Casino Employment, Occupancy, And Room Rates Bode Well For Atlantic City

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atlantic city new jersey gambling

The health of Atlantic City, and particularly the Atlantic City casino market is always a hotly debated topic.

In recent years the news has been trending more positive particularly on the online gambling front, but the optimistic analysis always comes with caveats.

David Danzis of the Press of Atlantic City summed up Atlantic City’s 2018 thusly:

“In 2018, Atlantic City saw a 4 percent uptick in vehicle traffic, a 3.6 percent increase in employment, an 8 percent increase in annual gaming revenue and more than $243 million in taxes and fees collected by the state.”

Danzis went on to note that some of these numbers are likely artificially inflated:

Revenue is an easy-to-digest way to measure the success/failure of the AC casino market, which makes these non-revenue metrics easy to overlook.

That being said, when measuring performance and trying to project into the future, elements such as employment, hotel occupancy, and room rates can tell us just as much as a revenue report.

Casino employment

Casino employment is largely dependent on the number of operational casinos in the Atlantic City market — a number that has fluctuated quite a bit over the last five or so years.

The simple answer is more casinos equals more employment.

Even though employment more or less trends up and down with the number of casinos at the macro level, there are other factors at play at the micro level.

As the next chart shows, in Q2 2014, the market boasted 11 casinos (several of which were struggling) with roughly 2,900 employees per casino.

In Q2 2018, the market had been whittled down to nine casinos, but employment grew to 3,300 employees per casino.

As easy as it is to assign any recent employment gains to the two new casino properties, some of those gains are due to casinos employing more people than they have in the past.

Profitable casinos hire more employees.

Occupancy and room rates are another sign of health

Like employment, the number of Atlantic City hotel rooms increased with the addition of Hard Rock AC and Ocean Resort Casino.

Not surprisingly, the addition of a couple thousand rooms led to a decline in overall occupancy rates of AC casinos.

That might seem like a negative, but hotels are often less efficient and profitable when occupancy rates exceed 85 percent. Atlantic City was approaching 100 percent in the busier summer months of 2017.

Essentially, Atlantic City casinos were sold out and needed the additional room inventory of Hard Rock and Ocean Resort casino to get back to optimal occupancy levels.

The beneficial nature of the occupancy rate decline can be seen in the next chart, which looks at average room rate: a number that was trending up for several years but skyrocketed in 2018.

The average room rate in Q3 has risen by more than $42 since 2014 ($109.25 to $151.66), after a sharp spike in 2018.

Suffice it to say, Atlantic City casinos seem to have found the sweet spot when it comes to occupancy vis-à-vis room rates.

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Steve Ruddock

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Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus is the developing legal and legislative picture for regulated US online poker and gambling.

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