Red Rock Resorts announced Tuesday it’s delaying the opening of the $780 million Durango Station casino resort in southwest Las Vegas to give the company more time to train staff. The opening date has been pushed back by 15 days to Dec. 5.
The property was scheduled to open on Nov. 20 after the F1 race weekend, but the change was outlined during the third-quarter earnings call with Wall Street analysts. The final expenditure is expected to be within 5% of the $780 million price tag previously estimated.
Board Vice Chairman Lorenzo Fertitta said the company tried to predict when a lot of areas of the property would be handed over by contractors, but that timeline changed.
“Different areas critical to the opening were not turned over by contractors in the time we originally anticipated and it didn’t give us enough time to properly train our staff and team members to have the appropriate load-in days and play days,” Fertitta said. “Our operations are a little different from the Strip in that we’re primarily a locals’ property. We’re going to have a lot of repeat customers. This isn’t where you’re going to see a new face every day. For me and (Board Chairman) Frank (Fertitta), the level of service on the day we open (must be) at the highest quality it can be. It’s the right thing to do when the doors open to be totally ready. We’re going to own this asset for a long time and the first impression is very important. We have very high standards and want to make sure we nail the opening.”
Durango Station is expected to be one of the highest-margin properties in the Red Rock system, executives said Tuesday.
Executive Vice President and CFO Stephen Cootey said the recent quarter was the third best third quarter in terms of same-store net revenue, adjusted EBITDA, and adjusted EBITDA margin, surpassed only by the third quarters of 2021 and 2022.
“This marked the 13th consecutive quarter that the company delivered adjusted EBITDA margins in excess of 45% and through the first nine months of the year the company remains on pace to have the best financial year in our history,” Cootey said.
Red Rock reported net revenues of $411.6 million for the third quarter, a decrease of 0.7%, or $2.8 million, from $414.4 million in the same period of 2022.
Net income was $68.4 million for the third quarter, a decrease of 28.3%, or $27 million, from $95.5 million in the same period of 2022.
Adjusted EBITDA was $175.2 million for the third quarter of 2023, a decrease of 3.7%, or $6.7 million, from $181.9 million in the same period of 2022.
Occupancy was 86% during the quarter, which is below historic levels, as the company waits to get group business back in higher numbers in 2024.
With Strip properties in ongoing negotiations over increasing union wages amid the threat of a strike, Red Rock President Scott Kreeger said no one is certain what the outcome will be. Red Rock doesn’t tie itself to wages on the Strip, but wants to stay competitive in the market.
“On the positive side is that any raises Culinary Union workers on the Strip receive, those are our customers when they come home at night,” Kreeger said. “There’s a benefit for higher discretionary income for Las Vegas residents.”
Frank Fertitta said they remain bullish on the Las Vegas locals’ market, because the people relocating to the state have higher incomes than those that have come to the city in the past.
“We’re very bullish on the Super Bowl and seeing very strong bookings there,” Frank Fertitta said in outlining that their properties benefit more from that than the F1 race.
An analyst asked about future developments for Red Rock.
“We’re further along with Durango phase two and the Inspirada project (in west Henderson),” Frank Fertitta said. “Skye Canyon (in northwest Las Vegas) is behind those. We’ve been actively working on all of those developments, but we want to get Durango open and stabilized before we make a decision on what’s next.”
The company’s board has declared a cash dividend of $0.25 per Class A common share for the fourth quarter of 2023. The dividend will be payable on Dec. 29 to all stockholders of record as of the close of business on Dec. 15.
