$2.4 billion flop: Atlantic City’s Revel closes after 2 years
The Revel Casino Hotel in hard-hit Atlantic City, N.J., shuts down after only two years; how did that happen?
The Associated Press
ATLANTIC CITY, N.J. —
The most spectacular and costly failure in Atlantic City’s 36-year history of casino gambling began to play out Monday when the $2.4 billion Revel Casino Hotel emptied its hotel.
Its casino was to close early Tuesday morning.
Revel is shutting down a little over two years after opening with high hopes of revitalizing Atlantic City’s struggling gambling market.
But mired in its second bankruptcy in two years, Revel has been unable to find anyone willing to buy the property and keep it open as a casino. It has never turned a profit.
“It’s kind of sad,” said Andrew Tannenbaum, of Edison, who has stayed at Revel a dozen times in the past year. “Compared to other casinos, this was a lot nicer.”
Revel will be the second of three Atlantic City casinos to close in a two-week span. The Showboat Casino Hotel closed its doors Sunday, and Trump Plaza is closing Sept. 16.As a result, the Atlantic City region is on the brink of a short-term economic disaster.
Thirty-six years ago, Atlantic City opened the first legal casinos in the United States outside Las Vegas.
Now, casino employment — which for years exceeded the number of city residents — is dropping precipitously after a decade of steady decline.
The closing of three casinos and the rapid-fire loss of 5,700 jobs, draw comparisons to longer-term collapses of U.S. industries such as steel.
“This is a massive economic body blow to Atlantic City on par with the hit to the national economy during the Great Recession,” said Mark Zandi, chief economist at Moody’s Analytics.
Beyond the thousands of lost jobs, which will spread into related industries and the general economy, Atlantic City will soon be left with four empty buildings (including the closed Atlantic Club) that have no clear future.
“What we’ve got in Atlantic City is unprecedented. It hasn’t happened before in this type of context, where they are going to shutter them up and literally can’t give them away for pennies on the dollar, like Revel,” said Alan Silver, a former casino-industry executive who teaches at Ohio University in Athens, Ohio.
So what killed Revel?
Analysts and competitors say it was hampered by bad business decisions and a fundamental misunderstanding of the Atlantic City casino customer.
“The timing of it could not have been worse,” said Mark Juliano, president of Sands Bethlehem in Pennsylvania and the former CEO of Trump Entertainment Resorts in Atlantic City. “The financial climate while Revel was developing and when it opened were completely different.”
Revel officials declined to comment.
The casino broke ground just before the Great Recession. It ran out of money halfway through construction and had to drop its plans for a second hotel tower while scrambling for the remaining $1 billion or so it needed to finish the project. When it opened in April 2012, it was so laden with debt that it couldn’t bring in enough revenue to cover it.
The idea behind Revel was to open a totally different resort, a seaside pleasure palace that just happened to have a casino as one of its features.
That included Atlantic City’s only total smoking ban, which alienated many gamblers; the lack of a buffet and daily bus trips to and from the casino; and the absence of a players’ club. By the time those decisions were reversed, it was already too late. High room and restaurant prices hurt, too.
Customers found Revel’s design off-putting as well, said Joe Lupo, senior vice president of the Borgata, whose upscale market Revel appeared to target.
Entering from the Boardwalk, they had to take a vertiginous escalator up four flights to reach the casino floor.
Once there, the property wound around a circular pattern instead of the linear layout of most other casinos.
Revel still hopes to find a buyer for the property after it has ceased to operate as a casino.
Material from The Philadelphia Inquirer is included in this report.