Coming off another record third quarter, Red Rock Resorts Tuesday confirmed a previously reported second expansion of Durango Casino & Resort in southwest Las Vegas, valued at $385 million, barely two years after its opening.
Stephen Cootey, executive vice president and chief financial officer, told Wall Street analysts that its Las Vegas operations set new records by delivering its highest third-quarter net revenue and adjusted EBITDA in company history, while maintaining a near-record adjusted EBITDA margin. This marks the ninth consecutive quarter of record net revenue and the fifth consecutive quarter of record adjusted EBITDA.
Cootey heaped praise on Durango for contributing to those numbers by attracting new guests and driving incremental play from existing customers.
Red Rock is currently spending $120 million at Durango to add 25,000 square feet of casino space, including a high-limit slot room and bar, and a new parking garage with nearly 2,000 spaces. The expansion will be completed in late December.
“With this phase nearing completion, we’re now turning our attention to the next phase of Durango’s master plan,” Cootey said.
The next phase will add 275,000 square feet to house about 400 new slot machines and increase amenities, including a 36-lane bowling facility, movie theater, restaurants, and entertainment venues. Construction, set to begin in January, is expected to take about 18 months to complete.
“Upon completion, we believe the property will be better positioned to capture additional market share and drive sustained growth in the local market, which is expected to add more than 6,000 new households within a three-mile radius of the property over the next few years,” Cootey said.
In response to a question, Board Vice Chairman Lorenzo Fertitta said that the expansion is prudent in a growing market; capacity will bring more people into the property. “We expect similar returns on the expansion that we’ve gotten so far on the initial build.”
Cootey said they don’t have details on how much financial disruption the project will cost at this time.
President Scott Kreeger said they announced the Durango project first, because it’s shovel ready, while other planned projects in west Henderson and on Las Vegas Boulevard South near South Point remain in the planning stages. “That doesn’t slow us down in our master planning, entitlement, or cost analyses of the other projects.”
Cootey quickly added that includes adding hotel rooms at Durango.
Fertitta said they’re bullish on future development and how the returns it will generate.
Kreeger said they aren’t daunted by having two projects in the ground at the same time, which won’t be more than a minor overlap with one winding down and the other starting up.
In talking about Las Vegas tourism overall, Kreeger said their average daily room rates outperformed the Strip by about 25%.
Cootey said the weakness on the Strip hasn’t spilled over to the locals market and that Red Rock offers a value proposition to out-of-town guests.
