Visitor spending in Atlantic City was on a steep incline before Sandy hit

Atlantic City posted record luxury tax revenues and regained a greater share of the state’s visitors over the past year, recently published tourism studies show.

“There’s a realization that we need to be a full-service destination,” said Brian Tyrrell, who conducted one of the studies. “There are clear signs that we are doing that.”

Luxury tax collections generated a record $12 million in the third quarter of 2012, said Tyrrell, a senior research fellow at the Lloyd Levenson Institute of Gaming, Hospitality and Tourism at Richard Stockton College.

The luxury tax — which is imposed on retail sales in Atlantic City of alcoholic beverages at casinos, bars and other venues; entertainment; room rentals; and rolling chair and beach chair rentals, among other items — has been trending up annually since 2010, researchers said.

Increases in restaurant, hotel and other discretionary spending last year came as Atlantic City posted some of its weakest gambling revenue figures ever — even with the addition of megaresort Revel. But while the gambling market contracted with the opening of Revel, the megaresort also likely played a role in helping to expand the market for leisure amenities in Atlantic City, researchers said.

That means some of the gambling-revenue void left behind by gamblers going to other markets has been partially replaced by visitors who spent money in Atlantic City on food, beverage, lodging and other leisure activities instead.

The change in spending has become significant. Regulators at the Division of Gaming Enforcement and Casino Control Commission announced last week that as part of their annual report of the gambling industry, which is expected to be released Wednesday, they would include hospitality and tourism data that show strides in nongambling amenities. That data also will continue to be released on a quarterly basis.

“The focus tends to be on the casino win numbers that are reported by the division each month,” Casino Control Commission Chairman Matthew Levinson said. “While that remains an important indicator, those statistics do not highlight the strides made in nongaming revenues, which is an important area of growth.”

Compared with seven years ago, luxury tax collections increased by 35 percent to nearly $36 million in 2012, researchers said. Last year’s increase was particularly steep, rising 13 percent from the prior year, researchers said.

At the same time, the change in visits — as measured by how many vehicles park at the casinos — is much more modest, rising by a little more than 1 percent from the previous year to end at nearly $29 million in casino parking fee collections, the Stockton study shows.

Those figures, when taken with luxury-tax collections, may mean that there aren’t substantially more visitors coming to the region, but those who come are spending more money and are staying longer, Tyrrell said. Hotel-occupancy fee collections in Atlantic City increased by 15 percent in one year to end at $5.5 million in 2012.

“The quality of the visitor went up,” Tyrrell said.

The addition of Revel, a new marketing campaign to “Do AC” and other factors likely contributed to that expansion last year. But some of that upswing appeared to have started earlier in 2010, when Gov. Chris Christie and lawmakers initiated revitalization plans for Atlantic City, Tyrrell said.

“If you look at the point the trajectory changed, it’s right about the time the McKinsey report came out,” Tyrrell said. The global consulting firm McKinsey & Co., which has offices in New York City and Summit, Union County, published a 2010 report on recommendations for revitalizing Atlantic City. The report was commissioned by the New Jersey Gaming, Sports and Entertainment Advisory Commission, a group Christie formed to look into ways of revitalizing Atlantic City.

From there, Christie and lawmakers enacted legislation creating the city’s Tourism District, overhauling regulatory practices, establishing the Atlantic City Alliance marketing agency and other measures to draw more tourists to the region.

“I’m not sure we can definitively attribute the uptick to the state’s attention to Atlantic City, but there’s most certainly a coincidence here,” Tyrrell said.

Atlantic City also appears to be regaining its market share of tourists to the state. At the peak of its dominance as a gambling mecca, the greater Atlantic City region drew more than 55 percent of tourists to New Jersey, researchers from D.K. Shifflet & Associates Ltd. — hired by the state to conduct annual tourism surveys — said in their 2012 New Jersey Overnight Leisure Visitor Profile.

That percentage began to plummet in 2007, at about the same time gamblers ventured to casino markets other than Atlantic City. By 2011, the greater Atlantic City region drew only 39 percent of state visitors, according to the Shifflet study.

But in a single year, the region has rebounded to capture 46 percent of the market share in 2012, according to the study.

“It could be attributable to marketing,” Cheryl Schutz said of the increase. Schutz is vice president of the McLean, Va., research firm that conducted the study. “There could be a lot of factors.”

Schutz said Atlantic City was among the few regions in the state that saw increases to its share of visitors. In addition, visitors to Atlantic City appeared more affluent than those in prior years and in fact brought up the average income of visitors to the state, she said.

“The share of those earning over $75,000 was relatively flat for the state as a whole, but dropped substantially when Atlantic City is excluded,” Schutz said in the study. “This means that visitors to Atlantic City in 2012 had considerably higher incomes than those visiting the balance of the state and higher incomes than those visiting in 2011.”

(c)2013 The Press of Atlantic City (Pleasantville, N.J.). Distributed by MCT Information Services.