Red Rock Resorts posts solid Q4 earnings as it readies new Las Vegas casino

February 7, 2023 9:25 PM
Photo: Red Rock Resorts (courtesy)
  • Buck Wargo, CDC Gaming Reports
February 7, 2023 9:25 PM

As Red Rock Resorts prepares to open a new neighborhood casino near downtown Las Vegas on Friday, the company reported Tuesday that it recorded record same-store net revenue during the fourth quarter and second-best-ever adjusted earnings and margins, surpassed only by the fourth quarter of 2021.

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Net revenues from Las Vegas operations were $419.6 million during the fourth quarter, a decrease of 0.2%, or $0.9 million, from $420.5 million in the same period of 2021. Adjusted EBITDA from Las Vegas operations was $206.9 million during the fourth quarter, a decrease of 0.9%, or $1.9 million, from $208.7 million in the same period of 2021.

For 2022, net revenues from Las Vegas operations were $1.65 billion, an increase of 3.0%, or $48.6 million, over $1.60 billion in 2021. Adjusted EBITDA from Las Vegas operations was $812.8 million, an increase of 1.6%, or $13.0 million, over $799.8 million in 2021.

“After looking at our results with same-store revenue and adjusted EBITDA, we had the best year in the history of our company, while also achieving the second-best adjusted EBITDA margin, only surpassed by (2021’s) record-high margin,” said Executive Vice President, CFO, and Treasurer Stephen Cootey. “We continue to see strong benefits in our regional and out-of-town customer segment. This strength, coupled with strong spend per visit across our entire portfolio, allowed us to enjoy near-record profits across the gaming segments. The trends in the fourth quarter were similar to those in our most recent quarter and remain consistent so far this year.”

As for non-gaming, Cootey said food and beverage and hotel also delivered near-record-level profitability during the fourth quarter, driven by higher occupancy and room rates.

The new Wildfire Casino at 2700 E. Fremont St. will open in time for Super Bowl Sunday. The neighborhood casino measures 21,000 square feet and has 200 slot machines, in addition to electronic table games, a sportsbook, and two restaurants.

“The quality is by far the best on the Boulder Strip and it does sit relatively close to downtown,” said Red Rock President Scott Kreeger. “We think it’s going to be predominately for folks in that neighborhood and something fresh and new on the Boulder Strip that we haven’t seen in years.”

The $750 million Durango Station resort in the southwest valley is scheduled to open by the end of 2023 and remains on track, Cootey said.

He also talked about Red Rock’s property acquisitions, including 67 acres at Losee Boulevard and the 215 Beltway in North Las Vegas for $55 million. It was paid for with a 1031 exchange for closing on the sale of 56.6 acres north of Cactus Avenue and Las Vegas Boulevard for $60.8 million. Red Rock also sold 21 acres of excess land on the Durango Station site for $23.8 million to multifamily developers that will bring additional visitors to the resort.
In addition, it sold 35.3 acres of its former Fiesta Henderson property for nearly $33 million.

In total, Red Rock sold about 113 acres for $118 million in 2022. And with the purchase of the Losee site and the earlier purchase south of Cactus and Las Vegas Boulevard, it has upgraded its pipeline of land ready for development, with plans to double its portfolio and take advantage of demographic trends, Cootey said.

“With the completion of these transactions, our strategic land holdings amount to more than 522 acres. The bulk will serve as the foundation for the future growth of the company,” he said. “We’re actively looking to divest or have under contract for almost 120 acres as we continue repositioning and upgrading our real-estate portfolio for the next chapter of growth at Station Casinos.”

CEO and Board Chairman Frank Fertitta III said they want to see continued stability in Las Vegas before moving forward with new projects. Everything they see, from population migration to home construction, sets the stage for a casino project in the Inspirada master plan in west Henderson.

“We’re working on being in position to have a ready-to-go project. But to greenlight it, we’re have to prove out Durango,” said Fertitta, who added that they’re optimistic of its rapid success.

As for customer growth, Kreeger said there’s stability in their database and they continue to see improvement in the out-of-town market. When it comes to food and beverage and hotel revenues, there’s been outsized growth from regional and out-of-town guests.

“When you look at all metrics, whether that’s food and beverage, hotel, entertainment options like bowling, salon, and spa, they’re up double digits and we’re encouraged by that,” Kreeger said. “When we look forward to this year, we’re seeing strength in all of those areas, specifically the return of convention guests and strong catering revenues.”

Kreeger said they’re seeing growth in the older demographic as well and are encouraged about that.

“If you look at demographics and in-bound resident profiles, that age group is not only coming in at a greater capacity than other age groups to the tune of 3.8 times the average, their average income is also increasing quite a bit,” Kreeger said. “We’re encouraged by all of those and seeing that come through in the database.”