Revel gets a rave review

Deutsche Bank‘s Carlo Santarelli took a jaunt down to Atlantic City to check out Revel, the biggest noise on the Boardwalk in almost a decade. He thought … well, let him tell it: “From the check in reception area, complete with pool, foosball, and air hockey tables and an expansive lounge seating area, to the signature restaurants with New York and Philadelphia appeal, nightclubs, and a large outdoor elevated pool deck overlooking the Boardwalk and ocean, we were thoroughly impressed.”

He goes on to forecast significant first-time visitation spurred by Revel, which he believes will outperform the rest of the market (even Borgata, whose F&B department was raided by the newcomer) in terms of “fair share” of casino revenue. To compare: Borgata currently has 13% of the total casino inventory. Revel’s 160 tables and 2,450 slots will give it 9%. Even with that numerical disadvantage, Santarelli predicts it will overachieve and — if the market grows just a little bit — Revel will eat everybody else’s lunch to the tune of a 10%-12% revenue decline.

In other words, Revel’s rising tide will lift one boat: Revel. Borgata is forecast to slip 5.5%-7%, offsetting Revel by recruiting customers who wish to “trade up” from properties like Caesars Atlantic City, Trump Taj Mahal and Harrah’s Marina. Even so, Boyd Gaming‘s cash flow from its cash cow is expected to take a 20% hit. “Four properties continue to run EBITDA negative,” Santarelli writes, “something which will be further compromised going forward.” In other words, Dead casinos walking.

Surrender monkeys. At least one casino has already hoisted the white flag. Santarelli spotted a billboard for the Taj boasting of $99 rooms and “great views of Revel.” He charitably described it as “somewhat ironic and humorous,” although “pathetic and desperate” was the phrase that came to my mind. Revel’s loyalty program has its pros and cons: It isn’t tiered but comps are expected to accrue faster than average. Revel management also has customer-service staff prowling the gaming floor, recruiting as many players as possible.

Although Santarelli demotes Borgata to “a clear [second],” he softens the blow by indicating that no other casino in Atlantic City is in shouting distance of it or Revel. Even so — and despite some erosion caused by Resorts World New York — he projects revenue gains in March for the Golden Nugget and Harrah’s. At present, only Harrah’s, Caesars,  Borgata and the Taj bring in more than their fair share of casino dollars. Resorts Atlantic City is the worst underperformer, -40%. Time to thin out that 2,125-machine slot floor, methinks.

Revel’s $240-$390 room rates appear to be predominantly (if not entirely) a function of limited inventory: 500 of them. When the other 1,400 hit the market by Memorial Day, expect a big, downward “Whoosh!” to follow shortly thereafter, especially with operators in the market expecting little midweek oomph even in a post-Revel climate.

In other respects, Revel sounds ominously like an $2.4 billion, East Coast version of The Cosmopolitan of Las Vegas. “While the decor of the property is sure to resonate with the high end gaming patron,” chronicles Santarelli, “the lingering question for us is whether it will appeal to the primary ‘mass’ customer. Given the property is expected to cater to [young nightclubbers], we question whether the traditional AC day tripping slot customer will find the environment appealing.” He likens it to Showboat customers abandoning ship when Caesars Entertainment repositioned around House of Blues. Then again, did any of us realistically expect Revel to draw the “grind gaming customer”? If it weren’t for them, rust buckets like Colony Capital‘s ACH would have already ceased to exist. And if ACH or Trump Plaza goes away, the slot fleas will migrate one step up, to the Tropicana Atlantic City or Resorts.

However, by targeting a non-gambling sort of customer, Revel may be missing the boat much in the manner that the Cosmo did. (Revel’s “soft” opening is described more as a “sparse” one.) Also, Revel is “billed as a property where gaming is one of several secondary attractions.” Hmmmmm …

Sound like anybody we know? I wonder what @JohnUnwinning would make of this?

Biggest loser: Decades of storied history at NBC-TV came crashing to an all-time nadir last Sunday night when the Peacock devoted its entire prime-time bloc to the monkeyshines of casino pitchman Donald Trump and his vile offspring. Trump’s lasting contribution to Atlantic City was to obstruct and delay Steve Wynn‘s return to the marketplace, an achievement for which few are likely to thank the hopeless buffoon.