ATLANTIC CITY - Two lines of twentysomethings formed outside the HQ Nightclub at the impressive Revel casino just before midnight on a recent Friday.
Among those eager to get in was Bill Cruise, 28, of Brooklyn - his first visit to Atlantic City since Hurricane Sandy.
"It's pretty hip," Cruise said of the eight-month-old complex. "This is a step above, for sure. Everything is brand-spanking new."
But while HQ quickly filled up, row after row of slot machines on Revel's nearby 150,000-square-foot gaming floor sat empty. The lights were on at every machine, but few were gambling. Many of the table games were also closed.
A recent two-night stay at Revel, Thursday through the noon checkout Saturday, displayed the glittering casino's challenges, especially a dearth of customers.
Revel's virtually empty gaming floor was an unlikely scene on a Friday night in Atlantic City - one of the resort town's busiest nights - but one that explains why the $2.4 billion Revel is burning cash at a fierce clip.
The casino sought to make its non-gambling attractions, including 14 celebrity-chef restaurants, 10 pools, a giant spa, nightclubs, lounges, and retail mall, as the real stars of the 6.3 million-square-foot property.
It's a philosophy that management continues to embrace.
"From our perspective, Atlantic City's future depends on its ability to evolve beyond gaming," said Michael Garrity, Revel's chief investment officer, at a casino-industry panel last week in Galloway, N.J. "We can't continue to rely on gaming, to continue to give more and get less."
But Revel's inability to generate sufficient casino revenue has put it in peril, and quickly. As winter - Atlantic City's slowest time of the year - sets in, Revel's financial future is uncertain.
Its owner, Revel AC Inc., went back to lenders in November to ask for more money. This latest request comes on top of the mid-August approval from the same lending group to double Revel's credit line to $100 million to keep the casino operating.
As of Nov. 21, Revel had drawn $77.3 million from the credit line, according to company filings - leaving the casino scrambling for another cash infusion.
Wall Street gaming analysts say that with too little gambling revenue coming in, Revel is unable to cover operating expenses. At this rate, they say, it won't be able to cover interest payments on its bonds, which could lead to default.
"Any deterioration in liquidity would increase the probability of a default on the company's debt," Moody's gaming analyst Keith Foley said after the firm downgraded Revel's credit rating in August.
Looking for reasons
"I think it's the economy," said Sherri Gerwitz, 54, of Manhattan, who was playing the slot machines with her husband on a largely empty casino floor at 4 p.m. Friday. "Revel is a fantastic hotel. It's better than Borgata's.
"The comps here are excellent. The pools are great. The food is great. We really have no answer [for too few customers]. The hurricane didn't help."
Revel, like the 11 other Atlantic City casinos, relies on nearly half of its customers from North Jersey and New York, which were seriously hurt by Hurricane Sandy. So Sandy's punch came at a particularly bad time for Revel, which joined the other casinos in being forced to close for four-plus days.
The casino opened April 2 with a spectacular all-glass facade - the first one here with doors facing the ocean - and proclaimed "Atlantic City's game-changer" by Gov. Christie, who supported more than $300 million in state tax credits and rebates to complete Revel.
Now Revel is being called by some "a $2.4 billion nightclub" that caters heavily to a younger crowd, the last thing Atlantic City needed as fierce regional competition has cut into gaming revenue.
Others say that Revel too narrowly targeted a high-end clientele and that its restaurants and rooms were too pricey for a largely drive-in market.
At Azure, a seafood restaurant with tables overlooking the Boardwalk and the ocean, a dinner of grilled octopus, Chilean sea bass, and apple tarte tatin will run about $78 per person without drinks or a tip. A fish taco at Distrito Cantina, a sit-down bar, costs $13. There are no economy buffets at Revel, unlike the other Atlantic City casinos, and it is the city's first fully nonsmoking casino. (The others allow smoking on 25 percent of their gaming floors.)
While some have complained that Revel's service was still choppy, one bright spot has been midweek group business.
"The Revel business plan is absolutely the right plan," said chief executive officer Kevin DeSanctis. "The feedback from the group and leisure segments has been very good, and will continue to build over time.
"We simply did not do a good job with the gaming segment, but we are taking steps to change that."
But on a Thursday, one of Atlantic City's slower days, and a Friday, when out-of-towners usually arrive in waves, the challenge was obvious: There were simply not enough people there to sustain such a large operation.
"I'm sure it costs a lot to keep open," said Bob Toth, 42, a bar owner from Charlotte, N.C. "I can see there are no bodies in here."
Toth sat in front of a penny video-slot machine that Thursday night - the only one in a row of 21 slots.
"I've been sitting here for two hours, and no one has come remotely near me," he said. "There's more employees here than customers."
DeSanctis said adjustments were being made. Revel just hired a new senior marketing executive and plans to add a lounge for slot players and more dining options. It has a new financial adviser to help manage cash flow and improve operations.
"As the gaming guest experience evolves and improves, we believe the numbers will respond in the same way," DeSanctis said. "We expect to be profitable in 2013."
Kurt Honeywell, 28, a real-estate appraiser from Voorhees and a recent Revel guest, said the place needed another year to get going.
"They went from packed crowds over the summer to nothing," Honeywell said as he played blackjack at Revel. "For sure, economic growth in the tristate area will help it. This place is too nice to not grow."
But time might be Revel's biggest enemy. The City of Atlantic City issued late last month a tax sale notice warning that Revel owes more than $12 million in property taxes.
Analysts say in order for Revel to meet interest payments and have positive EBITDA (earnings before interest, taxes, depreciation, and amortization), it needs to generate about $23 million in gross gaming revenue per month. It is nowhere near that.
Revel generated just $9.3 million from its 2,450 slot machines and 160 table games in October, and dropped to 10th place among the dozen casinos here. November revenue figures will be released Monday by the New Jersey Division of Gaming Enforcement.
Revel is forced to measure itself against the lush and popular Borgata, the shining star among Atlantic City's casinos.
"The Borgata continues to do well, but I will not concede that the Borgata has captured the entire potential market," said Michael Pollock, managing director of Linwood, N.J.-based Spectrum Gaming Group L.L.C. "It just has to be captured and marketed effectively."
By 12:30 a.m. last Saturday, it was hopping inside HQ, which was intended to rival mur.mur and MIXX at Borgata as a Vegas-style nightclub.
Among those inside was Bill Cruise, the visitor from Brooklyn.
"It will take time to get people back after Sandy," the middle-school teacher said as the music blared over the crowded dance floor.
Cruise stayed at HQ until about 2 a.m. and then left for the Borgata, where he had a "comped" (free) room.
The Borgata, in the city's Marina District, was packed throughout. People were standing in line to check into its hotel. There was not a seat to be had in its poker room. Every table game and most of its slot machines were filled.
At Revel, the contrasts were manifest.
"I don't know why there's nobody here. It's a shame because this is a more happening place," said Michele Rice, 56, of Yardley, as she perused The Row, Revel's upscale retail galleria alone earlier that night. She had purchased a pair of leather boots for $290.
"It's the whole ideology of having a resort and a casino," Rice said. "People come to Atlantic City for the casino part.
"I think that's the problem."