Meeting market demand
Experts hope group, convention business can rescue Atlantic City
As gaming revenue continues to dwindle, industry leaders and advocates in Atlantic City say the resort's future will depend on attracting group business. And though two of the city's biggest conferences were canceled this month, stakeholders are pointing to new signs of interest that could lay the groundwork for that growth — including the possible development of a new conference center.
The Atlantic City Convention Center has been buoyed by "the strongest summer we've ever had," said Jeff Vasser, president of the Atlantic City Convention and Visitors Authority. From July through September, the facility hosted 19 shows that resulted in 12,208 room nights — a 131 percent jump from last year, according to ACCVA data.
And that's particularly good news, he said, because "usually, people don't book conventions this time of year in Atlantic City, in the summer, because everybody looks at how much higher room rates are."
While room nights for conventions are down 13 percent for the 12 months ended October, he said the 15-year-old facility "is on pace to have a great year." Bookings through the end of the calendar year project a 13 percent increase in room nights from 2011, along with an 11 percent rise in convention attendees.
The positive trends have softened the blow dealt to the resort early this month when its two largest conference holders — the New Jersey Education Association and the League of Municipalities — canceled their events in the wake of Hurricane Sandy.
Whether a strong summer spills over to Atlantic City's 12 casino properties will become clearer this week, when regulators release their third-quarter financial report for the industry. The report will highlight nongaming revenue, hotel occupancy rates and other data not specifically tied to gaming.
Also this week, the Casino Reinvestment Development Authority is to vote on whether to finance a plan to build a new conference center alongside Harrah's Resort Atlantic City. Caesars Entertainment, which owns Harrah's, faced doubts when it presented the $134 million project last month, as CRDA board members voiced concerns about diverting business from the convention center and hotels.
But Kevin Ortzman, a senior vice president with Caesars, said the venue would bring in a segment that does not currently exist, while "introducing the business traveler" to Atlantic City. He said the 240,000-square-foot project, to include 100,000 square feet of flexible meeting space, will target corporate events like product launches and training sessions, while the convention center serves massive trade shows and associations.
Ortzman also noted the large concentration of Fortune 500 companies in the Northeast, especially in New Jersey, New York and Pennsylvania.
"Today, when they hold their meetings, they go to Dallas, Orlando, Nashville (and) Las Vegas. They don't even consider the Northeast," said Ortzman, who is general manager of Bally's and Showboat, also Caesars properties. "We believe this facility will meet their needs, and they'll consider hosting an event in their backyard."
Vasser has thrown his support behind the project, saying it would fill a void for corporate events too big for hotel ballrooms and too small for the Atlantic City Convention Center, which has 500,000 square feet of exhibit space.
The resort was in the spotlight for the event industry in August, when the newly opened Revel hosted a conference called the Elite Meetings Alliance. The three-day, semiannual meeting, organized by a California-based company, brought together more than 200 corporate planners and venue operators looking to book group business.
It was the first time Atlantic City hosted the event, said John Washko, vice president for sales and marketing at Elite Meetings International. He said the city "had fallen off to some degree" in the event industry, but the company believed Revel would generate excitement after the city had gone nine years without a new venue.
"That in and of itself said something — that the destination isn't growing, it isn't expanding," Washko said. "And planners look for that. They like the bright, new, shiny apple out there."
With a larger stock of hotel rooms, the resort is better equipped to build its group business than in years past, said Ed Spotts, an instructor at Temple University's School of Tourism and Hospitality. When the Borgata opened in 2003, the city had about 14,200 rooms, according to state data. The city now has around 18,500, following expansions at several properties and Revel's opening in April.
"There was always that conversation … that this is something that's viable," said Spotts, a 27-year casino industry veteran, referring to group business. "But then it always came down to making sure we had the capacity of hotel rooms."
Equally important, Vasser said, is that casino operators now "have more of an appetite for the group market" as they look to replace casual midweek gamblers lost to other markets. Even during the summer, operators are now willing to offer packages of room rates that are attractive to event planners, he said.
Convention and meeting planners also are now benefiting from the nonprofit Atlantic City Alliance, the casino-funded marketing group established last year, Vasser said. Efforts like the group's widespread "Do AC" marketing campaign have created a new source of recognition for the resort, creating new leads and enthusiasm among event buyers.
"The consumer advertising was something we couldn't do before," Vasser said. "We just didn't have the budget for it, so by having them do that … we can put all of those resources into the convention sales side."
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