing.

"In the big picture, the hurricane should not thwart Atlantic City's efforts to attract new patrons and position itself as a destination entertainment resort," said Joe Weinert, senior vice president of Linwood, N.J.-based Spectrum Gaming Group L.L.C. "There will be short-term pain, both from the actual casino closures and the notion that visitors should stay away while the city recovers."

When Hurricane Katrina hit the Gulf Coast in 2005, Weinert noted, it either badly damaged or destroyed almost every casino in Biloxi and Gulfport, Miss. But one year later, he said, the Gulf Coast reported its highest gross gaming revenues.

"Physically, Atlantic City will bounce back much faster than Biloxi/Gulfport, but its obvious challenge remains dealing with the severe impacts of regional gaming competition, which continues to grow," Weinert said.

It's been a painfully slow return for the $3.3 billion industry so far. Even the typically packed Borgata, Atlantic City's top grossing casino, sat empty most of last week, as did the other 11 venues.

For the casinos' 36,000 employees, many of whom rely on tips for their living, it's been devastating.
Don Marrandino, Eastern Division president at Caesars Entertainment Inc., which owns four casinos here, explained the trickle-down economics of Sandy's punch:

"Tourism down here is our number-one economic driver. The guy that makes the bread, the linen company that washes the sheets, and food suppliers are not doing as well because there is less occupancy until we get recovered."

Almost all of the casinos have set up fund drives and relief events for their employees. Some have set up temporary housing for those who lost their homes to the storm. (Tropicana's Popek, whose home in Little Egg Harbor Township was flooded, went back to work for the first time Tuesday.)

As the lone player at a Caribbean Stud Poker table at the Borgata on Wednesday, Bob Dickinson, 61, of Bergen County, was an anomaly. He said his three brothers and a sister, who also live in Bergen County, still had no power.

"I was hit really hard," said Dickinson, a retiree who had a huge tree land in his swimming pool. "My neighbors still don't have power. I came down here to fill up on gas, and also because I promised my 84-year-old mother I'd take her to Atlantic City."

Mother and son stayed overnight Tuesday at the Borgata. They ended up staying Wednesday, too, when the nor'easter made driving home difficult.

"Atlantic City is really having a hard time," Dickinson said, surveying the empty tables around him. "Hopefully, it can get past this."



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