Revel to File for Chapter 11 Bankruptcy
By Deanna Ting
February 20, 2013
opened in Atlantic City in April 2012, many thought of the casino resort as a true “game changer” for Atlantic City
. Revel was the first new resort to open since the Borgata Hotel Casino & Spa in 2003. Today the 1,898-room resort -- which cost $2.4 billion to build, and which received more than $260 million in New Jersey state tax reimbursements -- announced that it will file for Chapter 11 bankruptcy protection late next month, only 11 months after opening.
The voluntary, prepackaged bankruptcy filing is expected to eliminate approximately two-thirds of Revel’s
$1.5-billion debt by converting more than $1 billion of that amount into equity for lenders. Revel expects to complete the restructuring by early summer.
In a press statement released today, Revel CEO Kevin DeSanctis said that the restructuring will give the resort more flexibility in the future. “Today’s announcement is a positive step for Revel,” said DeSanctis. “The agreement we have reached with our lenders will ensure that the hundreds of thousands of guests who visit Revel every year will continue to enjoy a signature Revel experience in our world-class facility.”
In that same statement, the resort announced that it will continue business operations as usual, and does not expect the restructuring to impact any of its guests, employees, or vendors. There will not be any layoffs.
Regarding the resort’s meetings business, Maureen Siman, executive director of public relations for Revel, told Successful Meetings “Revel’s announcement to reduce its debt through a restructuring will not have any impact on Revel’s meeting business and the services our resort provides. This announcement will have no impact on current or future bookings for groups.”
She added, “During this process we will continue to operate our beachfront destination as usual, and are fully committed to providing the highest quality experience for our guests. All services, dining, scheduled entertainment, programming and events will move forward without change or interruption.”
Earlier this year, in an article published in the February 2013 issue of Successful Meetings
, DeSanctis said
that although Revel saw growth in the leisure and group markets, it had yet to see strong revenues in the gaming sector. In January, Revel saw only $8 million in revenue from gaming, and reported an operating loss of $37 million during last year’s third quarter. Prior to today’s announcement, the company had also recently obtained $150 million in new financing.
Revel’s financial troubles have raised larger questions about the strength of Atlantic City’s tourism and hospitality industry, especially because so many industry leaders saw Revel as a pivotal addition to the city’s casino resorts. Revel was marketed as “a lifestyle resort with a casino,” meant to change travelers’ perceptions of Atlantic City
as merely a gaming destination.
Today’s announcement is not the first challenge that the resort has faced. The project ran out of money during the economic recession in 2009, and was forced to stop construction halfway through. It was finally completed in 2011, thanks to state tax breaks.
In some ways, Revel’s financial struggles mirror struggles faced by Atlantic City as a whole. Many of the city's casino resorts have filed for bankruptcy, including Trump Entertainment Resorts and the Tropicana Resort in 2010. Atlantic City has also had to combat widespread misconceptions that it suffered major damage following Hurricane Sandy last fall.
Gary Musich, vice president of sales for the Atlantic City Convention & Visitors Authority, remains optimistic -- especially with regard to meetings business. “I don’t think [Revel’s debt restructuring] will have any impact whatsoever,” he told Successful Meetings. “I think it’s simply a debt restructuring and it’s not going to affect services at the property or have any impact on any current services, future groups, or the destination as a whole.”
He adds, “Customers currently using Revel will not see any change. It’s a spectacular property without any question, and a property like that just adds to the growing and improving product in Atlantic City that is broadening to all markets.”
Musich says that despite the challenges faced in the aftermath of Hurricane Sandy, Atlantic City saw growth in its meetings, conventions, and trade show market for the fourth straight year in 2012, and anticipates double-digit growth for 2013. It is also aggressively marketing a $1-million promotion and incentive program for meeting planners. He says that investment in the city continues to grow in the form of new developments.
“Atlantic City is recovering,” says Musich. “We’re drawing new visitors and new entertainment and incredible restaurants. It’s maturing as a destination and is still a great place to do business.”
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