After a $700 Million Upgrade, Why Isn't the Palms Reopening?

If Station has invested over $700 million in the Palms in recent years, why have they not reopened it yet while Station’s tired properties like Boulder Station have reopened? I would think they would try to recoup some of that investment. Or are the older properties more cost-effective to run?

[Editor's Note: This answer was written by David McKee, our Stiffs & Georges blogger.]

Undoubtedly the latter.

The renovation expenses that you mention were difficult enough for Station to recoup while the Palms was open (at one point it was generating a negative return on investment). Station’s attempt to beat the Strip at its own game — without having had any Strip experience itself — was a disaster, climaxing with the expensive flop of the KAOS nightclub, on which the plug was pulled at a cost of multi-millions.

Station’s official position, as articulated in one conference call with gaming analysts, is that it’s waiting for the Strip to recover before moving ahead with the Palms. Considering that current business on the Strip is so anemic, it's barely supporting some resorts, this seems prudent. After all, if there was little demand for a pre-coronavirus version of the Palms, it’s hard to see where it would find customers while the Cromwell, Planet Hollywood, Park MGM, the Mirage, and the Rio are still dark. Station has ruled out selling the Palms, which may be a mistake, as bargain-hungry entities like Hard Rock International are circling the Strip like sharks in chummed waters.

While the Palms may not be for sale, some of its inventory seems to be up for grabs. It was reported that Damien Hirst’s 60-foot-tall Demon has been removed from the pool area. We wonder what it would bring on the open market. However and whenever the Palms reopens, we suspect that it will court mass-market customers more assiduously, instead of chasing elusive high rollers, for whom Station is hard-pressed to compete with Las Vegas Sands, Caesars Entertainment, MGM Resorts, and Wynn.

Not only would it cost less to reopen, say, Boulder Station, there is a built-in customer base of locals who tend to avoid the Strip and many of whom belong to Station’s Boarding Pass players club already. Stock analysts say Station is also banking heavily on Las Vegas’ population of retirees with fixed incomes as a future mainstay.

But even the lower-end properties are no sure thing. Rather than compete with itself (at Sunset Station and Santa Fe Station), the company has put Fiesta Henderson and Fiesta Rancho — along with Texas Station — into a deep freeze at least until June of next year, citing “economic uncertainty.”

At the moment, there’s only so much Station that the market will bear and that certainly includes the Palms.

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Comments

rokgpsman Aug-09-2020

Things change

I'd say the guys running the casino resorts know almost exactly what it costs them to have the place open each day,,, counting things like employee salaries and benefits, utilities like elec usage and water, cleaning supplies, office supplies and a bunch of other business costs. They balance that with expected number of people spending money there by gambling, shopping, eating, etc. If they thought they'd make big money the place would be open. So it's probably related to not getting enough customers spending money. Locals are going elsewhere, and out of town visitors aren't coming in droves like they used to. Palms used to be seen as a hip or chic place, the cool-crowd loved to go there. Station may have bought the Palms thinking of it's popular past reputation and hoped to get that going again. And Station is competing with Boyd that was also acquiring additional properties, maybe they didn't want Boyd to have Palms and Gold Coast right there near each other, just off the Strip.

Jerry Patey Aug-09-2020

Palms

They see the writing on the wall. They will not reopen until we get the old Vegas back. They state this. There is not enough business to even come near to paying expenses much less make a profit. The return will be up to American people. They have to push back on the current !!! Corona hoax. They are churning numbers. They count a pos antibody test as  active case. They are asymptomatic     If a patient dies of comirbity they are counted as corona. They get 166k for every corona case. This info is per a coroner. Memphis hospitals were pd 900 million. No typo. Corona can be contacted via eyes and ear. They refuse to recognize chloroquine as good treatment thanks to Big Pharma and their desire to use the 3k treatment not the 20 dollar one. All this is scene to crash economy and see that Trump is not elected. They placate the public with printed paper money. Diluted dollar each time. I am physician with chem and biology major. Don’t calll me crazy. Stop watching fake news all is a lie.

LynGHS Aug-09-2020

Costly/Poor Decisions at the Top of the Foodchain

They should have let the marketing department in on this info; I just received an offer for 9 concerts in September - 3 of them at the Palms. Go figure. 
Hubby and I were invited to the pre-opening of Kaos; moments after we entered the venue, we literally felt an "evil" vibe in the place - and right after that - we saw IT - the ginormous disgusting statue that overwhelmed the space. It wasn't until I got home and researched it that I found out it was called "Demon," and that they paid $14M for it. There's more than irony in the way that has all played out (IMHO). All that said, I really liked the Palms and am sad it's closed. We had gotten to know many of the employees and miss seeing their friendly faces.

Sam Glantzow Aug-09-2020

eh bien

imho, palms had THE best buffet for the price in vegas. will miss that the most.

PC-LV Aug-09-2020

Reward club

With them needing the locals so much now, it really seems like a completely idiotic mode to gut their slot club upon reopening.  Seems like with all the reasons for locals not to return why would Station introduction a self-inflicted gun shot wound?

Gene Brown Aug-09-2020

Dr. J. P.

Thank you for sharing your thoughts regarding the question of the day. I am believing that the Station Group is not dealing with a hoax, as you usually inject when you enter comments. They are dealing with reality and the bottom line, or regardless of the cause. They are dealing with the effect. It has been my experience that it’s best to say, “In my opinion, thus and so!”  Did I somehow miss you saying that phrase in your response, “In my opinion?” Or are your credentials enough justification to make it absolute? I’m just trying to get clarity on the question of the day, as to your contribution.

Aug-09-2020

Boulder Station

I don't think anyone should call Boulder Station "tired". I was there 10 months ago; I found it to be very sprightly. All the machines looked new enough & were working; no broken or shut-down ones that I saw. It was clean & spacious, laid out in an efficient & modern way. The eateries were all either new or renovated, quite accommodating. Patrons seemed to be happy & on-the-ball. Employees were cheery & helpful enough. Even though the area around the place gets bad press, I didn't see it. I didn't see a single "undesirable" anywhere, not even at the bus stop (e.g., prostitute, drug dealer, gang member, homeless person). I felt quite safe both inside & outside on Boulder Highway.  A lot of people, not just me, do not require glitz and expensiveness to be satisfied with a place & enjoy it.  And a lot of properties do not want or need to attract "the In Crowd" or the rich weekenders from So. Cal.  I concur that the $14M "Demon" statue purchase was idiotic in both name & concept.

protravel Aug-09-2020

@ "Dr." J.P.

Your constant delusional rantings rarely have anything to do with the QOD. I suggest you find a more appropriate forum to spew your nonsense. You demonstrate precisely why the U.S. has become the most infected country on the planet.

Question of the Day - 09 August 2020

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