In the most inevitable headline of 2013, Revel has — brace yourselves — filed for bankruptcy. It will become the latest in a long string of casinos that are owned and run by banks: Two-thirds of outstanding debt will be converted to equity in the property, although I doubt that two-thirds of Revel is worth a billion dollars anymore. The best news: “no layoffs are planned.” The most depressing news? “Existing management will remain in place.” That’s because Revel’s new owners are the same financiers who installed the hapless Kevin DeSanctis as chief restructuring officer, er, I mean as CEO. Throwing good money after bad, Revel lenders will fling another $45 million into this bottomless money pit. If Revel has to keep borrowing in order to pay the electric bill, there are some folks in the executive suite who damn well ought to be held accountable for this mess. Bringing in “hired gun” managerial talent would be preferable to keeping the architects of this calamity on the job.
The Associated Press‘ Wayne Parry diagnoses the cause of Revel’s near-death experience: “It saw itself not as a casino resort but as a resort that happened to have a casino. But the distinction seemed to have been lost on many customers, who found its restaurants and hotel rooms pricey.” (Those Atlantic City hoteliers who whine about how room rates ought to be raised for the sake of the city’s image can draw a sobering lesson from Revel’s fate.) Back here on the Strip, The Cosmopolitan has been able to keep a weak casino floor in business thanks to strong entertainment and restaurant offerings, and high ADRs, but that formula just didn’t play on the Boardwalk.
Agreed…not a real story; however, with the debt holders, now the equity holders, they probably have the ability to defer debt payments thus providing more flexible financial capacity to improve the product (areas are still unfinished), pay contractors, vendors etc.
Pre-Revel, Kevin was known in the industry as one of the best in the business. I just dont know how he could have given architects full reign in designing this place. There are standard casino resort design failures all over the place. Management has been slow to appropriately managed the resort as well. As we approach its first anniversary, employees are still confused about the place and do not come close to offering the level of service that the big “B” in the market does.
But I wish them well. Designs aside, it is a beautiful resort and has some wonderful amenities.
Indeed it is beautiful in a lot of ways, and the problems could be fairly easily fixed by adding in a lot more ways to get between the various levels of the buildings and some better marketing and ties in. I could see a really natural tie-in with some like either Parx or Cordish given how complimentary what they’re trying to do is.
I hope — strongly hope — that the debt-for-equity swap will make it easier for Revel to stick around long enough to make good on the tax deferment it received from the State of New Jersey. Gov. Christie really stuck out his neck for Revel and DeSanctis’ arrogant bungling was his reward. No smoking? No buffet? No business!
Many of my readers will disagree but I think we’ve seen the last of the “Casino? What casino? Who said we have a casino?” school of casino-resort development. The Cosmo is a *succes d’estime* (critics love it, players avoid it, ROI is weak) and Revel … well, the numbers speak for themselves.
Dave, I could not agree more!
The Atlantic City Press has a story about Caesars having a hard time lining up financing for a new convention center. Does anyone in Atlantic City realize how close they are to chapter 11?
http://www.pressofatlanticcity.com/news/breaking/harrah-s-plans-for-modern-conference-center-slow-to-show/article_cabb2002-7d46-11e2-8b3e-0019bb2963f4.html
Wrong casino in the wrong market at absolutely the wrong time. NEXT!