By DEREK HARPER Staff Writer, The Press of Atlantic City (609) 272-7203
Published: Monday, November 5, 2007

It may be early, but the signs are unmistakable.  Atlantic City’s business leaders are rushing to find rooms for the growing number of tourists.

Cranes towering over the city are assembling hotel additions to the Borgata Hotel Casino & Spa, Harrah’s Atlantic City and Trump Taj Mahal Casino Resort.

But for the first time in memory, investors outside the casinos are spending tens of millions of dollars to renovate or build three separate hotels in the resort without public subsidies.

These generally high-end properties add nearly 600 rooms to the city. They include a two-year renovation of a former Quality Inn, a plan to combine two down-market destinations into a designer hotel and a small boutique establishment that just cleared the city’s zoning board this month.  The head of the Atlantic City Convention and Visitors Authority similarly thought now was a good time for hotels.

“You look citywide, it’s upwards of 90 percent occupancy,” Executive Director Jeffrey Vasser said. “That just tells you the supply and demand equation is out of whack. There are just not enough rooms in this market.”

Like others, he pointed to the Borgata’s July 2003 grand opening. This has generally been recognized as the first time that resort leaders saw a market greater than the low rolling bus trippers that underwrote the resort for much of the casino era.

“The Borgata has demonstrated that if you offer a high-end product, a quality product, then there is demand for that here,” Vasser said.

He thought the city might see more hotel announcements if national business conditions persist that have limited residential development in recent years. He pointed to the more than a dozen condominium plans announced in recent years that remain largely on paper. He thought some might morph into hotel projects. If so, it would show how much the tourism market has changed.

Not all are believers. The head of the Casino Reinvestment Development Authority included a hotel in tentative future expansion plans for The Walk shopping complex. But the CRDA investigated and Executive Director Thomas Carver said plans were changed.

“We did all the math,” Carver said. “You’d need a massive subsidy for it to be able to support itself based on the numbers.”

Furthermore, this comes while only one major hotel opened outside the casinos between 1988 and now.

The 502-room Sheraton Atlantic City required a $2.5 million tax abatement to open at the foot of the Atlantic City Expressway in November 1997. And in February 2006, the city agreed to close a second, yearlong tax appeal. The settlement knocked the building assessment down 41 percent to $26.5 million and refunded payments and tax credits worth $1.6 million.

The first of the new wave of hotel development to open likely will be the new Courtyard at Marriott, in the homestretch of an $8.4 million renovation and expansion that would add about 200 rooms.

The former Quality Inn on South Carolina and Pacific avenues closed in 2005. Renovation plans included demolishing the 1927 Atlantic City Friends School, found to be eligible for but not listed on state historical preservation lists.

The next to open probably will be a $93 million project that takes the resort’s separate Holiday Inn and Howard Johnson and turns them into a single upscale property called “The Chelsea” designed to shelter the young, hip and affluent resort visitors.

“We’re certainly on the early side of the opportunity,” former CRDA Executive Director Curtis Bashaw said, “but I think that we’re getting in early enough to enjoy the growth opportunities of the next 10 to 15 years.”

Bashaw’s group, A.C. Beach Development Partners LLC, paid $36.5 million for hotels in January. When finished by next Memorial Day, Bashaw said the renamed facility would have 337 rooms, two pools, a spa and a pair of upscale restaurants done in conjunction with successful Philadelphia restaurateur Steven Starr.

Starr’s restaurants include Atlantic City’s Continental and Buddakan, both inside The Pier at Caesars Atlantic City.

The newest hotel recently cleared City Hall desks.

Resort businessman Spiros Trupos received zoning board approval Oct. 11 to build a boutique hotel called “The Adelphia” across the street from The Quarter at Tropicana Casino and Resort. Attorney Nicholas F. Talvacchia said when finished in 2009, the seven-story project at the corner of Atlantic Avenue and Stenton Place would offer 56 upscale rooms.

Talvacchia said budgets and costs have not been finalized but expected an announcement soon.

Other hotel plans soon may materialize as the resort’s changing strategies develop attractions beyond gambling. It may be overdue, but developers argue it’s a natural fit.

“We were a resort for 100 years before we were a gaming town,” Bashaw said.

“Shouldn’t we leverage those roots rather than remain just a gaming destination?

To e-mail Derek Harper at The Press: dharper@pressofac.com