The Palms Casino Resort, which closed in March due to coronavirus restrictions, might not reopen. Although Nevada gave casinos permission to gradually reopen from June 4, Station Casinos, the resort’s owner, chose to reopen the company in phases. Like other large casino operators in the state, it appears Palms Casino Resort may not yet be part of these reopening phases.
Initially, the company had temporarily closed one of its most famous properties, the Palms. However, it now appears that the Palms closure may be permanent.
Palms and other Station Casinos remain closed
This week, during an earnings call, Frank Fertitta III, CEO of Red Rock Resorts, the parent company of Station Casinos, stated that it is too premature to discuss the reopening of the company’s closed properties. Station Casinos has kept Palms closed, and has also shut down Texas Station, Fiesta Henderson, and Fiesta Rancho.
Fertitta stated, “At this time, it’s too soon to make a decision about reopening any of the closed properties. We are uncertain if, or when, that will happen.”
In October 2016, Station Casinos finalized a $312 million deal to acquire Palms. The company then embarked on a two-year, $690 million renovation project to restore the off-strip Las Vegas casino to its former glory.
The makeover gave the Palms a fresh aesthetic, but the almost $1 billion expenditure (acquisition cost plus renovation expense) took time to gain traction. After pouring millions into resident artists, the KAOS nightclub shut its doors before the year’s end. Station Casinos struggled to stem the losses, resorting to using the space for meetings and group events.
Prior to shutting down, Palms struggled to maintain its trendy image while also attracting Station Casinos’ regular patrons. The choice to keep Palms closed while other properties resumed operations was not a hard one for Station Casinos. The company disclosed in its recent second-quarter earnings call that it draws roughly 80% of its revenue from the properties that have been reopened.
- Ranch of Green Valley
- Casino Red Rock
- Station Palace
- Station of Santa Fe
- Station Sunset
- Station Boulder
Lack of tourists doesn’t bode well for the property
Currently, it seems economically unwise to reopen the properties that remain closed, particularly Palms, which initially had financial difficulties.
The majority of Station Casinos’ properties are frequented by locals residing within a 3-mile radius. Although Palms is situated just off the Vegas Strip, it is predominantly 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 relying on tourists travelling by air seem to be falling slightly behind those catering to local clientele. Wynn Resorts, during their latest earnings call, revealed that they are viewing Las Vegas as a “super-regional” property. They are directing their marketing strategies towards 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 considering selling Palms, according to the first word.
From Vital Vegas on May 4, 2020.
Station Casinos denied this, but the atmosphere in the recent earnings call could suggest some truth to this rumor. Additionally, Vital Vegas reported that Boyd Gaming was showing interest in Fiesta Henderson and Fiesta Rancho.
Boyd Gaming CEO Keith Smith, for his part, stated during the company’s last earnings call that they have no plans for acquisitions.
Red Rock Resorts announced earlier this year that they would be selling various land plots across Las Vegas.
- 105 acres located at the intersection of Tropicana Avenue and I-15, near the Vegas Strip.
- 71 acres located at the intersection of Durango Drive and I-215 in southwest Las Vegas.
- The 58-acre property located at the intersection of Flamingo Road and Town Center Drive in Summerlin.
- 57 acres located on 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 has stated that it will release the land once the expected returns, prior to the slowdown, can be achieved. It is plausible to speculate that the company is employing a similar strategy with its shuttered casinos.
Tropicana’s future also up in the air
The Tropicana, one of the few casinos on the strip yet to reopen, is set to welcome guests again on Sept. 1. This casino-resort, located opposite MGM Grand, Excalibur, and New York-New York, has been closed for some time.
During an earnings call this week, PNG, the owner of the Tropicana, indicated that the opening date is flexible. Jay Snowden, the President and CEO of PNG, stated,
We are taking a careful approach regarding the timing and process of our reopening. Currently, our tentative plan is to reopen in September. However, we will firm up the exact date over the coming weeks. If the timing does not feel right, we will postpone the reopening a little longer.
This development isn’t entirely unexpected. Earlier this year, PNG sold the underlying real estate of the casino to reduce some rental costs. By July, the company announced its intention to lay off over 600 employees. Now, the Tropicana casino itself is up for sale.
Should the Tropicana reopen, it may potentially be under new ownership. Consider this a developing situation at the intersection of Tropicana Boulevard and the Vegas Strip.
