Red Rock Resorts (aka Station Casinos) is considering building a new casino in Las Vegas. This would be a surprise move considering the company still has four casinos that remain closed from earlier this year.
Texas Station, Fiesta Henderson, Fiesta Rancho and Palms haven’t reopened since being forced to close in March to slow the spread of coronavirus.
Even so, Station Casinos is already contemplating a new way to move forward: building a new Nevada casino.
New Nevada casino, new opportunity for revenue
Station Casinos building a branded property isn’t quite groundbreaking news.
The casino operator has owned various plots of land for more than a decade. That includes some space near Durango Drive and Roy Horn Way just off the 215 Beltway, which Station has owned for 20 years.
During earnings calls in 2019, Station Casinos announced it intended to sell the land. However, Station Casinos changed its tune earlier this year. The company decided to take the land off the market as the coronavirus started to spread across the US. There was concern the value of the land would drop if the country headed into a recession due to the global pandemic.
Gaming analysts seem to think the time is right for Station Casinos to build on at least some of the existing land. Chad Beynon, a gaming analyst for Macquarie, said the land at Durango “remains one of the remaining attractive return opportunities in the Las Vegas Valley, given its location, close-in population base and lack of competitive options.”
The Las Vegas Review-Journal reported that Station Casinos is already creating a concept and design for a property to be built on Durango near the 215 Beltway.
Station Casinos owns lots of land in Las Vegas
According to JP Morgan, building on the land at Durango would be beneficial to the locals-focused casino operator. An analyst note from JP Morgan obtained by the Las Vegas Review-Journal says this is “the most underserved” part of the Las Vegas locals casino market.
Altogether, Station Casinos owns 380 acres of undeveloped land throughout Las Vegas, including:
- 105 acres: Tropicana Avenue near Las Vegas Boulevard
- 71 acres: Durango Drive and the 215 Beltway
- 58 acres: Flamingo Road and Town Center Drive
- 57 acres: Las Vegas Boulevard and Cactus Avenue
There are no indications that Station Casinos will use or sell any of the other plots of land at this time.
Station Casino re-introducing Durango Station
In 2008, Station Casinos revealed plans to build Durango Station. The company intended to break ground in 2009. The goal was to complete the project in 2011.
Durango Station was to have two hotel towers. The first phase of construction would include a 201-room hotel tower with other amenities available at other Station Casinos properties in Las Vegas. Another 500-room hotel tower was part of phase two for Durango Station.
Plans for Durango Station included:
- 87,000-square-foot casino
- Movie theater
- Arcade
- Various restaurants and retail outlets
- Pool complex
Most notable from the original plan was the 190,000-square-foot retail development. This would have been a larger version of “The District” at Green Valley Ranch, another Station Casino.
The Durango Station project never took off, however. The country entered into a recession and Station Casinos filed for bankruptcy protection in 2009. Station Casinos emerged from bankruptcy in 2011.
Four Station Casinos properties remain closed
Station Casinos still has four casinos that haven’t reopened since March.
There’s no timeframe for these properties to reopen. During its last earnings call, Station Casinos officials said they “will look at reopening these properties once we’ve had a chance to fully assess how our first-to-reopen properties are performing post-crisis as well as the recovery of the Las Vegas market and economy as a whole.”
Nothing has changed as coronavirus continues to spread throughout Nevada. Despite rumors of Station Casinos selling properties from 2018, there’s no plan to move on from these properties right now. In May, Frank Fertitta, chariman and CEO of Red Rock Resorts, said that there was no truth to rumors of a possible sale.
Palms could be attractive to buyers
If there is a sale, look for Palms to go first. First, this is a completely renovated casino-resort. Station Casinos spent $690 million over two years updating the property. This could be a turnkey solution for a casino operator new to Las Vegas.
Second, Palms sits close to the Las Vegas Strip. The location is key to potentially drawing tourists in addition to locals. This is another positive for a new operator looking to get into the market.
Lastly, this tidbit from the JP Morgan note:
“The Fertittas were clear that Palms is not personal to them, and they do not view it as core to their portfolio.”
If there’s no personal connection to the property, it will be easier for the owners to sell.
The location of Palms might be more attractive to a national casino operator looking to add to its portfolio. Texas Station, Fiesta Rancho and Fiesta Henderson are not as close to the main tourist corridor of the Vegas Strip.
