Red Rock Resorts, also known as Station Casinos, is contemplating the construction of a new casino in Las Vegas. This is an unexpected decision given that four of the company’s casinos are still not operational from earlier this year.
Texas Station, Fiesta Henderson, Fiesta Rancho, and Palms have remained closed since March when they were compelled to shut down in an effort to curb the spread of the coronavirus.
Even so, Station Casinos is already considering a new approach to progress: constructing a new casino in Nevada.
New Nevada casino, new opportunity for revenue
It isn’t exactly groundbreaking news that Station Casinos is constructing a branded property.
The casino operator has been a proprietor of diverse land parcels for over a decade. Its ownership also extends to a portion of land near Durango Drive and Roy Horn Way, just off the 215 Beltway, a property that Station has held for two decades.
In 2019, Station Casinos revealed its intention to sell its land during earnings calls. However, the company shifted its stance earlier this year, deciding to withdraw the land from the market as the coronavirus began to pervade the US. Fears arose that the land’s value would plummet if a recession ensued due to the worldwide pandemic.
Station Casinos appears to be in a good position to develop parts of their existing land, according to gaming analysts. Chad Beynon, a gaming analyst for Macquarie, stated that Durango’s property remains an appealing investment opportunity in the Las Vegas Valley due to its location, nearness to a population base, and limited competition.
Station Casinos is in the process of developing a concept and design for a property near the 215 Beltway on Durango, as reported by The Las Vegas Review-Journal.
Station Casinos owns lots of land in Las Vegas
JP Morgan asserts that developing the land at Durango could be advantageous for a casino operator focused on locals. The Las Vegas Review-Journal obtained an analyst note from JP Morgan stating that this area represents “the most underserved” segment of the Las Vegas locals casino market.
Station Casinos owns a total of 380 acres of undeveloped land across Las Vegas, including:
- Tropicana Avenue near Las Vegas Boulevard covers an area of 105 acres.
- 71 acres located at Durango Drive and the 215 Beltway.
- Flamingo Road and Town Center Drive: 58 acres
- 57 acres located at the intersection of Las Vegas Boulevard and Cactus Avenue.
At this time, there are no signs that Station Casinos will utilize or sell any of the other land parcels.
Station Casino re-introducing Durango Station
Station Casinos unveiled plans in 2008 to construct Durango Station, with intentions to break ground in 2009 and aim for a project completion in 2011.
Durango Station was planned to include two hotel towers. The initial phase of construction was set to include a tower with 201 hotel rooms, alongside other amenities available at other Station Casinos properties in Las Vegas. A second tower, with 500 hotel rooms, was planned for the second phase at Durango Station.
The plans for Durango Station included:
- 87,000-square-foot casino
- Movie theater
- Arcade
- Numerous dining establishments and retail stores
- Pool complex
The original plan notably included a 190,000-square-foot retail development, which would have been a larger version of “The District” at Green Valley Ranch, a Station Casino property.
The Durango Station project, however, never got off the ground. A recession hit the country and in 2009, Station Casinos filed for bankruptcy protection. By 2011, Station Casinos had emerged from bankruptcy.
Four Station Casinos properties remain closed
Four casinos under Station Casinos remain closed since March.
Station Casinos officials have not provided a specific timeline for the reopening of these properties. They stated in their most recent earnings call that they will consider reopening these properties after assessing the performance of the properties that were first to reopen following the crisis, as well as the overall recovery of the Las Vegas market and economy.
The spread of coronavirus throughout Nevada has not altered anything, and despite 2018 rumors about Station Casinos selling properties, there are currently no plans to do so. Frank Fertitta, the chairman and CEO of Red Rock Resorts, clarified in May that there was no substance to the speculation of a potential sale.
Palms could be attractive to buyers
If a sale takes place, expect Palms to be the first to go. To begin with, Palms is a fully renovated casino-resort. Station Casinos invested $690 million over a two-year period to upgrade the property. For a casino operator who is new to Las Vegas, this could serve as a ready-to-use solution.
Secondly, the location of Palms, which is close to the Las Vegas Strip, is advantageous for attracting not only locals but also tourists. This is a significant benefit for a new operator seeking market entry.
Finally, here’s a snippet from the JP Morgan note:
The Fertittas made it clear that they don’t see Palms as a personal investment and don’t consider it a fundamental part of their portfolio.
The owners will find it easier to sell the property if they have no personal connection to it.
A national casino operator looking to expand its portfolio might find the location of Palms more appealing. Texas Station, Fiesta Rancho, and Fiesta Henderson are not as conveniently situated near the Vegas Strip’s primary tourist corridor.
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