Happy Thanksgiving from GGB; Newsletter Returns December 4

Locals Market Looks Good in Vegas

Smaller “locals” casinos, like Boyd Gaming’s Orleans (l.), are benefiting from an economic resurgence along the Las Vegas Strip. All the markers are positive, with housing and employment on the rise, and an additional $8 billion in development planned for the thoroughfare.

Boyd, Station reinvesting in resort properties

Boyd Gaming and Station Casinos see fair weather in the economic forecast, according to a report in the Las Vegas Review-Journal. With modest but dependable growth in the Las Vegas locals market predicted for this year, the companies have improved their credit profiles and are comfortable reinvesting in their properties.

“Over the last 12 months, Station Casinos has successfully completed a series of financial transactions that have improved the company´s liquidity profile, extended debt maturities and reduced borrowing cost,” said Deutsche Bank gaming analyst Andrew Zarnett. “There have been many positive catalysts for Boyd credit in the past year, such as bank/bond refinancing at Borgata and Boyd and the sale of non-core assets,” including the former Echelon site on the Strip, which the company sold to Genting.

Indicators for the locals market all continue to be positive, according to Union Gaming Group analyst Robert Shore. In an April call to investors, he said with housing, wage growth and employment all on the rise, the locals market will also see a healthy boost. “While we aren’t forecasting a near-term return to peak levels, we continue to remain positive on the long-term health of the market given the aforementioned issues,” Shore said.

Nongaming attractions have added a lot to the economic recovery in Las Vegas, and the locals market is following the playbook developed by big players such as Caesars Entertainment and MGM Resorts International.

Station’s $55 million upgrade of its restaurants, nightlife and other amenities at Red Rock Resort and Green Valley Ranch Resort are part of the trend. So is Boyd Gaming’s plan to renovate the restaurants at its Coast Casinos and Sam’s Town resort.

With Genting planning a $4 billion resort complex, Resorts World Las Vegas, and an additional $4 billion in development planned for the Strip, the locals sector will get even stronger.

“Construction workers have high relative salaries when compared to other subsectors, are transient and free spending,” Shore said. “The upcoming capital development projects and related new construction workers should have a clear positive impact on the locals’ economy and gross gaming revenue.”