Between the expansion at the Durango Casino & Resort in Las Vegas and renovations at other properties, Red Rock Resorts has hundreds of millions of dollars in its development pipeline.
For the full year of 2024, not including the spending to close out the $800 million Durango resort that opened in December, Red Rock expects capital spending to be between $185 million and $195 million spread between maintenance and investment capital. The company outlined its expansion plans during its third-quarter earnings call.
Red Rock intends to move ahead with its Durango expansion by the end of the year. The current plans for the next phase will add over 25,000 square feet of additional casino space, including a new high-limit slot and bar area with 120 new slots and another 110 on the casino floor, along with a covered parking garage with almost 2,000 parking spots.
The current budget for the project is about $116 million and the expansion is expected to take around 12 months to complete. Red Rock is expecting some disruption to the south side of the property during the construction period.
That’s not all that’s in the works, according to Stephen Cootey, chief financial officer and executive vice president.
“We also remain committed to strategically investing and offering new amenities to our guests in order to drive incremental visitation and spending to our properties,” Cootey said. “Last month, we successfully opened a Yard House restaurant at Sunset Station. We’re in early days, but we’re pleased with the guest response and the early results from this new amenity. We expect to continue to invest in our existing properties throughout 2024, including adding local favorite China Mama at Palace Station later this year.”
Red Rock also expects to invest in both its Sunset Station and Green Valley Ranch properties in 2025. At Sunset Station, Red Rock recently renovated the race and sports book and did a partial casino remodel. As part of this project, Red Rock will add a new country-western bar, a new Mexican restaurant, an all-new center bar, along with completely renovated casino space.”
Work has already commenced and the total cost is expected to be about $53 million, Cootey said.
At Green Valley Ranch, Red Rock is expecting to start a complete refresh of its room product. Work is expected to start in June and will continue through November. The cost of the room renovation is expected to be about $150 million.
“Like our other recently introduced amenities, we expect these to be solid investments,” Cootey said.
In terms of EBITDA impact from renovations, initial estimates at Green Valley Ranch are about $11.5 million lost, Sunset Station about $5.4 million lost, and Durango about $5.9 million lost, Cootey said.
In northern California, Red Rock has its North Fork tribal casino project situated on a 305-acre site located north of Fresno. With great egress off the heavily traveled Highway 99, the project is in one of the most convenient and accessible locations in central California, with over 5.8 million people located within two hours of the development site.
“When completed, this resort will include approximately 100,000 square feet of casino space with over 2,400 slot machines including 2,000 Class III games, 42 table games, two food and beverage outlets, and a food court,” Cootey said.
Red Rock has started site work as they continue to finalize design. The total construction time for the project is currently anticipated at between 18 to 20 months, putting the opening of the resort into 2026.
The current cost of the project is expected to be about $785 million, which includes all design costs, construction hard and soft costs, pre-opening expenses, and any associated financing and development fees.
As for the success with Durango’s opening, Cootey said that has validated its long-term growth strategy and demonstrated the power of the company’s development pipeline and real estate bank, which consists of over 450 acres of developable land positioned in highly favorable areas across the Las Vegas Valley.
“This pipeline, coupled with our current assets and locations, will allow us to double the size of our portfolio and capitalize on the very favorable long-term demographic trends and the high barriers to entry that characterize the Las Vegas locals market,” Cootey said.
Red Rock President Scott Kreeger said that when looking at all of their greenfield projects, the population growth is getting is achieving a maturity where they’re up for consideration. When they look at the Cactus Avenue location on Las Vegas Boulevard South between the M Resort and South Point, “It has different positive attributes than say Inspirada and the Kyle Canyon site” in the northwest valley.
“The specifics around Cactus are that it is a hybrid location,” Kreeger said. “It sits on the Las Vegas Strip and is surrounded by a lucrative locals market as well. So it makes it a unique development opportunity, because you can take advantage of the hybrid aspect of the property or the location. It would probably be something of a larger scale than say an Inspirada (in west Henderson southeast east of the M Resort). We weigh the pros and cons of that capital contribution as well.”
Kreeger said growth in the west Las Vegas valley in Summerlin will benefit their flagship Red Rock property. Summerlin is expected to add 34,000 households in the area.
“Not only do we have a great story as it relates to household growth, but the average income in the area is one of the highest in the valley,” Kreeger said. “And we continue to see growth in average income in that area.”
As for Durango, Kreeger said it’s the fastest growing area of the city that probably has the largest amount of remaining buildable acreage in the surrounding area.
“Durango will continue to have its own growth story into the next year as well,” Kreeger said. “If you switch gears a bit and look at Sunset, one of the key reasons we’re refreshing Sunset is the Henderson area around Cadence has got quite dynamic growth and we think we’re going to see upside from that continued growth in that area of the valley as well.”
