After closing in March due to coronavirus restrictions, it seems as though Palms Casino Resort may not reopen. Casinos were given the green light in Nevada to reopen slowly on June 4, and like other large casino operators in the state, owner Station Casinos decided the company would reopen in phases.
The company kept one of its most famous properties closed initially, but it now looks like the Palms closure may be permanent.
Palms and other Station Casinos remain closed
During an earnings call this week, Frank Fertitta III, CEO of Station Casinos’ parent company, Red Rock Resorts, said that it’s too early to discuss when the company would reopen its closed properties. In addition to keeping Palms closed, Station Casinos also closed Texas Station, Fiesta Henderson and Fiesta Rancho.
Fertitta said “We don’t know if – or when – we’re going to reopen any of the closed properties. We think it’s too early to make that decision at this time.”
Station Casinos completed a deal to purchase Palms in October 2016 for $312 million. The company spent a couple of years giving the property a massive $690 million overhaul to try to bring the casino just off the Vegas Strip back to glory.
The renovation gave the Palms a new look, but the nearly $1 billion investment (purchase price plus renovation cost) was slow to catch on. After spending millions of dollars on resident artists, the KAOS nightclub closed before the year was over. Station Casinos couldn’t stop the bleeding, filling the space with meetings and group gatherings.
Before closing, Palms was caught between wanting to be cool and hip while appealing to Station Casinos’ locals. The decision to keep Palms closed while reopening other properties wasn’t difficult for Station Casinos. During the recent second-quarter earnings call, the company stated that it generates about 80% of its revenue from the properties that have reopened.
- Green Valley Ranch
- Red Rock Casino
- Palace Station
- Santa Fe Station
- Sunset Station
- Boulder Station
Lack of tourists doesn’t bode well for the property
As it stands today, it doesn’t appear that reopening the still-closed properties would make sense economically, especially Palms, which wasn’t in good financial shape to begin with.
Most Station Casinos’ properties are visited by locals who live within 3 miles of a property. Even though it’s located just off the Vegas Strip, Palms is considered a property visited mostly by tourists.
All across the country, local and regional casinos for companies like Station Casinos, Boyd Gaming and Penn National Gaming (PNG) are making a comeback.
Meanwhile, casinos that depend on tourists flying in for visits appear to be lagging a bit behind the local ones. During its recent earnings call, Wynn Resorts said they’re treating Las Vegas like a “super-regional” property and are focusing marketing efforts on customers in neighboring states like California and Arizona.
Is Palms Casino available for purchase?
In May, Vital Vegas shared a rumor that Palms is available for purchase.
First word Station Casinos reportedly looking to sell Palms.
— Vital Vegas (@VitalVegas) May 4, 2020
Station Casinos refuted this, but the tone during the last earnings call could lead one to believe that there might be some truth in this rumor. Vital Vegas also said that Boyd Gaming was kicking the tires on Fiesta Henderson and Fiesta Rancho.
For its part, Boyd Gaming CEO Keith Smith said the company has no plans for acquisitions during its last earnings call.
Earlier this year, Red Rock Resorts said that the company would sell various plots of land throughout Las Vegas:
- 105 acres at Tropicana Avenue and I-15 (near Vegas Strip)
- 71 acres at Durango Drive and I-215 (southwest Las Vegas)
- 58 acres at Flamingo Road and Town Center Drive (Summerlin)
- 57 acres at Las Vegas Boulevard and Cactus Avenue (south of Vegas Strip)
Red Rock Resorts has since taken the land off the market with the economic slowdown occurring from the COVID-19 pandemic.
The company says it will make the land available when they can get the returns they expected prior to the slowdown. One could speculate that the company is doing the same with its closed casinos.
Tropicana’s future also up in the air
The Tropicana is one of the few casinos on the strip that hasn’t reopened yet. The casino-resort across the street from MGM Grand, Excalibur and New York-New York is currently slated to reopen on Sept. 1.
PNG, which owns the Tropicana, said the opening date is flexible during an earnings call this week. President and CEO of PNG Jay Snowden said,
“We’re going to be really thoughtful around when and how we reopen. As of right now, September feels right, but we have several more weeks to nail down an exact date, and if it’s not right, then we’ll wait a little bit longer to reopen.”
This isn’t entirely a surprise. PNG sold the real estate under the casino earlier this year to alleviate some rent expenses. In July, the company said it plans on laying off more than 600 workers. Now, the actual Tropicana casino is on the market.
If the Tropicana does reopen, it could be under new ownership. File this away as something that’s brewing on the corner of Tropicana Boulevard and the Vegas Strip.