- Like many companies in the gaming industry Boyd Gaming reduced their gaming and hotel capacity in the wake of the coronavirus pandemic.
- Boyd Gaming has now indicated that the Main Street Station in downtown Las Vegas won’t reopen until sometime in 2021.
- Main Street Station is one of three Boyd properties in Southern Nevada that remain closed.
Southern Nevada’s tourism and gaming economy has come back to life following an unprecedented–and economically devastating–shutdown in excess of 60 days due to the COVID-19 pandemic. Caesars Entertainment will reopen The Cromwell later this week and at that point all of the gaming properties on The Strip will be back in business in some form or another.
Although visitors are slowly returning to The Strip–and will be drawn downtown by the imminent opening of Derek Stevens’ new Circa Resort & Casino–it’s now evident that the Nevada gaming industry won’t be ‘back to normal’ for quite some time. That’s assuming that the industry hasn’t been permanently transformed by the economic collateral damage of the COVID-19 pandemic. Away from the main gaming corridors many large, well known properties remain closed with no reopening date in sight.
Stations Casinos has yet to reopen the Fiesta Rancho, Fiesta Henderson and Texas Station as well as The Palms. Not only is their not a timeline for reopening there are questions if some–if not all–of these properties will *ever* reopen. So what is the future of these properties? It wouldn’t be a shock if some of them never reopened. Stations could decide that there’s too much capacity and too little demand in North Las Vegas and/or Henderson and close/unload the two Fiesta properties and Texas Station. They’re all pushing 25 years old and despite renovations along the way that’s ‘long in the tooth’ by Las Vegas standards. The Fiesta Rancho and Texas Station are located in an area that was once considered ‘up and coming’ but all of the development in the Las Vegas Valley has been well away from these properties.
The Palms’ proximity to The Strip and I-15 suggests that it might reopen at some point. The Palms was in the midst of a comprehensive renovation anyway and they could be taking this opportunity to rework the property for the post COVID-19 era. On the other hand, Stations could decide that the Palms isn’t a good fit for their locals oriented property portfolio and sell it. Time is on their side–it doesn’t make sense to sell it now when they can easily get more value out of it by waiting. The Palms’ neighbor down the road and across Flamingo Boulevard–Caesars Entertainment operated Rio Suite Resorts & Casino–also remains closed. The Rio was an extremely influential property when it first opened but it is now far from the cutting edge and needs some serious work inside and out.
Boyd Gaming is in a similar situation to their ‘locals market’ competitor Stations Casinos. Three of their properties remain closed. In August, Boyd put the gaming and liquor licenses of Henderson’s Eldorado Casino into non-operational status indicating that it will remain dark for the forseeable future. The non-operational status runs through June 4, 2021 but there’s no guarantee that it will reopen at this time. The most ‘endangered’ of Boyd’s Southern Nevada properties is likely the Eastside Cannery on Boulder Highway. The Boulder Strip looked over-saturated before the COVID-19 pandemic and now the excess capacity is glaringly obvious. Located right down the street from both Sam’s Town and the Boulder Station the reality might be that there’s just no longer enough business to keep the Eastside Cannery viable.
For now, Boyd Gaming CEO Keith Smith maintains that both of the aforementioned properties will reopen at some point. At least that was his position during Boyd’s Q3 earnings call held earlier today. The next Boyd property to come back online will be downtown’s Main Street Station and Smith all but promised that it would reopen sometime in 2021 saying it would ‘certainly’ open before the end of next year. Here’s how Smith answered a question from Barclays’ Felicia Hendrix about the company’s strategy for dealing with potential future closings in a ‘second wave’ of COVID-19 as well as plans for reopening the three properties that remain closed:
As I said, the good news at The Orleans or, yeah, the goodness of The Orleans is, we have a strong component of Locals play there that kept it very, very close to last year’s record results, and key last year was a record.
With respect to the closed property, so there’s three of them, they are all here in Las Vegas, Main Street, Eastside Cannery and Eldorado. We probably see reopening them in that order, but it will depend on how the business flows.
We think that Hawaii and the downtown market will probably come back quicker than the other two markets, the Boulder Strip market. We have good business at Sam’s Town. We just don’t have enough demand to open Eastside yet or the Eldorado. So as soon as the business demands it, but I’d expect sometime next year we certainly get Main Street open.
Smith indicated that Boyd was able to stay afloat during Q3 because of serious belt tightening during the pandemic, particularly cuts to labor and marketing costs. He’s not optimistic about a ‘return to normal’ as it existed pre-pandemic saying: “We view a lot of the changes that have taken place as permanent in nature.”
Smith’s comments underscore the tenuous nature of Las Vegas’ economic recovery. Locals spending won’t increase until the unemployment rate goes down. Boyd and other gaming companies are cutting labor and marketing to remain financially solvent. That’s obviously prudent, but the cuts that will help Boyd weather this challenging time will prolong the Southern Nevada economic downturn. Marketing is also necessary to get players in the door in the highly competitive Las Vegas ‘locals’ market but Boyd can’t spend until demand returns–even in an area that is necessary to increase demand. There’s a lot to unpack on a micro and macro level in Southern Nevada which is why many analysts suggest that it’ll be 24 to 36 months before steady job growth returns to the area.