Golden Entertainment reported decreases in revenue in its Nevada hotel-casinos, while its tavern business was impacted by the Vegas Golden Knights failing to advance beyond the first round of the NHL playoffs.
During a second-quarter earnings call, Golden reported total property revenue fell 1.4% and consolidated EBITDA fell 4.9% for casino operations. Same-store tavern revenue fell 2.4%.
Golden registered revenue of $101 million for properties that include The Strat on the Las Vegas Strip and Aquarius Casino Resort and Edgewater Casino Resort in Laughlin. That’s down 1.4% from the $102.5 million in the second quarter of 2023. Adjusted earnings fell from $28 million to $27.4 million, a decline of 2.3%.
The Strat, meanwhile, reported record second-quarter hotel revenue, up 14%, with average daily rates up 8% and total occupancy up 4% to 73% for the quarter. Weekend occupancy was 97%, while midweek occupancy improved 2% to 64%, according to President and CFO Charles Protell.
“We see opportunity and continuing to improve midweek occupancy, as we’re still missing nearly 18% of occupancy compared to 2019,” Protell said.
Asked how they will make up the gap, Protell said they’re improving 2% to 3% every quarter and expect that to continue, though the full recovery won’t be overnight. He noted that the closure of the Mirage and Tropicana Las Vegas eliminates a significant number of rooms and helps The Strat as they enter the fall.
The margins at The Strat aren’t where they want them to be and Golden CEO and Chairman Blake Sartini said they’re “laser focused” through mitigating costs and how they market and drive bookings to the property. They’re seeing increases in the Strat’s player count.
Revenue and adjusted earnings increased at The Strat, despite higher labor costs related to a new union contract.
Atomic Golf, which opened in March, continues to build its customer base and that will drive additional visitors in the fall, Protell said. The indoor golf and entertainment experience had a difficult start, with layoffs announced in May.
Sartini said Atomic Golf “got out of the gate slow, so our expectations weren’t met” and called it a rough rollout in learning the market. With some third-party marketing and specialty and group events, Atomic Golf is now gaining momentum.
“We continue to believe the future is bright for cross traffic between Atomic, given its location next to us, and their learning and ability to position that property more effectively,” Sartini said.
As for the F1 race in November, Sartini called last year’s event a “headwind” for the Strat that weekend, but this year the city is “way ahead of promotional activity” during that weekend for downtown and the north end of the Strip.
“There’s a concerted effort between casino ownership and operations to work with the Las Vegas Convention and Visitors Authority to provide an entertainment-heavy weekend with music events and pop-up events,” Sartini said. “We’re in offensive mode this year for that weekend and we anticipate a much better weekend for us, as we continue to roll out and plan for specific events that will occur.”
In Laughlin, Protell said they saw declines in revenue and EBITDA due to increased labor costs and their decision to reduce large-scale entertainment acts. Golden has focused its entertainment on smaller acts, but that came with lower gaming and food and beverage revenue with fewer patrons.
“Instead of spending $750,000 to $1 million on an act, we can spend $50,000 to $150,000 and do three of those a month and not burn out our own players in terms of visitation or their wallet without taking as much risk on the expenses,” Protell said.
Sartini said that will produce more profitability in Laughlin through more frequent lower-priced shows and reinvestment of some of that money in expensive acts to drive casino play.
Golden’s locals casinos, including the Arizona Charlie’s brand in Las Vegas and other properties in Nevada, had $37.8 million in revenue, down 4.9% from $39.8 million in the second quarter of 2023. Adjusted earnings fell 13% from $19.4 million to $16.9 million, Protell said. “That’s due to decreased visitation and spending from our lower-tier customers.”
The largest decline came at the Arizona Charlie’s Boulder property that caters to the most value-oriented guests. Road construction impacted access to the Arizona Charlie’s Decatur property, Protell said. Golden also started 259-room renovations that will be completed in 2025.
Locals properties have operated at a 45% margin over the last four quarters, which Protell expects to continue.
Nevada tavern revenue rose 3% to $28.1 million with the purchase of six new taverns, Protell said. Golden had 71 taverns through the end of June and anticipates opening its 72nd in the third quarter.
Same-store revenue declined 2.4%, driven by a 10% decline in food and beverage revenue, offset partially by 6% same-store gaming revenue. Protell said revenue declined because the Vegas Golden Knights didn’t advance beyond the first round of the playoffs compared to the Stanley Cup championship a year ago.
He noted taverns tend to ebb and flow with the locals casinos on the lower tier of players, while mid- to upper tiers are more stable.
“It seems to be getting better,” Sartini said. “The first part of summer is always tough for the locals’ casinos and tavern business. Football is a big driver to our taverns. As the population continues to grow, school starts and people get into their regular patterns, I expect it to get better over the near future. The taverns are a very resilient part of our portfolio.”
