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For years, developer Tom Scannapieco wanted the state of New Jersey to buy the hotel at the Atlantic City Convention Center.
The logic seemed clear. With casino gambling in a long decline, conventions and events have become increasingly important for the city’s economy. While the Sheraton Atlantic City Convention Center Hotel is a longtime money-loser and hasn’t been renovated since it opened in 1998, political and business leaders believe it’s essential to the Convention Center’s success.
Scannapieco noted that in dozens of cities, from Chicago to Dallas to Denver, convention center hotels are publicly owned, based on the recognition that they provide an important economic benefit, even if they aren’t profitable themselves.
In Atlantic City in particular, where casinos often provide rooms at below-cost prices to entice gamblers, the hotel business is “a difficult market for a private sector property,” he said, “which is why this hotel maybe should be owned by the public sector.”
So after the Sheraton’s then-owners fell behind on their debt payments and Scannapieco’s investor group acquired the distressed senior debt in 2020, he said he reached out to the Casino Reinvestment Development Authority.
“We said, ‘Look, you guys really should own this hotel,’” he recalled. “We even hired a consultant to put together some materials to try to make them see the opportunity — and that didn’t work. They didn’t want to own it.”
The CRDA contested that account.
“Although CRDA and Mr. Scannapieco have had conversations regarding the Sheraton over the years, including its longstanding deteriorating conditions, CRDA was never approached with any substantive offer to sell the Sheraton,” spokesperson Michael Chait said.
Ultimately, Scannapieco’s group, LINY Investor LLC, bought the 502-room facility itself. But Scannapieco said the same economic problem remained: While the Sheraton is essential to attracting conferences, the Convention Center does not host enough large, multiday events to make a hotel of that size profitable.
To overcome that challenge, the investor group hired hotel experts and architects, and came up with a $100 million renovation plan that Scannapieco says will save the building while creating a new, reliable source of revenue.
They would spruce up about half of the rooms, create an art-filled lobby with an upscale design, and convert the rest of the building into 130 high-end apartments for residents 55 and older, with a private swimming pool and other amenities.
“The message to me was very clear: We had to find a solution that did not involve a continuing annual public subsidy, and that’s what we did,” Scannapieco said.
The plan received a mixed reaction. While Atlantic City Mayor Marty Small supports the renovation, it has been criticized by casino and tourism officials who say the remaining 252 hotel rooms would be too few to support a viable convention center hotel.
In addition, the New Jersey Economic Development Agency has so far declined to help advance the plan. For almost a year, the agency has declined to make a decision on LINY Investor’s application for tens of millions of dollars in state tax credits. Without that funding, Scannapieco said that construction can’t begin.
Meanwhile, Marriott International, which runs the hotel, has decided it can no longer keep taking losses and recently announced it will lay off all 180 employees by mid-December, he said. If the tax credits aren’t approved soon, he’ll have to close the hotel.
“It’s a shame that it comes down to deadlines and ultimatums,” he said. “It’s the worst possible way to approach a problem, but we’ve had four years of conversations, and it’s just absolutely clear to us that they want a private-sector solution. And this is the only solution that the team could come up with that makes economic sense.”
