Vegas Vibes: Red Rock Resorts Thriving Amid Economic Concerns
Highlights local casino market in Las Vegas, emphasizing its efficacy, according to Red Rock.
In the face of investors' unease over a potential slowdown in the U.S. economy, Red Rock Resorts has sent a clear message – Vegas ain't slowing down just yet! Buck Wargo, our go-to guy for all things gaming, has the details.
Stepping up to the microphone, Stephen Cootey, Red Rock Resorts' EVP and CFO, shared some optimistic news during a first-quarter conference call with Wall Street analysts. According to Cootey, the first quarter was one for the books, with Las Vegas breaking its own records for highest first-quarter net revenues and adjusted earnings, all while maintaining near-record adjusted earnings records.
The recently opened Durango Casino & Resort has been a game-changer, escalating the operator's profits by tapping into the hearts of local Vegas enthusiasts, driving spirited play from existing clientele, and enticing newblood to the brand. Boasting a whopping 95,000 new customers, Durango's momentum shows no signs of slowing.
So, what's the secret sauce behind Red Rock Resorts' continued success in Sin City? Turns out, Durango Casino & Resort is on track to become one of the highest-margin properties in the portfolio, with an impressive net return of nearly 16% through Q1 2025. It's important to note that any culinary exclusion has essentially occurred at Red Rock Casino Resort & Spa in Summerlin. But fret not, Cootey assures us the worst of the 10% cannibalization is behind us, and we can look forward to recovery within the next couple of years, as Summerlin's growth continues.
In Q1 2025, Las Vegas cashed in a cool $495 million in net revenue, marking a healthy 1.9% increase from the same time last year. Adjusted earnings skyrocketed 2.7% to $235.9 million year-over-year, and adjusted margins climbed a robust 34 basis points to a healthy 47.7%.
Cootey took a moment to trumpet the spike in carded slot play across the database, likening it to a lightning bolt of profits that illuminated the gaming segment's near-record profitability in the quarter. Bandying about the word "robust," Cootey couldn't help but celebrate the non-gaming divisions' stellar performance, too. Both the hotel and food and beverage divisions shone brightly, with near-record revenue and profitability. Hotels boasted the second-highest first-quarter revenue and profit through its strategically placed properties, thanks to increased occupancy.
While challenges in group business and catering may have plagued the operation, Coote shared his positive spirit, forecasting a brighter future for the remainder of 2025. As for the core slot and table business in the locals market and the carded database, analysts can anticipate stability. "We remain confident in our business prospects moving forward," Cootey emphasized.
Cootey touted the resilience of the Las Vegas locals market, noting its ability to weather economic storms – a testament to its convenience, proximity, and affordability. Interestingly, the 2008 Great Recession and the 2020 pandemic-induced recession were anomalies, with unique drivers that are unlikely to impact Red Rock this year, according to Cootey.
Looking ahead, Red Rock plans to further bolster its operations in Henderson, with renovations at Green Valley Ranch expected to kick off in June, wrapping up by year's end. The renovation will cost a hefty $200 million, focusing on room and convention area upgrades. In other news, construction on the North Fork tribal-managed casino in northern California is progressing, with an anticipated mid-2026 opening. Excitingly, Vici Properties has stepped in to provide construction financing, freeing Red Rock from any financial burdens associated with the project.
In an offhand comment, Cootey mentioned that while a sell-and-leaseback option may not be entirely off the table, Red Rock prefers to own its properties – especially during tough economic times. This strategy allowed the company to retain all employees during the last downturn. Red Rock President Scott Kreeger shared that the company outperformed competitors during the Super Bowl and March Madness, adding pizzazz to their Q1 2025 results.
Since goods for construction were previously sourced from China, they may experience some sticker shock from tariffs implemented by the Trump administration. However, Red Rock is making smart moves to mitigate this issue, sourcing goods from alternative countries where possible, minimizing the impact to just 4% to 6% of the project's costs.
[1] Biz Journals, Q1 2025 Red Rock Resorts Earnings Report[2] CBS News, Red Rock Resorts Q1 Earnings[3] CNBC, VICI Properties to Develop Tribal Casino with Red Rock Resorts
- Despite the concerns over a potential recession in the U.S. economy, Red Rock Resorts' EVP and CFO, Stephen Cootey, shared optimistic news about the company's first-quarter profitability, thanks in part to the successful addition of the Durango Casino & Resort.
- During the first-quarter conference call, Stephen Cootey highlighted the impressive net return of nearly 16% from the Durango Casino & Resort, suggesting that it could become one of the highest-margin properties in Red Rock Resorts' portfolio.
- As a result of the success of the Durango Casino & Resort, the company experienced a surge in profits, attracting 95,000 new customers and boosting its net revenue by $495 million, despite a slight increase in tariffs on goods sourced from China.
- Despite the challenges presented by the potential economic downturn, Red Rock Resorts remains confident in its business prospects, with Stephen Cootey emphasizing that the Las Vegas locals market has shown resilience in weathering economic storms.
