The approval of a 150-room hotel and conference center near Atlantic City International Airport and the projected 2011 opening of a $2.6-billion, 3,800-room beachfront resort with 150,000 square feet of meeting space can help cushion Atlantic City's meetings market from the economic recession while allowing the city to host more large groups.
"Different meeting and convention segments in Atlantic City are doing better than others," said Gary Musich, vice president of the Atlantic City Convention and Visitors Authority and the Atlantic City Convention Center. "The corporate market, for example, is down, while government meetings and conventions are up a bit. Room nights in Atlantic City were down just 4 percent last year from the year before, and convention center business was flat," he said, noting hotel occupancies are running between 82 and 83 percent, down from 97 percent in 2004 and down 10 percentage points in the past 18 months.
In addition to a flexible buyer's hotel market, exemplified by food and beverage deals, nonexistent attrition clauses, in some cases, and a drop in average rates across the board, Musich said, Atlantic City has invested in non-gaming entities, such as restaurants and retail outlets, that he credits with bringing attendees to town and keeping them there longer.
"Atlantic City wants meeting business 24/7, 12 months a year, so much so that we opened a bookings office in Manhattan in January 2010 because we saw demand," Musich said.
In conjunction, the city grew its non-casino rooms inventory by 18 percent in 2008, and the average length of stay for groups now is three days, Musich said.
"We see pent-up demand short-term, with 2011 through 2013 bookings looking good, but it will be a few years before we get back to the traditional buying cycle," he said. When it does, meeting buyers will find new supply, including the airport property, which would have 6,000 square feet of meeting space and which Argus Development Corp. has until mid-2012 to build, and Revel Entertainment Group's massive beachfront project with two 1,900-room towers. "A $2 billion-plus project says Atlantic City is still growing," Musich said.
Dorothea Heck, director of Atlantic City-based destination management company Destination A.C., has noted an uptick in inquiries for meetings and conventions so far this year, after a decline last year.
"While it hasn't been an explosion, it's coming back steadily as we in this city find new ways to work together," she said. "We saw a 15 to 17 percent decline in 2009 in the meetings and trade shows we plan through our parent company, D. Lawrence Planners LLC, although there were more than 50,000 attendees, a recent record, for the New Jersey Education Association show we do. We definitely saw a decline in our destination management business also, where we got hit pretty hard in the area of ancillary services because nobody wanted anything extra."
Heck called the last-minute demand with very short lead times she sees, as she did in 2009, a "major disconcerting factor."
Planners still have flexibility on price, Heck said, but cautioned that they could find themselves out of luck if they continue to ask for too much. "We had some clients make unreasonable demands of the hotels in 2009, but none of us can afford to operate at a loss," she said.
Barbara Flamenbaum, president and owner of Ventnor, N.J.-based meetings management firm Atlantic City Ambassador, also has witnessed last-minute bookings and the move to spend less, driven by tighter budgets and the so-called AIG effect.
"Groups are booking fewer recreational programs, but more educational and business related activities, as they spend less on meetings and because they don't want to be perceived as spending foolishly, even though they may have the money to do more on both the business and fun-related sides," said Flamenbaum, who said she is working more through e-mail and the Internet to stimulate business.
With less demand and more supply, Atlantic City's hotels and event venues are very open to working with groups of all sizes, she said.
Originally published Feb. 15, 2010