Now more than ever, who wouldn’t want to get hold of a crystal ball—an accurate one? While there’s been plenty of speculation about the Covid-19 pandemic—how long it will last, how soon businesses will get up and running, how consumers will consume in the post-viral age—the lasting impacts of the contagion will be known only in hindsight.
In the meantime, as part of GGB’s ongoing series of updates on the virus and its impact, we asked Bob Ambrose to share his views on the pandemic, and how it may shape the industry in Atlantic City and environs. A noted hotel and casino consultant, adjunct professor of casino management, and onetime Atlantic City casino executive, Ambrose spoke from his home in New Jersey.
GGB News: At first, we were looking at a brief shutdown for Atlantic City. Now April is a loss, and May is looking questionable. How much can the industry tolerate? And is it important for AC to reopen by summer?
Ambrose: There’s no question that going past 30 days is scary for the entire industry. It’s going to depend on the properties themselves, how they’ve controlled their debt, and whether they’re individually owned. The Mt. Airy Casino in Pennsylvania, for example, is owned by a single entity. For properties that are part of a corporate structure based in another jurisdiction—like MGM or Caesars—that’s a whole different model.
If Atlantic City doesn’t see some summer revenue—worst-case scenario, it’s closed for part of the summer—it’s definitely going to impact not just the properties themselves, but all those suppliers and vendors, and the employees of those suppliers and vendors, and then the community: the local dry cleaner and grocery store.
Hopefully this can be right-sided pretty quickly, but the virus is a moving entity. We’re seeing the worst of it now in New York and North Jersey, but other states could be coming into the pipeline two to three weeks later, so casinos in those jurisdictions will be down longer and coming back online later.
The impact is horrible financially for the entire industry. The outbreak will have a negative impact on tourism for the remainder of 2020 and beyond, both in the U.S. and internationally.
When casinos reopen, could local or regional properties in Pennsylvania and New York grow their markets at the expense of AC?
At least for a time, people may choose to stay closer to their home base, for a smaller, regional casino experience, rather than travel and enter a huge casino property. The smaller properties—I’m thinking Parx, Rivers and those entities on the Pennsylvania side—will benefit, as people think, “I’ll just go out for an hour, do my thing, then go home” instead of driving to the shore.
It’s important to keep in mind that part of the disruption has been people’s income flow. The pipeline of disposable income for travel, gambling and entertainment among the masses will not be flowing as it did in pre-virus days.
Let’s look at online gaming as a potential bright spot. How much was it adding to the revenue pot in AC before the shutdown, and how much has it spiked since?
Atlantic City’s internet gaming had steady growth since legalization in New Jersey in 2013; iGaming saw a 61 percent increase year-over-year in 2019, a revenue total of $482.7 million. I think it’s too early to tell how much it’s activity contributed during the shutdown, but any gaming revenue for a casino during this time is meaningful.
A lot of players are migrating online. Is there a chance they may not return to the casino, because online is more convenient and they’ve grown accustomed to it?
I don’t believe so for the long term. Online gaming has its purpose and some customers do prefer it, and the brick-and-mortar experience is completely different.
In the short term, online may continue to see more of a bump than normal, simply because of a reluctant customer base, people not wanting to return to a crowded environment such as a casino.
What will this crisis do to nongaming, and will the whole resort “ship” be stabilized at once?
The integrated resort experience has grown in product and diversification in recent years, with each segment contributing its own unique experience and financial bottom-line under one property brand umbrella. Many times, these are separate companies within themselves, paying rent and employees apart from the main property host.
A positive note is that in Atlantic City, its hotel/casino properties were in a much stronger financial position headed into the shutdown. The entire model has been disrupted, but the financial way back will be a collective effort, with all parties in it together. The next quarter in gaming and hospitality will be very fluid, and the remainder of 2020 at times could resemble a patchwork quilt on the spread sheet.
The length of the shutdown is unknown, and it’s a huge factor as to what the industry looks like post-virus.
What do you foresee happening as we move into spring and summer?
Casino properties will reopen in stages. Obviously, customer demand will be slow, and we may see jurisdictions limiting the number of people and open areas within the casino environment, restaurants and other venues, mimicking what supermarkets are presently doing.
Casino floor managers have told me they’re looking for ways to redesign sections of their gaming floor, at least in the short term, to create more space between banks of games and individual units. It’s hoped that will make casino patrons feel more comfortable. Perhaps blackjack tables will be limited to three players. All of this is going to be on people minds when the government finally says, “You can go out now.”
There will be some pent-up demand, with people just wanting to be back out in the world. The variable in the equation is how long the industry is shut down, but marketing executives should be developing plans to revamp their summer campaigns, take an additional look at fall, and adjust as necessary.
Do you feel optimistic about the rebirth—again—of Atlantic City?
I’m always impressed with Atlantic City. It amazes me how it always comes back from adversity. Just when you think they’re about to close the Atlantic City Expressway, some little spark happens, and it all comes back to life.
We just saw that in the past couple of years. Properties like Hard Rock and Ocean took a chance, and investors followed, not just on the casino-hotel side, but at the street level. The city as a whole, despite its political issues, had just started to walk again from a steady crawl.
It’s down now, but yes, it’ll come back. The remainder of this year, in terms of projections for the properties, will have to be rewritten. Marketing plans have been scratched. Okay, we don’t like to lose the entire month of April, and this thing may go on even longer, but at least there’s a (tentative reopening) date out there, so marketing can begin to come up with ideas and plans and offers to infuse the flow of the customer base once things get operational.
It’s so important to stay in touch, not just with employees but with customers, letting them all know, “We’re all in the same boat. We want to get back to work and serve you and welcome you to our property.” But it’s going to be a very slow ramp-up. It’s not going to be like flipping a light switch. You’re not going to see a mad dash to the nearest casino.
