Despite ongoing construction disruptions at the Palace Station and Palms Casino Resort, Red Rock Resorts CFO Stephen Cootey stated the company remains “very bullish” on both projects.
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Red Rock Resorts acknowledged that its solid second quarter operating results were partially offset by ongoing construction disruptions at both the Palace Station and Palms Casino Resort in Las Vegas. Nevertheless, company executives remain sanguine about the prospects for both redevelopment projects.
The parent company of Station Casinos reported a 1.5 percent increase in net revenue, which rose to $416.2m for Q2 2018.
Net income for the quarter was $99.1m, an increase of $149.3m from a net loss of $50.2m for the same period of 2017.
“I think the disruption in the casino will be waning in the third quarter,” said Station Casinos CEO Frank Fertitta III in a conference call with investors. “Primarily, the disruption in Q3 will be the hotel suite renovation, so we have quite a few rooms out of service at Palace Station right now.
“But we definitely see the light and the end of the tunnel at Palace. It definitely feels like it’s getting traction week to week with great results.”
During Red Rock’s Q2 earnings call, CFO Stephen Cootey told investors that once construction disruption at the Palace Station “begins to taper-off” the company expects “to come at the low-end” of its estimate $10m- $15m “disruption range” for the year.
Once fully completed the $192m Palace Station redevelopment will add 178,000 sq ft of new gaming and entertainment space to the property, along with upgrades for 575 rooms and suites, and a refreshed exterior which will include two new LED marquee signs and 300 additional parking spaces.
“Recently completed highlights include a fully renovated and expanded gaming floor which provides a seam- less contemporary look throughout the property and now offers approximately 1800 slot and video poker machines and 43 table games an increase of nearly 300 machines from the prior floor counts,” stated Cootey.
Work at the Palm is more extensive with the completion of a $620m renovation – the first phase of which wrapped up in late May – still ahead. Phase two of the project – set to include 282 fully redesigned and renovated hotel rooms and luxury suites in the Fantasy Tower as well as construction of 60 new hotel rooms in a previously unfinished tower space – is under- way, with most of the new rooms due to be in service by “the end of October”.
Following this, phase three will see a casino floor expansion with the addition of approximately 300 slot machines and 16 table games.
“We remain very bullish on both of these opportunities based on their ability to appeal to both residents and tourists alike and expected to generate significant returns to the company upon the completion,” Cootey concluded.