Sandy takes toll on Atlantic City casino business

ATLANTIC CITY, N.J. - November 13, 2012

The city's 12 casinos had to close due to the storm for between five to seven days in late October and early November. Even after they reopened, business has slowed considerably.

The Atlantic Club turned to layoffs to help deal with the downturn. The two Trump casinos are making salaried workers take a week of unpaid time off, and barring hourly workers from using vacation days for time they were off during the storm.

Moody's Investors Service predicts Atlantic City casino revenue could be down 25 percent for the next six months and earnings down 40 to 50 percent over that same period due to the storm. By contrast, casino companies outside New Jersey should see less than a 2 percent impact to their business through the first quarter of 2013, the firm said.

Tony Rodio, president of the Casino Association of New Jersey as well as the Tropicana Casino and Resort, said the storm hurt business levels at each of the 12 casinos.

"I think it's going to take a few months before we get back to normal because of the impact to the homes and businesses of our customers," he said. "But it's not as bad as it could have been. When you think about the long-term viability of Atlantic City and what we're trying to do in terms of become a destination market, if there had been major storm damage to the casinos, that would have been an impact that would have lasted for years. But that didn't happen."

The Atlantic Club laid off 80 workers, although three-quarters of those were seasonal jobs that would have ended anyway a bit later in the year. The storm forced the casino to end them earlier than it otherwise would have, chief operating officer Michael Frawley said.

"It's a challenge," he said. "Our main feeder markets have been crippled, and it's going to take a long time for them to come back. We had to react in order to preserve the business."

Trump Entertainment Resorts, which owns the Trump Taj Mahal Casino Resort and Trump Plaza Hotel and Casino, is making its salaried workers take a week of unpaid leave, cutting back the schedules of hourly workers, and preventing them from using vacation days to get paid for time they were away from work due to the storm. Company CEO Robert Griffin said the moves should save the company $10 million to $12 million, which it will need in the post-Sandy world.

"Post-storm business is off significantly," he said. "October was a bad month; November is even worse."

The first week after the storm saw business decline by 50 percent, he said.

Griffin said the company called virtually all its regular customers and invited them to come back after the storm. Two-thirds of them said they wanted to but didn't have gasoline to drive here, and the remaining third said they thought Atlantic City was devastated by the storm, when the reality is the casinos and the Boardwalk in front of them came through unscathed, Griffin said.

He said now that gasoline is becoming more widely available (New Jersey's rationing plan ended Tuesday morning), customers are slowly starting to return.

Gary Van Hettiga, president of Resorts Casino Hotel, said business has been down by more than 20 percent since the storm.

"We obviously lost millions and will continue to lose millions," he said. "We don't know when things are going to get back to normal. A lot of our customers have been severely impacted, so our concern is for them."

Don Marrandino, eastern division president of Caesars Entertainment Inc. which owns four of Atlantic City's 12 casinos, also said post-storm business is off, but slowly returning.

Hotel occupancy percentage is in the 60s compared with the 80s this time of year at Harrah's Resort Atlantic City; Caesars Atlantic City; Bally's Atlantic City and the Showboat Casino Hotel. Marrandino said the casinos are scheduling about 20 percent less staff in the aftermath of the storm.

"It's a double-whammy: the start of a slower season combined with a big impact to our feeder markets," Marrandino said. "But we're trying to be fair to our employees and to keep people working. We paid our employees for some of the days they were out."

One casino has actually gained some business because of the storm. The Golden Nugget Atlantic City has seen its hotel occupancy rate increase by 4 percent over last year due to the influx of Red Cross and utility workers staying there.

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