Any financial manager worth his salt will tell you that while a business’s revenue figures are important, ultimately, gross operating profit is king.
And on Monday, the New Jersey Division of Gaming Enforcement crowned Borgata as the king of first-quarter profits in the Atlantic City casino industry with $45.9 million.
But these days, almost everyone is a winner in Atlantic City (gamblers aside). The $155.6 million in combined profits for the nine casinos is higher than any first-quarter numbers in the previous eight years, which is how far back the DGE website’s numbers go.
COVID-hampered 2020 and 2021 led to just $29.7 million and $95.5 million in profits in the first three months, respectively. In 2019, with the new Hard Rock and Ocean casinos not even a year old, first-quarter profits were $87 million. A year earlier, with only seven casinos open in the first half of the year, the figure was $123.6 million. The 2017 figure was $139.9 million, topping the 2016 mark of $106.6 million.
With the existence of 12 casinos for much of 2014, the rivals combined for $38.8 million. When four of them closed their doors that fall, profits by the survivors rose to a collective $81.3 million in 2015.
The rest of the 1Q pecking order
The runner-up to Borgata in January/February/March profits was Hard Rock at $26.9 million, followed by Tropicana at $19.8 million.
The middle tier included Ocean ($18.5 million), Harrah’s ($15.9 million), and Caesars ($10.6 million).
Golden Nugget had to settle for seventh at $5.6 million, while Resorts eked out just a $536,000 profit and Bally’s actually lost money in the quarter — $6.8 million.
The order was the same in the first quarter of 2022 as it was across all of 2021, except Tropicana and Hard Rock flipped places at second and third.
Bally’s — which is in the latter stages of a $100 million upgrade that could bear fruit in the next few quarters — also lost money in 2021 ($13.2 million).
Reasons for the high profit number
One industry expert cited greater efficiency in explaining the big boost in profits.
“As operators continued to face labor shortages in the first quarter, they have had to find creative ways to satisfy consumer demand with fewer employees,” Jane Bokunewicz, faculty director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at the Stockton University School of Business, said in a statement.
“The high gross operating profits in the first quarter indicate that they have found an efficient balance between staffing levels and volume of business.
“Entering the second and third quarter, the peak of economic activity for the resort, we should expect to see gains in non-gaming revenues driven by lodging occupancies.
“Higher occupancy levels will likely also translate into higher demand for labor. How well operators can keep up with this demand, given the labor supply, rising wages, and product costs, will determine if recent gross operating profit performance will persist.”
Ocean still the king of hotel stays
The average rate per occupied room for the first quarter of 2022 partly evened out in the industry, with five casinos charging between $130.49 and $150.71 per night.
The exceptions on the low end were Hard Rock ($120.15) and, as usual, Resorts ($106.01). On the high end? Borgata at $171.68, and Ocean, where visitors paid an average of $209.46 per night.
That price didn’t scare customers away, either, as Ocean also led in room occupancy rate at 81.5% even though its 1,399 rooms place it squarely in the middle of the pack. Borgata, Tropicana, and Resorts all placed between 54% and 56% occupancy rate.
The offseason rate charged by Resorts wasn’t far below its full-year figure in all of 2021 ($116.31), so that could be a sign that the summer of 2022, with COVID’s influence over behavior likely minimal, will bring a little less of a bargain for hotel rooms there.