There's nothing cataclysmic about the move. According to Station Casinos' Vice President of Corporate Communications, Lori Nelson, Station is "cancelling all of our old slot tokens in all denominations since [our] machines no longer take them." So it's not a question of Sunset Station going to an all-slot format, let alone closing.
In fact, Station Casinos is doing better than it ever has. According to recent Wall Street analyst reports, it has the biggest market share (43 percent) of any Las Vegas locals-oriented casino company and 90 percent of Las Vegans live within five miles of a Station-owned property. Station has nine full-scale casinos in the Vegas area, nine smaller, off-brand properties, and manages two Native American casinos, one in Michigan and another in California.
Station is riding something of a hot streak, to put it mildly. The company recently posted its twelfth consecutive quarter of improved revenue, going from a $45.6 million profit in early 2015 to a $59.5 million profit in the first three months of 2016. At the same time, Station announced it would be starting a year-long initiative to renovate its hotel rooms and upgrade its slot product. (Which may explain why the tokens are being retired.)
Continuing the vein of good economic news, Station recently re-entered the public market as Red Rock Resorts (it will, however, continue to be known as Station Casinos for consumer purposes). On April 26, an initial public offering – NASDAQ ticker symbol RRR – raised over $531 million, smack in the middle of Wall Street's range of expectations. Within two weeks, the newly flush company had acquired the Palms Casino Resort for a bargain-basement $312.5 million, a fraction of what the three-tower casino/hotel/condo complex had cost to build.
Shortly thereafter, JP Morgan gaming analyst Joseph Greff sat down with Station executives and got a glimpse into the company's near future. Top-priority markets included Reno, where Station owns two plots of land, and southwest Las Vegas, where Durango Station has been on hold for well over a decade. Station is particularly bullish on this project, saying it has received offers for the land in excess of a million dollars an acre. The demographics and potential consumer spending in the area were favorably noted.
One Station property that may not be long for this world is Days Inn at Wild Wild West (which looks like it would topple over with a firm shove). During the height of the casino bubble, 10 years ago, Station's owners proposed an $11 billion metaresort, Viva, for the site, despite its being off the Strip corridor. (MGM Resorts International would struggle with $8.5 billion CityCenter even though it was right on the Strip.) That project went the way of the dodo bird.
However, Station has not given up on turning the Wild Wild West lemon into lemonade. In conversations with Greff, Station management "envisions partnering with a developer to build a high-rise residential or retail project, allowing RRR to retain the gaming rights." So, while not the second coming of Viva, it's impressive nevertheless, particularly given the dearth of quality casino product on Tropicana Avenue between the Strip and Boyd Gaming's Orleans … a fairly long haul. Such a project would also give Station a competitive near-Strip position comparable to the one it will hold at the Palms, where it will go toe-to-toe with the Rio and Boyd's Gold Coast.
Greff added that Station's "outlook for the LV Locals consumer remains upbeat, with encouraging trends in population, job, and wage growth" in the Las Vegas area. "As the Las Vegas Strip continues to perform well with increased visitation and strong convention/group business, RRR should benefit as it estimates 30-40 percent of its customers work on the Strip." Greff also noted that the construction business – a major source of Station customers – while only 75 percent as large as 10 years ago, is more diversified (read: stable), rather than being concentrated in the housing and resort industries.
So, the outlook for Station is very upbeat indeed. We can confidently predict that you will be playing at Sunset Station for many years to come, albeit with new checks and tokens.
