New Casinos and Healthy Downtown Las Vegas Boost Boyd Gaming Earnings
Posted on: April 26, 2019, 10:15h.
Last updated on: April 26, 2019, 11:51h.
A vibrant downtown Las Vegas casino market and new acquisitions in the Midwest and South region helped propel Boyd Gaming to Q1 revenue growth of 36.5 percent, at $827.3 million, while net income rose 9.8 percent to $45.5 million.
While visitors to Las Vegas piled into Fremont St, boosting revenues by 4.2 percent to $63 million, Las Vegas locals were doing their bit too. Boyd’s locals market segment was up just under one percent, but it represented the best results for the segment since 2007, before the recession kicked in.
Fremont’s regeneration means that around half of all visitors to Las Vegas these days head downtown – although Boyd CEO Keith Smith acknowledged that the company’s downtown properties will likely suffer from disruption created by the construction of Circa, Derek Stevens’ new casino resort.
“Derek has been a great neighbor and is doing everything he can to mitigate the disruption,” Smith said during a Thursday earnings call. “We think this is a tremendous development for downtown.”
Boyd has announced a $32 million expansion of its Fremont Hotel that will see the addition of a new hotel tower to the property, while expanding the gaming floor to help cope with the upturn downtown.
Smith said the company had made substantial progress in the first quarter integrating the company’s recent acquisitions and realizing synergies.
Boyd recently purchased Missouri’s Ameristar Kansas City and Ameristar St. Charles, and Indiana’s Belterra Casino and Belterra Park for $575 million from Pinnacle Entertainment, strengthening its presence in the Midwest and South region.
Revenues in the region increased by 67.4 percent, with $223 million in revenue attributed to the new casinos.
Don’t Talk About Caesars
Smith said Boyd wouldn’t rule out further acquisitions but added the company isn’t interested in “vanity projects” – it has to be “right asset, in the right market, for the right price,” he added.
He refused to be drawn on whether the company was interested in an acquisition or merger with Caesars Entertainment, which recently placed itself on the market.
“The first quarter marked a strong start to 2019 as we continue to build upon the positive momentum of last year,” Smith said. “Solid growth is continuing across every segment of our business as our talented property leadership teams make the most of a healthy economy, new operational efficiencies and enhance marketing capabilities.
“Sports betting is proving to be a key growth driver at our properties in Mississippi and Pennsylvania,” headed. “And we look forward to introducing this new amenity into additional states like Iowa and Indiana.”
Downtown’s Ups and Downs
While downtown’s resurgence may have been buoyed by gradual local regeneration and a host of new non-gaming attractions over the past few years — from esports arenas to zombie apocalypse experiences — its economy will always be intrinsically tied to the Strip.
Marketed as Vegas on a budget, downtown began to lose out before the recession of 2008 due the emergence of low-cost alternatives on the Strip, such as Luxor and Treasure Island.
When the recession kicked in and Strip properties slashed their room rates, downtown was forced to go even lower, pushing its margins to the limit.
But now, with tourists flooding into Las Vegas, the Strip has been raising its prices, adding on its much-loathed “resort fees,” which has allowed downtown to reassert itself as the affordable Las Vegas experience.
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