Revel can be fixed, casino analysts, executives and officials say
Posted: Thursday, March 14, 2013 2:30 am | Updated: 6:44 am, Thu Mar 14, 2013.
Revel-New Management
Revel Casino in Atlantic City, Wednesday March 13, 2013. Revel has replaced it's CEO, Kevin DeSanctis, with Jeffrey Hartmann, the former head of Mohegan Sun, who takes over the reins as interim chief executive officer.That’s the belief of analysts, casino executives and political leaders. Although they said Revel’s problems are serious, they are not insurmountable.
They also predicted that the $2.4 billion luxury megaresort may yet fulfill its promise to expand the Atlantic City market now that new management has taken over.
Revel made a series of missteps, including pursuing a marketing strategy that may have overlooked or outright ignored key segments of the city’s customer base, analysts noted.
State Sen. Jim Whelan, D-Atlantic, said Revel had the misfortune of opening at a time when the economy soured and competition from casinos in surrounding states became much more intense.
“With the economy and the national competition, it clearly turned out that it wasn’t the best time to open a megaresort casino,” Whelan said. “I think everybody would acknowledge, including Kevin, that the performance was not what was wanted.”
Whelan was referring to Kevin DeSanctis, the CEO who built Revel but stepped down Wednesday in a management shake-up. Jeffrey Hartmann, a 20-year veteran of the casino, hospitality and leisure industry, has taken charge as Revel’s interim CEO.
Whelan credited DeSanctis with scraping together the financing to complete Revel after it temporarily ran out of money in 2010 and stood as a half-finished hulk overlooking the Boardwalk.
“Personally, I think we have to acknowledge that if not for Kevin and his tenacity, this project would not have been completed,” Whelan said. “It probably would have sat there as a half-completed monument to futility.”
Under DeSanctis’ leadership, Revel touted itself as a resort first and a casino second, an image that was supposed to appeal to high-end customers who would stay overnight and spend money in the casino’s upscale restaurants, nightclubs and retail shops.
At the same time, Revel shunned the day-tripping bus customers and imposed a smoking ban, a move that may have turned off the hardcore gamblers who are considered the bread and butter of the Atlantic City marketplace.
Michael Pollock, a casino analyst, said Revel may have failed to connect with customers on several levels, including the well-heeled resort crowd, even though the property itself is a dazzling, oceanfront attraction.
“While it may be the case that they were overfocused on resort customers, they may not have been able to provide the message that resonated with those customers,” said Pollock, managing director of Spectrum Gaming Group, a Linwood-based casino consulting firm.
Still, Pollock said he believes Revel’s problems can be corrected. He said Hartmann will bring a fresh perspective and new ideas to Revel as it moves forward.
“All of these issues are addressable,” Pollock said. “Anyone looking at Revel would clearly conclude that this is a world-class property. That’s one area where there is no dispute. That remains its greatest potential. The other greatest potential is that the customer base that Revel sought was not a mirage. It is out there.”
The next step is for Revel to seek bankruptcy protection as part of an agreement with its creditors to restructure its $1.5 billion in debt. A bankruptcy filing is expected in the coming days.
When it opened in April, Revel was hailed as “a game-changer” — a property that would single-handedly reinvigorate the depressed Atlantic City casino market. It brought style and sophistication to a Boardwalk better known for T-shirt shops, cheap souvenir stands and pizzerias.
Even Revel’s competitors acknowledge its importance to the market. Despite casino’s financial difficulties, the industry is banking on Revel to lead a revival in city tourism.
“I think it’s important for Atlantic City that Revel is successful. To that end, we’re hopeful that Revel improves its results and does what it was supposed to do for Atlantic City, which is to grow the market,” said Tony Rodio, CEO of Tropicana Casino and Resort and president of the Casino Association of New Jersey, a trade group for the city’s gambling industry.
State Senate President Stephen Sweeney, a frequent critic of Revel’s management and finances in recent months, characterized the leadership switch as the first step in the casino’s recovery.
“I believe this change is for the best. Clearly, what was going on at Revel was not working,” said Sweeney, D-Salem, Gloucester, Cumberland. “A change in leadership will hopefully spur greater success there. As I’ve said before, the bottom line is that we have to make Revel work, because it is too important to Atlantic City and the surrounding area.”
Mayor Lorenzo Langford expressed regret that DeSanctis is leaving Revel. Langford said it is simply too early to predict what will ultimately happen with the casino.
“I enjoyed my time working with Kevin. I wish him well. I think he did the best job he could under the circumstances,” Langford said. “As to the future of Revel, only time will tell.”
Whelan said Revel is likely to be the last new casino, large or small, built in Atlantic City for years to come. However, he is counting on the existing casinos to continue investing in the city, building bigger and better attractions to fuel tourism.
“I don’t think there’s any question that we’re not going to see a new casino for some time, boutique or otherwise,” said Whelan, a former Atlantic City mayor. “The hope is that we will see ongoing investment at the existing properties.”
“That’s the market we’ll have to follow for the next several years, until the market proves that it can support the hundreds of millions of dollars of investment that a new casino would involve,” he said.
http://www.pressofatlanticcity.com/news/top_three/revel-can-be-fixed-casino-analysts-executives-and-officials-say/article_dd32a27c-8c47-11e2-9683-0019bb2963f4.html
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