Go to the Convention Center, get a test; Station faces tough recovery

May 20, 2020
By: David McKee

In a win for the Culinary Union, a wide swath of Las Vegas casinos have agreed to test all their employees for Coronavirus before they reopen. University Medical Center, the Culinary Health Fund and the Las Vegas Convention Center are all chipping in, with the LVCVA providing the testing venue. So far, the participants are MGM Resorts International, Caesars Entertainment and Boyd Gaming, and the hope is to perform 4,000 tests per day. The effort will be coordinated with the Governor’s COVID-19 Response, Relief & Recovery Task Force, which is headed up by our old friend Jim Murren. Caesars CEO Anthony Rodio did have one caveat: “All Caesars employees would complete a pre-screening questionnaire and the results would determine the need for a COVID-19 test before returning to work,” he said. (Can a questionnaire screen for a virus?)

Tests will start rolling on the 21st and continue as employees return to their jobs. A 48-hour turnaround on test results is promised. “In response to this unprecedented public health crisis, we have seen an unparalleled level of collaboration between private industry, community leaders, and the health care community,” remarked UMC CEO Mason VanHouweling. “As a result of the hard work and dedication of our health care professionals on the front lines of this crisis, UMC now has the capacity to run 10,000 COVID-19 tests per day. With valuable support from our community partners, this increased testing capacity allows UMC to detect new cases of COVID-19 and safeguard the health of our friends, neighbors and family members across Southern Nevada.”

* Rodio gave CNN a preview of what Caesars Palace will look like when it reopens. It’s not Covid-foolproof but, as Rodio observes, what is? Elsewhere, Harrah’s Resort Southern California will reopen May 22, Horseshoe Tunica resumes play early tomorrow morning, Horseshoe Bossier City and Harrah’s Louisiana Downs are already back in the swing of things. Further down the road, Harrah’s Hoosier Park plans to hold its first race June 16, one day after Indiana Grand Racing & Casino reopens, pending regulatory approval.

* Station Casinos stock got a markdown after company officials met with JP Morgan analyst Joseph Greff, who lowered his price target from $30/share to $13. Ouch. Projecting a June 1 reopening, Greff wrote, “we think the Locals margin recovery is underappreciated (though the revenue recovery probably is well understood, with the positive pull of a retiree and baby boomer base mix somewhat offset by a portion of its customer base directly impacted by lower levels of LV Strip employment).” Damning with faint praise, he anticipates “increasingly less bad revenue results,” projecting 45% less revenue next quarter and -35% in 4Q20, followed by 20% less in 2021. He did allow for “impressive margin and property-level flow through (70% plus) given sizable and sustainable opex reductions.”

Without the Palms and its three other shuttered properties, Station still has 80% of its revenue base and 90% of its locals-derived cash flow. In a worst-case scenario, Station’s liquidity is described as “solid,” enough to carry the company for three years. Potential land sales are deemed possible but Greff’s not banking on it. (Time to shop the Palms, we guess.) Ironically, before Covid-19 hit, Station properties were enjoying their best winter since 2008 … except for the Palms.

* As we begin to examine, with cautious optimism, the look of a post-lockdown world, some big changes are in order for the F&B sector of the casino industry. Not only are buffets a no-fly zone for the foreseeable future, HotelsMag.com predicts “even when business starts to recover, hotel foodservice may be more grab and go or knock and drop than serve-yourself.” If you’re attending a convention, expect an “elevated version” of a box lunch than a big, sit-down meal. (More economical for operators, heh heh.) Speaking of economy, hotels buy in bulk and may leverage that to compel as much as a 30% price reduction from their suppliers. Pebblebrook Hotel Trust CEO Jon Bortz even floats the idea of eliminating restaurants altogether.

More reservations, plus assigned meal times, are also on the table. No more lingering over that five-course dinner. You might not even being waited upon. Self-service is being discussed as an option, along with acrylic dividers between restaurant tables. “Cozy communal tables, small private dining rooms and family-style meal service no longer seem so appetizing. The focus is likely to shift to fare that is cooked to order, plated and served against a backdrop of optimal hygiene. In fact, some hoteliers haven’t ruled out repurposing empty function space as a new kind of restaurant with ample elbow room.” The restaurant experience may not be so aesthetically pleasing but it will certainly be more hygienic.

The last word goes to CHMWarnick CEO Chad Crandell: “Let’s just say, robots may finally get their big break.”

* Finally, if you’re engaging in match play in golf, better to have Tom Brady on your team than Peyton Manning. The Tiger Woods/Manning pair is the heavy underdog in the May 24 rematch between Woods and Phil Mickelson/Brady. According to South Point, Mickelson/Brady are +175 to win, as opposed to -200 for Woods/Manning. Which team will have the lead after nine holes? Mickelson/Brady +140, Woods/Mickelson -160. And will there be sudden-death play? Yes: +350; No: -450. Place your bets.