Friday, August 24, 2018

Resorts World Catskills – A Casino in Trouble? – I


Five years ago this fall, New York State had a referendum on the legalization of several new casinos.  I supported it, as did many, and the measure passed.  One result was Empire Resorts’ Resorts World Catskill (RWC) in Sullivan County, near Monticello.  It partially opened February 8th this year, with a large gambling area, a hotel, restaurants, and more promised to follow.  Its first day became a media event, with a lobby-full of customers ready at opening, and all seemed fine. 

For the five months after that, RWC was seldom in the news.  The July 11th Times Herald-Record, though, had a report that those of us here didn’t want to see.  Daniel Axelrod’s “Sullivan casino owner reports $37M loss,” documented that gross earnings were “far below the level needed to cover the business’s expenses,” with a second-quarter deficit of $22.4 million in operations paired with $15 million in interest expense on its half-billion-dollar “debt and other long-term liabilities.”  Not all of that was from the new resort, though, as the parent company also owns the Monticello Casino and Raceway trotters-and-slot-machines racino, which “has been a major money-loser over the past decade.”
 
The more-detailed figures the company provided, though few, gave further insight into the shortfall.  According to unnamed “gaming experts” Axelrod cited, casinos should avoid their “viability” being “questionable” by having gross revenue of $200 per slot machine per day, and $1,200 per table game.  RWC’s $1,192 for each of the latter was close enough, but the former’s $111 was not. 

Four days later the Record published another Axelrod piece, its cover story, behind the colorful headline “Oh, Craps!”  In “Resorts World Catskills failing to live up to first-year projections,” the author added coverage of an interview with Empire Resorts president and CEO Ryan Eller, in which the executive said that financial worries, given the feather-soft opening during “a brutal winter,” were premature.  A “midmarket hotel, with 15,000 square feet of retail, food, and beverage space” is scheduled for a December opening, and next year will see a new large indoor water park in the Poconos and reopening of a once legendary golf course at the resort itself.  The latter will help them, as Boston College management professor Father Richard McGowan said they need, “to greatly increase the non-gaming revenue.” 

One area in which the resort has not missed expectations, per the New York State Gaming Commission’s spokesman, is in “economic stimulus measures.”  It has added 1,500 jobs to its county of less than 70,000 people, and has made a noticeable dent in local unemployment, once worse than neighboring and larger Orange’s, but now consistently lower.

Six months is long enough for many RWC reviews to appear online.  One major source, TripAdvisor, this week had 201, with an average score a tepid 3.0 out of 5.  Some were completely positive, but most were not.  The quality of the rooms came out highest.  Common complaints were slow restaurant service despite little crowding, a lot of small logistical gaffes such as elevators not working properly, early closing times for some places by casino standards, a lack of combination deals with outside activities, and apathy toward heavily gambling customers.  Oddly, the slot machines, for their newness and variety, got almost all thumbs-up comments.  An RWC public relations manager responded to these remarks and pledged action on the negative ones.  In all, it is noteworthy that these problems were not all due to how new RWC is, and 3.0, with casino-hotels generally 3.5 or higher, does not qualify as a good rating score. 

What did the place look like in person?  I will post what I found during my visit last weekend, along with a list of concerns and questions about Resort World Catskill’s prospects, next week.

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