Closures will leave A.C. short of hotel rooms for conventions

Posted: August 30, 2014

ATLANTIC CITY - With gambling's decline, this financially ailing resort city is going after convention business big time.

But there may be another wrinkle in its projected transformation into a nongaming mecca: room availability.

The four casino closures this year - including the 801-room Atlantic Club, shut in January - will take about 4,400 hotel rooms out of the market, about a fourth of the city's inventory.

Atlantic City will be left with 13,436 rooms by mid-September after Showboat (1,329 rooms), Revel (1,399) and Trump Plaza (906) all close in the next three weeks.

"The available inventory will shrink by 20 percent, so the existing operators have to contribute more rooms if we are going after the mega-city-wide conventions," said Jim Wood, chief executive of the new Meet AC entity, created to boost conventions and meetings. "They will have to provide a larger room block."

The remaining rooms won't be nearly enough to go after large-scale conventions, say industry experts. Of the 13,436 rooms available after the closures, about 8,000 will be made available for conventions, according to Wood.

The majority of the remaining rooms are "comped," given away to the casinos' most avid gamblers - reflective of the resort's heavy dependency on gaming revenue for well over three decades.

By comparison, Center City Philadelphia has 11,400 rooms and Baltimore about 10,000, to cite two markets with which Atlantic City competes for convention business.

The Atlantic City Convention and Visitors Bureau has not kept statistics to track conventions and meetings. Private, nonprofit Meet AC, created in late June with a staff of 26 salespeople, is tasked with marketing the Atlantic City Convention Center, Boardwalk Hall and meeting spaces in the casinos.

To make up for the city's room shortage, tourism officials say the resort could tap other non-casino hotels for rooms, including the Sheraton Atlantic City Convention Center Hotel, the Courtyard by Marriott, the Chelsea and the Claridge, as well as hotels in the Atlantic City area, such as the 270-room Stockton Seaview Hotel & Golf Club in Galloway.

But convention and meeting planners prefer housing delegates in hotels in close proximity, instead of having them spread out.

"There's less costs involved with a compact hotel package," Danielle Cohn, spokeswoman for the Philadelphia Convention and Visitors Bureau, said in an e-mail Thursday. "It's easier for delegates to get to and from meetings and events, plus it creates an energy in the city like no other."

The Atlantic City Alliance, the city's chief marketing agency, supports the meeting, group, and convention segment with a $4 million subsidy program that can be used by Meet AC and the casino sales teams to draw new business to Atlantic City through 2016.

The goal for Atlantic City, according to John Palmieri, head of the Casino Reinvestment Development Authority, which oversees Meet AC, is to add 250,000 group nights over the next five years - or roughly 50,000 new room nights every year, from 2015 to 2020.

Palmieri said during a conference call this week that he was "encouraged by strong room nights and spending this summer."

He cited the $126 million Harrah's Waterfront Conference Center, which will open in August 2015 next to Harrah's Hotel Casino in the Marina District, as an example of the resort's renewed emphasis on attracting conventions and meetings.

Getting more of them to come to Atlantic City has been given lip service for years. Gov. Christie, in announcing his five-year revitalization plan for the resort in summer 2010, listed doubling conventions over the next five years as a key goal.

But conventions and meetings make up less than 10 percent of the city's revenue, and gaming and lodging experts say the casino closures will only make attracting conventions more difficult.

The $2.4 billion Revel, which closes its 1,399-room hotel on Monday, was a key piece in the city's quest to become a convention destination. Before Revel's April 2012 opening, it was heavily marketed as a "casino convention hotel."

"Revel's original business plan was predicated, at least in part, on further penetration of more sizable convention business in Atlantic City," said Michael Paladino, senior director of gaming, lodging, and leisure for Fitch Ratings in New York City. "A main reason that was unsuccessful is due to the city's limited hotel room inventory relative to other convention destinations.

"Removing hotel rooms from the market is not going to help further penetrate convention business," Paladino said. "Historically, it was difficult to get stand-alone hotel developers to commit to the market without gaming because of the lack of non-gaming economic activity.

"Now, there is too much gaming supply, and we're seeing a contraction to help that supply become more balanced relative to the current demand environment," he said. "These dynamics seem to be factors that will make it more difficult to attract larger-scale conventions to A.C."

Showboat closes at 4 p.m. Sunday; the Revel hotel closes Monday and the casino Tuesday; and Trump Plaza closes Sept. 16, leaving eight operating casinos in the city.

Even the timing of Wood's hiring was precarious. He was brought in from Kentucky, where he was president and chief executive of the Louisville Convention and Visitors Bureau, on June 30 - four days after Showboat announced it was closing by summer's end and two weeks after Revel declared bankruptcy for the second time.

He said he knows the challenges.

"We're targeting midweek convention business," he said. "That is where the need is for our hotels, and our job is to fill that slot. The gaming market is still very strong for the weekends."

Wood said the resort was going mostly after conventions that require from 2,000 to 3,000 rooms.

"Weather is not the issue for [increasing] midweek business," Wood said. "There has not been as strong an emphasis on the meetings market in A.C. Today there is a greater emphasis as the destination continues to diversify its offerings.

"This year is a speed bump. Once we get past it, we can really move forward and ignite the city into a dynamic destination."

But the head of the local casino union said he fears the casino industry was making moves counter to where the resort's future lies.

"It's unsettling," Bob McDevitt, the head of Unite Here Local 54, said of the casino closures that will cost his membership nearly 6,500 jobs. "The CRDA needs a plan to go after conventions. . . . We need to grow nongaming" business.

"You can't turn a city around with conventions if you are taking room stock from Showboat, Revel, and Trump Plaza."


sparmley@phillynews.com

856-779-3928 @SuzParmley

comments powered by Disqus
|
|
|
|
|