Two Way Hard Three | Las Vegas Casino & Design Blog

November 16, 2006

WSJ: How Boyd and Station Casinos Lost in Vegas

Posted by Hunter

I'm always a little reluctant to post links to WSJ articles since you have to subscribe to read it. Still, I love the Journal and check it out every day and we've got a section piece on Boyd and Station today that's interesting so I'm posting it.

The concept is looking at Red Rock and South Point (South Coast) and how these investments didn't produce the returns they wanted... Station missed this quarter for the first time in a looong time.

http://online.wsj.com/article_print/SB116364714531124738.html

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From the article:

"Two companies whose casinos are better-known to Las Vegas locals than to the tourists who flock to the bright lights of the Strip have spent well over $1 billion turning nondescript gambling halls into glitzy resorts. So far, their bets haven't worked out as they hoped.

Station Casinos Inc. and Boyd Gaming Corp., which are family-founded and family-run, have long catered to people who live in town, including the bartenders and dealers who work in the major casinos. Boyd posted an unexpected loss for the third quarter, largely because of the sale of a poorly performing new casino. Station reduced its fourth-quarter and 2007 full-year guidance, after 18 straight quarters of meeting or exceeding estimates."

Categories: Boyd Gaming, Business of Gaming, Station Casinos


Comments

Read archived comments (9 so far)
November 16, 2006 10:15 AM Posted by mike_ch

Google News allows you to find other newspapers that republish WSJ articles in their own paper.

So, with that in mind:
http://www.post-gazette.com/pg/06320/738900-37.stm

November 16, 2006 11:46 AM Posted by detroit1051

"This gives further credence to our thesis that the Las Vegas locals market has slowed dramatically,"

A Vegas friend and I discussed this article by email this morning. We were both disappointed the writer didn't mention the real estate slowdown. Vegas has not slowed as much as some areas (such as South Florida where I am), but people clearly don't feel as wealthy now as they did a year ago with real estate paper gains and lower rate mortgages. This has got to have an effect on locals casinos. The Journal article also mentioned construction in relation to Boyd's Echelon Place. The LV Sun talk about that as well as The Mirage's fantastic performance and a promising Chinese New Year:
LV Sun: Gaming

November 16, 2006 10:11 PM Posted by David

What they are also not mentioning is that every major Strip casino has started some form of local marketing in the last year. They all want the high end local gamblers. Many of the GVR guests from years past have told me that they all gamble at Wynn now.

Local gamblers are very profitable, you send them a months worth of offers by mail, they come in - sometimes 20-25 days a month. Take that versus a out of state visitor, who comes in for four days every 6 months. Stations and Boyd benefited from the Strip ignoring the locals. Not any more.

November 17, 2006 8:15 AM Posted by Hunter

Great point David, you're totally right. I have heard a lot of stories of properties like Wynn Las Vegas sending promos to locals, much more than they were used to.

David - what are you up to now? You left GVR, right?

November 17, 2006 8:26 AM Posted by detroit1051

David's right. Some local advantage VP player friends are following the promotions to the Strip. However, they certainly aren't loyal to operators. Wynn seems to have started this with high paytable and enhanced comps, possibly to boost numbers? When the paytables go back down, these players are off to the next deal. Caesars Palace has gotten quite aggressive as well. I don't hear much about MGM properties doing it....Another reason to respect MGM.

November 17, 2006 11:45 AM Posted by Mike P.

Caesars just finished killing off what used to be a decent video poker inventory, so Harrah's has apparently decided they don't want locals' (or knowledgeable tourists' for that matter) business.

Wynn still has locals only promotions and they even offer a few VP machines with 100%+ games. You can tell when the locals are hanging out there by the clouds of cigarette smoke hovering over that bank.

What I find strange about Wynn is they do little direct marketing to tourists -- at least not to this one. We've gotten maybe 3 mailings and one promotional email from them, none with really compelling offers. I get spam from MGM and HET properties at least a couple times a week, along with stuff in the mail pretty regularly.

Mike P.

November 18, 2006 4:41 PM Posted by mike_ch

Detroit, what's to respect about MGM? I don't play VP and I don't smoke, but I do have 'favorite' properties and are willing to cast them aside at least temporarily in search of a good deal. However, I was like this as a tourst, too.

I do get offers from MGM properties but none as nice as Bellagio/Wynn (NYNY and recently Luxor.) I can't stand the Stations/Coasts because they're so utterly bland and the payout for slot machines really aren't that much different from the Strip. Except for Bellagio, I seem to get really fleeced there when I'm not playing a progressive.

Besides, there's still a large amount of locals who avoid the Strip because of $15 drinks.

November 18, 2006 6:29 PM Posted by detroit1051

"Besides, there's still a large amount of locals who avoid the Strip because of $15 drinks."
Yikes! I don't know that I've ever seen a $15 drink.

November 18, 2006 6:34 PM Posted by Hunter

The unfortunate thing is that it looks the same as a $3 (or a $100 drink (bar-top VP losses) for that matter) drink.