Impacted by a drop in spending by mid- and lower-tier customers at its Las Vegas and Pahrump, Nevada, casinos, Golden Entertainment recorded first-quarter declines in revenue and adjusted earnings for its casino operations.
Golden’s Nevada casinos reported $140 million in revenue in the first quarter compared to $141.3 million in the first quarter of 2023. Adjusted EBITDA for its Nevada casinos was $44.4 million, down from $51.8 million.
“Comparing operations in the first quarter, total revenue was down less than 1% and EBITDA was down over 15%, primarily due to increased labor costs and weaker revenue from our higher-margin locals casinos,” said Charles Protell, Golden’s president and chief financial officer.
Occupancy at The Strat on the Strip improved almost 8% to 78% for the quarter, Protell said. It improved 6% in mid-week occupancy.
“Unfortunately in March, Las Vegas missed several large drivers of visitation compared to last year, including Con Expo, one of the city’s largest conventions, the hosting of NCAA tournament basketball games, and two sold-out concerts at Allegiant Stadium,” Protell said. “Despite a successful Super Bowl weekend in February, our average daily rate was down about 8% for the quarter. Weekend occupancy at the Strat was almost 96% for the quarter, but we’re still missing over 12% of occupancy during the week compared to 2019, although that gap is narrowing with each passing quarter.”
Protell said they view improving mid-week occupancy as a key component for growing EBITDA at The Strat and that the company’s capital investments and growth in Las Vegas visitation will improve business throughout the year. That includes its partnership with Atomic Golf that will drive both visitors and local residents. The massive golf center opened next door to the Strat at the end of March.
The Strat experienced higher labor costs with a new union contract. It increased wages about 11% year over year. The casino also had spent $500,000 in additional advertising in the quarter to enhance its media campaign for The Strat to build consumer awareness and drive future visitation, Protell said.
Golden grew revenue in Laughlin in the first quarter, driven by a new bingo room at Edgewater Casino Resort attracting more local residents, Protell said. Rated-gaming revenue and database activity remain healthy, with improved spend across all tiers of the market.
Margins, however, were impacted by higher labor costs.
Revenue for Nevada locals casinos in Pahrump and Las Vegas besides The Strat declined 5% and EBITDA declined 13%, primarily due to decreased spending from low- and mid-tier rated customers, Protell said.
“Our largest revenue and EBITDA declines were at Arizona Charlie’s Boulder, which we view as the most value-oriented casino in the portfolio,” Protell said. “In addition, we’ve been impacted by road construction affecting the entry to Arizona Charlie’s Decatur, as well as seeing some increasing promotional activity in the market. These trends continued in April, but we see improvement in May.”
First-quarter tavern revenue rose 1% over 2023, supported by the purchase of four new taverns in November, bringing the total to 69 at the end of March. Golden purchased two additional taverns in April to bring its portfolio to 71 locations, with 68 in the Las Vegas valley. The 72nd will open by the end of the second quarter and the target remains more than 90 locations in the next couple of years, Protell said.
Branded Nevada taverns reported $27.8 million in revenue, up from $27.5 million a year ago. Adjusted EBITDA, however, was $7.56 million, down from $8.53 million, a drop of 11%.
On a same-store basis, Protell said total revenue declined 4%, driven by a drop in food and beverage revenue. That was partially offset by a slight increase in same-store gaming revenue.
“We attribute lower same-store revenue to declining retail demand and less-frequent visitation from our lower-tier rated players,” Protell said.
Chairman and CEO Blake Sartini said mid-week and overall occupancy is growing and cited a regional advertising campaign at the end of 2023 and in the first quarter of 2024 to reintroduce people to The Strat and investments that they have made. That will continue.
