Palms Casino Resort, which closed in March due to coronavirus restrictions, may not reopen. Despite Nevada giving casinos the permission to gradually reopen from June 4, the casino’s owner, Station Casinos, chose to go through a phased reopening. However, it remains uncertain if Palms Casino Resort will be part of this process.
Initially, the company kept one of its most famous properties closed. However, it now appears that the closure of the Palms may be permanent.
Palms and other Station Casinos remain closed
In an earnings call this week, Frank Fertitta III, CEO of Red Rock Resorts, the parent company of Station Casinos, stated that it’s premature to discuss the reopening of its closed properties. Not only is Palms still closed, but Station Casinos has also shut down Texas Station, Fiesta Henderson, and Fiesta Rancho.
Fertitta stated, “We are uncertain about if or when we will reopen any of the closed properties. We believe it’s premature to make such a decision at the moment.”
In October 2016, Station Casinos acquired Palms for $312 million. The company then invested two years and $690 million in a significant refurbishment of the property, aiming to restore the off-strip Vegas casino to its former glory.
The refurbishment endowed the Palms with a fresh aesthetic, but the close to $1 billion expenditure (acquisition cost and renovation expenses) took time to take effect. Despite spending millions on resident artists, the KAOS nightclub shut down before the year ended. Station Casinos were unable to halt the financial loss and resorted to using the space for meetings and group events.
Palms found itself in a predicament of balancing its image of being trendy and attractive, with the need to appeal to the local clientele of Station Casinos prior to its closure. The choice to keep Palms shut while reopening other establishments was not a hard one for Station Casinos. In the recent second-quarter earnings call, the company revealed that about 80% of its revenue comes from the properties that have been reopened.
- Green Valley Ranch
- Red Rock Casino
- Palace Station
- Santa Fe Station
- Sunset Station
- Boulder Station
Lack of tourists doesn’t bode well for the property
Currently, it seems economically unwise to reopen the properties that are still closed, especially Palms, which initially had poor financial health.
The majority of Station Casinos’ properties are frequented by locals residing within a 3-mile radius. Despite its proximity to the Vegas Strip, Palms is viewed as a property primarily visited by tourists.
Local and regional casinos for companies such as Station Casinos, Boyd Gaming and Penn National Gaming (PNG) are experiencing a resurgence all over the country.
Casinos that rely on tourists who fly in for visits seem to be slightly behind local ones. In its latest earnings call, Wynn Resorts stated that they are treating Las Vegas as a “super-regional” property, focusing their marketing efforts on customers in nearby states such as California and Arizona.
Is Palms Casino available for purchase?
Vital Vegas shared a rumor in May that Palms is up for sale.
Station Casinos is reportedly seeking to sell Palms, according to the first word.
From Vital Vegas on May 4, 2020.
Station Casinos denied the allegations, however, the atmosphere during the recent earnings call could suggest some veracity to the rumors. Vital Vegas also mentioned that Boyd Gaming was showing interest in Fiesta Henderson and Fiesta Rancho.
Boyd Gaming CEO Keith Smith stated that the company does not have any plans for acquisitions, during its most recent earnings call.
Red Rock Resorts announced earlier this year that it would be selling various land plots across Las Vegas.
- 105 acres located near Vegas Strip, at the intersection of Tropicana Avenue and I-15.
- 71 acres located at Durango Drive and I-215 in southwest Las Vegas.
- Flamingo Road and Town Center Drive (Summerlin) has 58 acres.
- 57 acres located at the intersection of Las Vegas Boulevard and Cactus Avenue, south of the Vegas Strip.
Due to the economic slowdown caused by the COVID-19 pandemic, Red Rock Resorts has subsequently removed the land from the market.
The company asserts that it will release the land when they can achieve the returns they anticipated before the slump. It can be conjectured that the company is employing a similar approach with its shut-down casinos.
Tropicana’s future also up in the air
The Tropicana, one of the few casinos on the strip yet to reopen, is currently scheduled to resume operations on September 1. This casino-resort is located across the street from MGM Grand, Excalibur, and New York-New York.
Jay Snowden, the President and CEO of PNG (which owns Tropicana), stated during an earnings call this week that the opening date is flexible.
We will approach the task of reopening with great care and consideration. As it stands, September seems like a suitable time, but we still have a few weeks to finalize a specific date. If it doesn’t seem appropriate, we will postpone the reopening slightly.
It’s not entirely unexpected. Earlier this year, PNG sold the property beneath the casino to reduce some rental costs. In July, the firm announced plans to lay off over 600 employees. Now, the Tropicana casino itself is up for sale.
Should the Tropicana reopen, it might be under new management. Consider this a developing situation at the crossroads of Tropicana Boulevard and the Vegas Strip.
