Atlantic City hotels offering room-rate deals

ATLANTIC CITY - Supply and demand are way out of whack in this seaside gambling resort this year.

There are too many hotel rooms and not enough guests. The deals show it.

A midweek stay this month at the swanky Borgata Hotel Casino & Spa here will cost you $129, down $50 from a year ago.

For less than half of that - $54 - you can reserve a room at the Ocean Tower at Resorts. At Trump Marina, the fee is $59.

Rooms at the new Chairman Tower at the Trump Taj Mahal are fetching lower midweek prices than the company had expected to get - $119 a night vs. $132.

"The softening economy is basically reducing demand" for rooms, said Andrew Zarnett, a gaming and lodging analyst with Deutsche Bank AG in New York. "That, coupled with added supply, has negatively impacted room rates."

Casino operators in Las Vegas, such as Steve Wynn, are lowering room prices even more as occupancy there has fallen to record lows as people fly less.

Last summer saw a huge growth in Atlantic City hotel rooms as new towers opened at Harrah's Resort (962 rooms), the Borgata (800 rooms) and the Taj Mahal (800 rooms). That's 2,562 rooms.

The new Chelsea, a nongaming boutique hotel next to the Tropicana, added 331 more.

While all was fine in the peak summer months, the picture now is not so good. Winter is generally Atlantic City's slowest time, but the recession has made selling rooms extra challenging.

Consumers are pinching pennies, and casino operators say they have had no choice but to slash room rates like at no other time in recent memory.

In the third quarter of 2008, the average Atlantic City casino room rate was $103.05, down from $111.94 a year earlier, according to the New Jersey Casino Control Commission, which tracks the Atlantic City gambling market.

Average room rates at the three Trump casinos - Trump Marina, Trump Plaza and Taj Mahal - decreased slightly year-over-year in the second half of 2008. The Chairman Tower at the Taj was the casino's first new tower since it opened in 1990.

"Obviously, we have 800 more rooms to fill, and this particularly is the hardest time to do it - right after the holidays and right before Martin Luther King and President's weekend," said Mark Juliano, chief executive officer of Trump Entertainment Resorts Inc., which owns the Trump casinos.

Juliano said he was seeing a new trend emerge in this bad economy.

"One of the things we have noticed is that people are saving up their trips [to Atlantic City] for longer holiday weekends and not visiting as often," he said. "It's making occupancy more difficult at the rate we want it."

Juliano said, for instance, that before the Chairman Tower's debut over Labor Day weekend last year, the company had projected midweek rates of $131 or $132 during the winter months, above the current $119. That $12 to $13 differential really adds up when you multiply it 800 times, he said.

By comparison, a room at the Chairman Tower fetched $179 during midweek last summer.

Analyst Zarnett said rooms were the main driver of revenue for casinos.

December and full-year gambling revenues come out tomorrow for Atlantic City's 11 casinos, and the resort is expecting its second straight year of decline - primarily because of new slots parlors in Pennsylvania.

"In the casino business, having an empty room is lost opportunity," Zarnett said. "Having warm bodies in rooms not only contributes to room revenues, but contributes to gaming, and food and beverage, as well."

All four Atlantic City Harrah's Entertainment Inc. casinos - Bally's, Showboat, Caesars and Harrah's Resort - are running aggressive promotions to fill their rooms.

Instead of focusing on room rates, Harrah's Entertainment is selling a package experience. One such promotion, called Total Indulgence, is for a midweek or weekend night stay at Caesars for $429, including complimentary French champagne, chocolate-dipped strawberries, a $50 gift card redeemable at the Pier at Caesars shopping mall, an exclusive wine testing at Mia's restaurant, and dinner at any restaurant at the Pier.

Jennifer Weissman, regional vice president of marketing for Harrah's, said a bad economy, coupled with having nearly 1,200 more rooms to sell this winter than last, had forced the company to be more creative.

"Now that we've got the inventory, we're really focusing on growing this market from a day-trip to a destination market," she said. "We have to leverage the full experience that a customer can have here."

Atlantic City's casinos hope to get some help next month. Express train service between the resort and New York begins Feb. 6.