Atlantic City casino profits down 8 % in second quarter

The dismal profit figures were offset, if only slightly, by news that more visitors are staying overnight in casino hotels, according to room figures also released by the DGE.

Gross operating profits for the resort’s casinos totaled us$ 136.3 million, down from us$ 149 million in the second quarter of 2010 and down from us$ 192.5 million during the same time in 2009. At its peak in 2006, the casinos reported second quarter gross operating profits of us$ 355.9 million.

Roger Gros, publisher of Global Gaming Business Magazine, said last Friday’s profit numbers reflected the continued effect of table games in Pennsylvania casinos, which began in July 2010. He said other effects are the lingering recession and the new hotel that opened at Sands Casino Resort Bethlehem.

“It’s no surprise here,” Gros said. “Atlantic City still is lacking that catalyst that is going to spur growth going forward.” He said that the expected opening of the Revel casino project would be a catalyst, as would the future Hard Rock project, but more catalysts would be needed in the future. “Atlantic City’s business model is in the process of evolving,” he said.

At the same time, the occupancy rate in the city’s casino hotels in the second quarter rose slightly, from 85 % in the second quarter of 2010 to 87 % in the same quarter 2011. It continued a trend of slowly rising occupancy levels, which were at 85 % in 2009.

Occupancy rates were a positive sign, said Jeffrey Vassar, executive director for the Atlantic City Convention and Visitors Authority, who said “most markets would kill for occupancy levels in the 80s.”

This showed people are continuing to come to Atlantic City, and for the shopping and entertainment rather than only gambling. “We have to focus on the positive, and that is a strong indicator that Atlantic City is becoming that well-rounded destination that we want it to be,” Vassar said.

Bally’s Atlantic City and Caesars Atlantic City had the highest occupancy rates, each at almost 96 percent. Bally’s earned $81.72 on average per room night, while Caesars took in us$ 104.53. ACH, formerly the Atlantic City Hilton, which reported 67 % occupancy, was the only hotel reporting occupancy less than 70 %. ACH’s u$ 65.22 average per room night was also the city’s cheapest.

At us$ 135.05 per room night, Borgata Hotel Casino & Spa held the highest per-room figure, with an 87 % occupancy rate.

The casinos remained mostly profitable, although ACH, Resorts Casino Hotel and Tropicana Casino and Resort reported losses. Resorts did the worst, reporting more than us$ 5.7 million in losses in the second quarter, up from more than us$ 3.8 million in losses in 2010. ACH lost us$ 3.5 million, while Tropicana Casino and Resort lost nearly us$ 1.3 million.

Borgata remained the resort’s most profitable casino, earning us$ 40 million, although profits were down 10 %. Harrah’s Resort was second, with us$ 30.7 million in profit and Caesars Atlantic City was third, at us$ 24.9 million.

Gross operating profit reflects earnings before interest, taxes, depreciation and other items. It is a widely accepted measure of profitability in the gaming industry.