The Palms Casino Resort is set to reopen after a two-year closure, and it couldn’t come at a better time for the new owners – the San Manuel Band of Mission Indians – with tourism and convention business growing in Las Vegas and gaming revenues setting records as omicron wanes.
The Southern California-based tribe, which will mark the first Native American ownership in Las Vegas, has its management in place with former MGM Resorts International executive Cynthia Kiser Murphey as general manager. It has been aggressively hiring staff ahead of its grand opening, the date of which is expected to be announced imminently by the tribe.
The Palms will take one of its final steps before reopening on Wednesday, when the Nevada Gaming Control Board considers recommending the licensing of William Hill to operate its sportsbook. The Nevada Gaming Commission is on track to give final approval on April 21, setting the stage for the Palms reopening after that.
The reopening comes after a record 12 consecutive months of Nevada gaming revenue exceeding $1 billion. Las Vegas saw strong visitation last month with March Madness and spring break. April is expected to be strong as well, when the NFL draft will be held on the Strip April 28-30.
Casino executives have been touting what they expect to be a strong 2022 following the dissipation of the omicron variant that slowed visitation in January, and the ending of the state’s mask mandate February 10. Las Vegas had its highest number of convention visitors of the pandemic era in February at 439,000; overall visitation in February was 70% higher than in February 2021.
“The Palms is reopening in the right environment,” said Josh Swissman, a casino consultant and founder of The Strategy Organization. “The demand is there, and that’s what you need for another property to come into play and not have it negatively impact other operators. Demand only looks to be growing from here on out.”
Casino industry consultant Brendan Bussmann, managing partner at B Global, said the upcoming reopening shows Las Vegas is continuing its comeback. “It’s a good time to open that property and see that they can make it work,” Bussmann said. “And most importantly, this will be the largest property run by a tribe in Vegas. It’s a new era.”
The tribe made history in December when it closed on its purchase of the $650 million property from Red Rock Resorts, which shuttered the property in March 2020 when the pandemic shut down the casino industry. Red Rock Resorts never reopened it.
“The impending opening of the Palms represents a seminal moment in Las Vegas gaming,” said Andrew Klebanow, a principal with C3 Gaming. “First, it is a testament to the fact that Las Vegas has fully recovered from pandemic-induced closures. More importantly, it represents the entry of a highly respected Indian casino operator into the competitive Las Vegas local and tourism markets.”
The Mohegan Tribe of Connecticut operates the Virgin Hotels Las Vegas casino but doesn’t own it. The Seminole Tribe of Florida has a deal to acquire the operations of The Mirage from MGM Resorts International for $1 billion and operate it under its Hard Rock brand.
“If you look largely at what’s on the Strip, it’s dominated by three players, all of which are publicly traded companies,” Bussmann said. “Having a California tribe be the owner of a Strip asset, since it pretty much is part of the Strip (although just west of it), adds a different element to the future of Vegas.”
Red Rock remodeled The Palms, which has 1,300 rooms, for $700 million prior to the pandemic. The property has a 100,000 square-foot gaming floor with 1,400 slot machines and 55 table games.
Bussman said Las Vegas still has room to grow its convention business and international travel. Only 100,000 people passed through Harry Reid International Airport in February – well below historical monthly numbers that typically exceed 300,000.
“You hope the bubble is going to continue to grow and help drive that additional opportunity,” Bussmann said. “As we head into the spring and obviously the fall, that’s going to be the key. You hope it’s good volume and we don’t see another wave from a variant.”
Michael Lawton, a senior economic analyst with the Nevada Gaming Control Board, said the board is optimistic that the level of gaming revenues over the last 12 months will continue. However, there are caveats – the war in Ukraine, high gas prices, and high inflation. Those have taken money out of people’s pockets but haven’t impacted gaming so far.
“There are a great deal of macroeconomic and geopolitical events that are happening in real time which are concerning, and it is unknown how it could impact the trends we have been witnessing for the past year,” Lawton said.
Despite the excellent economic conditions so far, the new operators of The Palms are faced with a number of challenges, Klebanow said. “They will have to compete with formidable competitors, notably Boyd Gaming, Red Rock Resorts, and Golden Gaming for a share of the local Las Vegas gaming market, and with several national brands for a share of the tourism market. All their competitors have sizable databases of proven gamers, and those gamers have established loyalties to those brands. Stealing market share is going to be tough.
Notwithstanding, Cynthia Kiser Murphey is one of the most experienced and respected gaming executives in the industry, and few people have as much knowledge of the Las Vegas gaming market.”
The Palms plans to draw from the San Manuel tribal database for its 432-room Yaamava’ Resort & Casino at San Manuel in San Bernadino County, California, and also market to the rest of Southern California, Arizona, Utah, and the Pacific Northwest. Las Vegas locals will also be an important part of its customer base, executives said.
