Red Rock Resorts' Vegas Victory
Local Casino Market in Las Vegas Thrives According to Red Rock's Declaration
In the midst of economic jitters due to negative GDP growth, Red Rock Resorts decided to raise a glass to their triumph in Las Vegas. Buck Wargo, our trusted source, has the scoop on the success story.
Stephen Cootey, EVP and CFO, took center stage, sharing Red Rock's impressive performance in the first quarter. This period marked a win by all measures, with Las Vegas achieving its highest first-quarter net revenues and adjusted earnings ever, maintaining near-record adjusted earnings records.
The grand opening of Durango Casino & Resort, scheduled for December 2023, has proved quite a boon. The new addition has helped grow the local market, bringing in 95,000 new customers and soon becoming one of the highest-margin properties, generating returns net of cannibalization of nearly 16% by the first quarter of 2025[1]. The cannibalization was primarily felt at its Red Rock Casino Resort & Spa in Summerlin, but Cootey assures that the worst is behind them, and recovery is expected in the next couple of years due to the growth in Summerlin, where 34,000 households will eventualy be added[2].
Slated for completion in late December, the Durango expansion involves adding 25,000 square feet in casino space, introducing 230 new slot machines, and a high-limit room featuring 120 machines. The project costs, including a parking garage for 2,000 spaces, come to a cool $120 million[3].
Las Vegas reported net revenue of $495 million, up 1.9% from the first quarter of 2024. The adjusted earnings were $235.9 million, posting a 2.7% year-over-year increase. Adjusted margins stood at 47.7%, an increase of 34 basis points[4]. Cootey was quick to praise the increase in carded slot play across the database, attributing near-record profitability in the gaming segments to robust spend per visit[4].
The non-gaming divisions also shone in the quarter. Both the hotel and food and beverage divisions saw near-record revenue and profitability, with the hotels securing the second highest first-quarter revenue and profit. Despite challenges in group business and catering, Cootey foresees positive momentum, predicting stronger performance for the remainder of 2025[4].
As for the second quarter, the core slot and table business in the locals market, along with the carded database, remains stable. "We remain confident in our business prospects moving forward," Cootey said[4].
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- Red Rock's Q1 report highlights strong performance and investors' confidence.
- Durango Casino projection hints at future growth potential.
- VICI Properties' partnership with the North Fork tribe could further expand Red Rock Resorts' footprint.
- Upcoming renovations at Green Valley Ranch aim to boost profits.
- Enhancedvisitor spend at Super Bowl and March Madness buck the economic slowdown trend.
- Despite the ongoing recession, the profitability of Red Rock Resorts' business in Las Vegas has significantly increased, as shown by their impressive first-quarter net revenues and adjusted earnings.
- The grand opening of the Durango Casino & Resort, scheduled for December 2023, has been a key factor in this success, bringing in new customers and expected to generate near 16% returns net of cannibalization by the first quarter of 2025.
- Cootey, EVP and CFO of Red Rock Resorts, has introduced plans for a Las Vegas expansion with Durango, which includes a $120 million casino space addition and new slot machines, contributing to the financial growth of the company.
- Despite economic jitters due to negative GDP growth, the casino-and-gambling industry in Las Vegas, represented by Red Rock Resorts, continues to thrive, with promising projections for the future due to factors such as the Durango Casino expansion and the growth in Summerlin.
