- Station Casinos reopened a number of their Las Vegas area properties on June 4, 2020 including Red Rock, Green Valley Ranch, Santa Fe Station, Boulder Station, Palace Station,Sunset Station, and their Wildfire Casino properties.
- Stations now plans to keep four of their properties–Palms, Texas Station, Fiesta Station, Fiesta Rancho–closed indefinitely.
- Based on information from the Nevada Gaming Control Board these four properties will remain closed until at least July 1, 2021.
The COVID-19 pandemic is and always has been a very complex crisis. Most significantly, it is simultaneously a public health crisis and an economic crisis. Partisans who suggest that that one should be prioritized to the exclusion of the other are being disingenuous and oversimplifying a situation to which there is no simple answer. While the metrics of the public health component of the pandemic are fairly easy to grasp on a superficial level–the number of deaths, positive tests, hospitalizations, etc.–the economic devastation caused is more difficult to wrap your head around. It’s easy to look at raw data in a vacuum but metrics like the unemployment rate and gross domestic product are only the tip of the iceberg.
Travel and tourism has been especially hard hit during the pandemic and particularly leisure travel. Based on current research, many travelers aren’t optimistic that things will get better in the short term. A report in the Las Vegas Review Journal dated June 23 detailed the deteriorating mood of the traveling public:
Would-be travelers are becoming more pessimistic in their outlook about their safety when they travel.
A report issued by San Francisco-based Destination Analysts that surveys prospective visitors’ attitudes toward travel found the economic toll on tourism resulting from the coronavirus outbreak is not pretty.
To the question, “In the next month, how (if at all) do you expect the severity of the coronavirus situation in the United States to change?” 47.7 percent of the 1,200 people surveyed said they expected conditions to get worse. A week earlier, the number was 34.7 percent.
Whether conditions actually improve or deteriorate over the next month is of little consequence. When it comes to leisure travel perception *is* reality. A number of other metrics in this report are also relevant here–asked to identify if they feel certain activities are unsafe the respondents underscore the challenges of the tourism industry: 61.1% indicated that commercial air travel is unsafe, 66.9% said that they felt going to a casino was unsafe and 68.7 percent feel that attending a conference or convention puts their health at risk.
There are plenty of other sobering insights on the Destination Analysts website and it’s well worth a look:
NEVADA’S ECONOMY HAS BEEN HIT HARD
We’ve talked a lot about the devastation to Nevada’s economy that the pandemic has caused with the gaming industry in particular taking a brutal hit. The long term significance of the economic collateral damage is only now becoming apparent. Many analysts suggest that it will take 24 to 36 months for steady job growth to return to the Las Vegas area. Since Nevada’s unemployment rate is the worst of any US state (28.2%) and Las Vegas’ unemployment rate is the worst of any major US city (33.5%) that’s very bad news. More context: the peak unemployment during the Great Depression was 25% (1933). Only two other states have ever posted unemployment rates higher than 20%–Michigan reached 22.7% in May and Hawaii reached 22.3% in April. As bad as the more recent numbers are they’re at least an improvement over the month of April when the Nevada unemployment rate was 30.1%–the highest statewide unemployment rate ever recorded and the only time in history that a state has experienced a jobless rate above 30%.
The initial numbers when the Nevada gaming industry reopened on June 4 were encouraging but considering that most industry metrics were at or near zero during the previous two months that bar isn’t set particularly high. Currently, only 75% of Las Vegas area casinos are open though Anthony Curtis reports in the essential Las Vegas Advisor newsletter that the ones that aren’t open are some of the biggest on the Strip. Among those that are closed with no indication of a reopening date are Mirage, Bally’s, Paris, The Cromwell, Planet Hollywood, Palms, Rio and downtown’s Main Street Station.
Tourists are returning slowly but based on the dismal employment projections for the next couple of years that won’t help the ‘locals’ casino market. The extent of damage to this segment of the Nevada gaming industry is likely more significant than the more tourist oriented casinos and will take longer to recover. That 33% unemployment rate reverberates throughout the area’s economy and for locals casinos hits not only gaming but non-gaming revenue–people eat out less, drink less, party less and certainly gamble less when they’re in dire straits economically.
STATIONS CASINO PROPERTY CLOSURES UNDERSCORE THE WEAKNESS IN LAS VEGAS’ ECONOMY
The backdrop of the devastated Las Vegas economy helps explain this but does little to minimize the shocking decision of Stations Casinos to keep four of their properties closed ‘indefinitely’. More specifically, the company has been granted temporary closure status by the Nevada Gaming Control Board through June 30, 2021. Simply put, the Palms, Texas Station, Fiesta Rancho and Fiesta Henderson will remain closed for at least a year.
Here’s the location information for the Fiesta Henderson with the ‘temporary closure through 6/30/2021’ clearly indicated. The other four properties have the same date noted in the ‘temporary closure through’ space. Here’s the link to the information from the Nevada Gaming Control board–all are in .PDF format:
FIESTA HENDERSON LOCATION INFORMATION
FIESTA RANCHO LOCATION INFORMATION
PALMS CASINO RESORT LOCATION INFORMATION
TEXAS STATION LOCATION INFORMATION
In addition, as first reported by Eater Las Vegas the Fiesta Rancho and Texas Station properties have requested ‘non-operational’ status for their business licenses in North Las Vegas. The request will be heard at the North Las Vegas City Council meeting on July 1 and should be granted without much opposition. The ‘non-operational’ status will be retroactive to June 4, 2020 (the ‘reopening date’ for the Nevada gaming industry) and run through June 4, 2021:
FIESTA RANCHO NON-OPERATIONAL STATUS REQUEST (PDF)
TEXAS STATION NON-OPERATIONAL STATUS REQUEST (PDF)
Background information from the above documents indicates the reason for the request and the fact that there is ‘no known reopening date’:
Due to the uncertain economic conditions in the State of Nevada, Texas Station Gambling Hall & Hotel will remain closed until further notice, and there is no known reopening date at this time.
This is to the best of my knowledge unprecedented. Properties have ‘temporarily closed’ on short notice due for a number of reasons with financial issues being the most common. In this case, an otherwise solvent company is unilaterally shutting down four properties for at least a year. Based on my understanding of the procedures for closure and reopening due to the COVID-19 pandemic Stations Casinos could have kept their properties closed indefinitely without the need for NGC approval. The ‘temporary closure’ status does provide some certainty that these casinos won’t reopen any time soon and that’s important for investors and financial markets. The fact that they’ve decided that it is in their financial best interest to close these four properties for at least a year tells you everything you need to know about the state of the economy in the city and state. These closures also represent several thousand jobs that won’t be returning in the near term.
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.
Given the Palms’ proximity to The Strip and I-15 you have to think it’ll 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.