The New Jersey Division of Gambling Enforcement released the Q4 2018 report on Monday, and there is plenty of data to sift through.
Revenue, operating profits, hotel occupancy, and room rates are just some of the data laid bare in the reporting. And because it provides a year-end synopsis, the fourth quarter report is the most anticipated.
Here’s what the latest report tells us about the Atlantic City casino market.
Revenue and profits go in opposite directions
When it comes to revenue and operating profits, 2018 was a mixed bag for Atlantic City casinos.
The market saw net revenue grow from $2.7 billion in 2017 to $2.9 billion in 2018. That’s an increase of 7.5%.
At the same time, gross operating profits decreased by 15.4% in 2018. AC casinos pocketed $688.6 million in gross operating profits in 2017, but only $582.6 million in 2018.
But not every casino experienced a decline:
- Bally’s AC: -5.7%
- Borgata: -18.8%
- Caesars: -15.4%
- Golden Nugget: 12.5%
- Hard Rock: N/A
- Harrah’s: -6.5%
- Ocean Resort: N/A
- Resorts Casino: -2.7%
- Tropicana: 1.4%
It appears Hard Rock and Ocean (larger, swankier properties) are poaching some of Borgata’s higher-end customers.
More hotel rooms cause occupancy rate to fall
Things were just like Jekyll and Hyde on the hotel side.
With the addition of the two new casinos, room inventory increased by 25%. The 15,000 rooms were the most in the market since 2014.
A lot of those rooms went unoccupied. Occupancy rates decreased by 6.2%. But, as seen in the chart below, 2017 was a severe outlier on that front, so 2018 occupancy is in line with other years.
What might be a little surprising is the lower occupancy rate didn’t have a negative effect on room rates.
Casinos benefit from higher room rates
The average price of a room at Atlantic City casinos ballooned from $108.35 to $137.03 year-over-year.
So what does that tell us?
On average, the number of occupied rooms in Atlantic City was at its highest level since 2014:
- 2014: 14,303
- 2015: 10,873
- 2016: 11,038
- 2017: 9,819
- 2018: 12,234
And since the average room rate increased by more than 30%, the average daily haul from hotel rooms rose by 35% Y/Y.
- 2014: $1.442 million
- 2015: $1.117 million
- 2016: $1.166 million
- 2017: $1.063 million
- 2018: $1.676 million