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Atlantic City still seen as little threat



Printer Friendly VersionPost a CommentTell a Friend about this Article06 August 2005
As reported by: Las Vegas Review Journal
Atlantic City is undergoing a renaissance that city fathers say represents a new dawn, but which industry experts say will leave the Mid-Atlantic destination an isolated regional market in a dynamic world of casino developments.

While Atlantic City's new-found interest in younger, high roller and nongaming customers mirrors the Strip, industry experts also said the East Coast city poses no threat to Nevada, and could give Las Vegas a marginal boost.

Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, said historically Atlantic City has been seen as a threat to the gaming market here.

However, time has proven that Atlantic City has a distinct and separate customer base, even with today's effort to broaden its appeal, he said.

Goldman Sachs analyst Steve Kent said nongaming development is everywhere in Atlantic City today, from the beach bars, to restaurants, to shopping areas.

New projects include the House of Blues, a "Vegas-style" nightspot, modeled on its sister at Mandalay Bay; the Havana-themed Quarter at Tropicana; the Pier at Caesars which apes the Forum Shops here; the Borgata expansion; and plans for new towers at Atlantic City resorts.

"These amenities are definitely drawing in a more diverse, younger and affluent crowd which should result in sustained growth," he said.

But even that poses a challenge, however, as management works to avoid alienating its core older customer base, Kent said.

In addition, he said promotions and discounts, rather than quality resorts and amenities, still reign supreme in capturing customers for Atlantic City.

And nearly every casino is adding table games, specifically poker, which may pressure margins unless volumes and nongaming revenue offset this, Kent said.

"But all Atlantic City is doing is penetrating its existing drive-in market deeper even though it's moving away from targeting just casino customers," he said.

Despite the summer trends to-date, a Goldman Sachs investor advisory released Thursday rated the performance of Atlantic City as a whole no better than "OK."

Schwer said even the newest developments leave Atlantic City largely dependent on daily bus arrivals of value-oriented customers from New York City.

Younger customers, who are likely to spend more freely, may substitute their spending from casinos to other concerns, but there is unlikely to be much crossover with Las Vegas, he said.


Article By: Las Vegas Review Journal

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