Every year, Atlantic City looks for an economic uptick as summer arrives.
Yet while the New Jersey Division of Gaming Enforcement noted a slight year-over-year increase in NJ gambling revenue during the second quarter of 2024, hotel occupancy actually dipped, albeit by a similar small percentage.
And according to Jane Bokunewicz, the data released by the DGE “is less encouraging” than what Atlantic City casinos may have hoped.
“Despite respectable performance in the first and second quarters, net revenue gaints did not translate into GOP [gross operating profit] growth,” the faculty director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism (LIGHT) at the Stockton University School of Business said in a statement.
“GOP is down nearly 5% for the first half of the year despite a 1.5% increase in total net revenue for the same period.”
Atlantic City no longer a ‘dream vacation’ destination?
Earlier this month, the DGE released revenue figures for Atlantic City casinos in July, during which properties combined for just $272.3 million. While it represented an 11% month-to-month increase form June, that total still stands as the industry’s lowest July since 2018.
In a statement shortly thereafter, James Plousis, chairman of the Casino Control Commission, emphasized that July’s figures “did not keep pace in comparison to recent years, partly due to a calendar with fewer weekend days.
“It fared better over a longer range, ranking as the fifth-best casino win for the month of July in eleven years. July’s slot machine win ranked third over the same eleven-year period.”
“While many were hopeful that the summer of 2024 for Atlantic City casinos would see a rebound in drive-in visitors after last year’s trend of people taking their ‘dream vacation’ and flying to destinations,” Bokunewicz said, “the July in-person gaming numbers suggest that is not the case.”
Bokunewicz added:
“Record-high volumes of passengers traveling through US airports this year (as reported by the TSA) might suggest that more people are choosing fly-to destinations for their vacations compared to drive-to destinations or even ‘staycations.’ This would be a reversal or more likely a rebound of recent trends that have favored drive-to destinations as the result of some travelers’ post-pandemic reluctance to fly. This favoring of drive-to destinations likely boosted Atlantic City’s revenues in 2023 and 2022 compared to previous years.”
Nongaming offerings could help turn around Atlantic City
Overall in the second quarter this year, according to the DGE, casino licensees in New Jersey reported a net revenue of $829.8 million, just 1.3% better than the same quarter in 2023. Gross operating profit, though, dipped by the same percentage to $178.4 million.
Through six months, the DGE said, net revenue is ahead of the two-quarter pace from a year ago at $1.6 billion while gross operating profit clocked in at $333.8 million, a 4.9% decrease from 2023.
Bokunewicz did mention that the second quarter exceeded pre-pandemic levels when considering inflation and increased labor costs. And perhaps, she added, Atlantic City is trending upward.
“Continuing a trend in the growing importance of nongaming sources to Atlantic City operators’ revenue mix, nongaming contributions in second quarter 2024, at $416.1 million, compared favorably to the same period in 2023 ($399.7 million) and 2022 ($374.2 million). Nongaming operations contributed 50.1% of total net revenue in second quarter 2024, 47% in 2023 and 44% in 2022.
“This may be an encouraging sign that the city is expanding its tourism offerings in a way that may help it keep pace with regional competitors in the future.”
