Red Rock Resorts touted its performance in Las Vegas amid investor worries of a slowdown in the U.S. economy after GDP numbers for the first quarter showed negative growth.
Stephen Cootey, executive vice president and chief financial officer, outlined the positive news Thursday during a first-quarter conference call with Wall Street analysts. Cootey said the first quarter was strong by all measures, with Las Vegas achieving its highest first-quarter net revenues and adjusted earnings in its history, while maintaining near-record adjusted earnings records.
The opening of Durango Casino & Resort in December 2023 continues to benefit the operator’s bottom line by continuing to grow the Las Vegas locals market, driving incremental play from its existing customer base and attracting new guests to the brand. It has added 95,000 new customers to the database.
“It’s on pace to become one of our highest-margin properties, generating returns net of cannibalization of nearly 16% through the first quarter of 2025,” Cootey said.
Any cannibalization has primarily occurred at its Red Rock Casino Resort & Spa north of Durango in Summerlin.
Cootey said evidence shows the worst of the 10% cannibalization is in the past and expects revenue recovery in the next couple of years, given the growth in Summerlin, where 34,000 households will ultimately be added.
Construction continues on the Durango expansion, slated for completion in late December. It will add 25,000 square feet in casino space, including a new high-limit slot area and bar. It will introduce 230 new slot machines with 120 going to the high-limit room. The total cost, which includes a parking garage for 2,000 spaces, is $120 million.
Cootey said Las Vegas reported $495 million in net revenue, up 1.9% from the first quarter of 2024. The adjusted earnings were $235.9 million, up 2.7% year-over-year. The adjusted margins were 47.7%, an increase of 34 basis points.
Cootey lauded the increase in carded slot play across its database. Robust spend per visit drove near-record profitability in the gaming segments in the quarter.
As for non-gaming, both hotel and food and beverage divisions had a strong quarter, with near-record revenue and profitability. Hotels had the second highest first-quarter revenue and profit by driving increased occupancy.
Despite challenges in group business and catering, Cootey seed positive momentum and expects it to be stronger for the remainder of 2025.
For the second quarter, there’s stability in the core slot and table business in the locals market and the carded database. “We remain confident in our business prospects moving forward,” Cootey said.
Cootey said the Las Vegas locals market is resilient to handle any downturn. The operator grew during recessions in the early 1980s, early 1990s, and early 2000s, since customers like convenience, proximity, and affordability.
“That supports consistent visitation even in softer economic environments,” Cootey said. “That’s slightly different from the way the Strip reacts during a recession.”
The 2008 Great Recession was driven by the housing collapse, while the 2020 recession was driven by a government-mandated shutdown over the pandemic. Neither case is applicable to any issues that are expected to arise this year, Cootey said.
Red Rock continues to make investments in Sunset Station and Green Valley Ranch in Henderson to take advantage of the growth in the Cadence master plan and Ascaya luxury development. Work is expected to start in June on renovating rooms at Green Valley Ranch and those will be back in service by the end of the year. Renovations to rooms and convention areas will cost $200 million.
Cootey highlighted the company’s North Fork tribal-managed casino in northern California, where construction is progressing for a mid-2026 opening for the $750 million project, which will have 100,000 square feet of casino space with more than 2,400 slot machines, 42 table games, two restaurants, and a food court.
The tribe has obtained construction financing for the project from Vici Properties and ended the need for Red Rock to finance the project off its own balance sheets, Cootey said. With the deal, the operator has received $110.5 million in capital and accrued interest invested over the past 20 years that will show up in the second-quarter earnings report. Its outstanding balance with the tribe is $69.6 million.
“We’re very happy with this project and execution of financing,” Cootey said.
Cootey said they would never rule out a sell and lease buy option, but during the last downturn, not having to pay rent allowed them to keep all of their employees. “We like owning our properties, but we’ll never say never.”
Red Rock President Scott Kreeger told analysts the operator performed better in the Super Bowl and March Madness college basketball tournament than others.
Goods used in construction imported from China will be impacted by the tariffs implemented by the Trump administration and executives are working to source those goods from other countries where possible, the company said, adding the impact will be 4% to 6% of the project costs.
