Red Rock Resorts said Tuesday that the company’s Las Vegas properties have had a strong performance since they reopened June 4th, but didn’t have a timeline of when or if the Palms Las Vegas and three of its locals’ properties will reopen.
Red Rock reported Tuesday the closure of Nevada casinos for 79 days due to the coronavirus netted revenues that were $108.5 million for the second quarter, a decline of 77.5% from the same period in 2019. The net loss was $118.4 million, a decline from a $7.1 million loss in the second quarter of 2019.
But when comparing the June 4 re-openings through the end of June to 2019, net revenues fell only 23.3 percent and earnings before interest, taxes, depreciation and amortization increased 46.8 percent and resulted in their highest June margin in history.
“While the severe impact from COVID-19 can be seen in our quarterly results, the company’s Las Vegas performance from June 4th to June 30th tells a more different and positive story,” said Executive Vice President and Chief Financial Officer Stephen Cooley. “It reflects the resilience of our locals’ business model and impact of the decisive action the management team took during the closure.”
Cooley said they are pleased with their year-over-year financial performance through July.
“Though we would caution we are still in the middle of this pandemic and are unsure of its impact on the economy in the future,” he said, adding that the company is positioned financially to handle what comes through its cost reductions and can deliver margins that surpass what it has done historically.
The workforce is down 50 percent from prior to the closures.
Company officials said the trends for July have been consistent with what they saw in June. Compared to 2019, that means less visitation, more spend per visit and more time spent by customers on devices.
Red Rock reported that a younger demographic in their database is showing up, and that the older demographic as expected, has stayed at home.
“I can tell you we have seen a pretty significant increase in the younger demographic in our business,” said CEO Frank Fertitta III. “We have seen a decline in the older guest that is more concerned about the COVID virus. I don’t know what the future brings, but if we can retain some of these younger people that are coming into our facilities and get the virus under control so our older demographic feels comfortable coming back it could be a very good thing for us.”
Red Rock has opened 16 of its 20 properties with the exception of the Palms, Texas Station, Fiesta Henderson and Fiesta Rancho. Officials said it’s too early to say when or if the Palms will reopen since there is a lack of clarity on the future of the economy.
“We don’t know when or if we’re going to reopen any of the closed properties,” Fertitta said.
“We think it’s too early to make that decision at this time. So far, we’re very pleased with the results that we had and the ability to move some of the play from the closed properties to our existing properties. We will continue to get clarity and navigate the situation and make well-informed decisions. Whatever decision we make will be in the interest of shareholder value.”
Fertitta said the drive-in traffic and short flights to Las Vegas is down but not as much as it is was for longer flights. Group and convention business is down more significantly, he said.
“Just like the Strip, we are suffering from group business,” Cooley added. “I think 2020 and the beginning of 2021 will be tough sledding.”
Fertitta called their operation a gaming company that relies on suburban Las Vegas locals but one that has hotels, catering and convention business as an amenity. Some 80% of the business comes from the casinos.
Feritta said all operators in Las Vegas are refocused on what matters in the business. His company took 79 days when they were closed and worked long hours thinking through what was meaningful and what was taking time but not yielding results.
Without naming them, Feritta said there will be a lot of amenities that don’t return. They can generate traffic but not high margins. He said they will be more focused on marketing and advertising to measure if it works.
“It led us back to where we started in this business,” Fertitta said. “Every survey you have ever done for Las Vegas locals since we started in 1976 for the most part hasn’t changed. It’s all about convenience, the value proposition and relationships at the end of the day.
Sometimes we have overcomplicated it a bit too much, but we’re back to the basics.
“We have a lot going for us. We have the best properties, and the best distribution in the valley. If you take the six properties that we have opened today — five are all in the suburbs with growing population off of major interstates. They were perfectly built for the local business.”
Executives said Saturday business is down but comes back on Sunday and weekdays. People are spreading their time in casinos throughout the week.
Fertitta said the state’s closure of bars in Clark County hasn’t helped because they have about 650 bar machines in Las Vegas.
“This is an ebb-and-flow thing with changing requirements, whether it be at the pools or at the bars or whether you have to wear or don’t wear a mask,” Fertitta said. “Every day is trying to navigate through a new set of circumstances.”
Station Casinos owns and operates Red Rock Casino Resort Spa, Green Valley Ranch Resort Spa Casino, Palms Casino Resort, Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Sunset Station Hotel & Casino, Santa Fe Station Hotel & Casino, Texas Station Gambling Hall & Hotel, Fiesta Rancho Casino Hotel, Fiesta Henderson Casino Hotel, Wildfire Rancho, Wildfire Boulder, Wild Wild West Gambling Hall & Hotel, Wildfire Sunset, Wildfire Valley View, Wildfire Anthem and Wildfire Lake Mead. Station Casinos also owns a 50% interest in Barley’s Casino & Brewing Company, Wildfire Casino & Lanes and The Greens.
In addition, Station Casinos is the manager of Graton Resort & Casino in Northern California.