Boyd Gaming reported Monday that Las Vegas locals’ business has picked up from a slow start in June and July and into the fourth quarter. But CEO and President Keith Smith said while profits are up, the recovery is going to be “long and slow.”
Boyd Gaming said that while third-quarter revenue for Las Vegas local’s segment was down 20% from 2019, adjusted earnings grew more than 23% to $78.9 million — a third-quarter record — and operating margins increased to an all-time high of 46% It reported the highest company-wide operating margin in its history as 18 properties grew adjusted earnings at a double-digit pace and eight achieved all-time records.
“The third-quarter results clearly reflect the tremendous progress we have made since we began reopening our properties five months ago and the strength of our operating teams across the country,” Smith said. “When we started our reopenings in late May, it was clear we had adapted our operating strategy to meet a much different environment. The world had changed, and we had to change with it. With limited capacity on our casino floors and reduced amenities for our guests, visitation at our properties was down significantly from the pre-COVID world. We knew we had to rebalance our marketing and operating costs to match this reality and find a way to control costs without compromising the great guest experience our customers expect.”
Smith said there’s a new normal under which the company will operate going forward despite pressure to return to the way things were. There will be pressure to add marketing and operating costs and drive more people into buildings to compete for casual play, he said.
“There may be situations it may make sense to add some level of marketing and overhead costs, but overall, today is our new normal,” Smith said. “We have established a more efficient and focused business model over these past seven months, and we are determined to maintain higher margins going forward.
“While we’re encouraged by strength in our most loyal customer segments, there are ample opportunities available to us in the future as customers who have not yet felt confident enough to venture out feel comfortable in visiting our properties once again.”
Smith said while guest counts and revenues are down, there’s been strong play from top-tier customers. Gaming revenues were down 8% even with significant declines in downtown Las Vegas where revenues were down 71% from the third quarter of 2019 and adjusted earnings was down $1.5 million due to travel restrictions from Hawaii and overall declines in visitation.
In October, Boyd laid off nearly 300 people at the California Hotel & Casino and Main Street Station, which the latter is closed. In July, Boyd laid off 25% of its workforce across the country or about 6,000 workers.
“Our downtown properties have been affected from a near total shutdown from travel from Hawaii,” Smith said. “With an ease of travel restrictions now underway from Hawaii, we expect our downtown performance to improve in the future.”
The Orleans in Las Vegas continues to be impacted by a decline in convention business along with destination travel to the market, Smith said. Locals play remains strong and kept the result close to last year’s record performance, he said.
Boyd has benefited from regional customer play in Las Vegas and is not dependent on tourists like the Strip properties.
“The Las Vegas locals’ business started soft or starting slow when we reopened in June whereas other businesses in the Midwest and South started very strong,” Smith said. “Las Vegas started softly and has grown and has gotten better, and we have learned what works and doesn’t work.”
Boyd has three closed Las Vegas properties in Main Street, Eldorado and Eastside Cannery. Main Street is likely to open first in 2021, Smith said. He added that as people think about the recovery in Las Vegas, two things come to mind — long and slow.
“It’s going to be a slow recovery,” he said. “There is some pent-up demand of people wanting to come up. When the governor lifted the cap to have a meeting at 250 or 10% of certain spaces, the phone started ringing, and we had people interested in coming out and holding those events. It shows there is some demand for the product, but it’s going to be a long slow recovery.”
Boyd Gaming reported third-quarter 2020 revenues of $652.2 million, compared to $819.6 million in the third quarter of 2019. The Company recorded net income of $38.1 million, or $0.33 per share, for the third quarter of 2020, compared to net income of $39.4 million, or $0.35 per share, for the year-ago period.
Boyd said it continues to build the foundation for future growth through the expansion of its partnership with FanDuel Group, launching mobile sports betting platforms in Illinois and Iowa and expanding its digital reach to more than 30 million adults nationwide.