Casino finds profit off the Strip
By Lisa Snedeker
Associated Press
HENDERSON, Nev. — When the Bingo Palace opened off the Las Vegas Strip in 1977, the casino industry didn't give it much of a chance. But by building away from the action, Station Casinos was taking on a lucrative new market — neighborhood casinos.
"At the time, everyone thought he was crazy for building off the Strip," said Lorenzo Fertitta, son of Station founder Frank Fertitta Jr. and now the company's president.
Two years after it opened, the Bingo Palace became Palace Station, attracting local gamblers who didn't want to fight the crowds on Las Vegas Boulevard.
Station Casinos Inc. had found its niche by offering bingo, buffets and later bowling.
Today, the Las Vegas-based company has grown into a locals gambling empire with the opening of its ninth hotel-casino in the area, Green Valley Ranch Station.
Green Valley Ranch, in nearby suburban Henderson, is decidedly more upscale than its counterparts. Company officials say the $300 million property that features a nightclub, European day spa, three-acre vineyard and well-known restaurants — Il Fornaio, BullShrimp and Border Grille — is a natural evolution.
"We want to mix a lot of different groups of people," Fertitta said. "If a guy in shorts and a T-shirt is sitting at a blackjack table with a guy in a suit, then we've accomplished our goal."
Despite its fancy trappings, Green Valley Ranch is adhering to the same formula that has made Station Casinos a nearly $1 billion a year operation — providing food, entertainment and slots that are easy to get to and a good value.
"You need to be located by an interstate or a busy intersection and have ample parking," Fertitta said.
Las Vegas Strip resorts have to build hotel rooms, but Station's only requirement is parking garages, Fertitta said. But Station casinos also feature movie theaters, fast-food courts and even baby-sitting services to attract residents.
Company officials predict 80 percent of the new resort's business will come from local residents, but they hope to attract the other 20 percent from the Strip because of Green Valley Ranch's access to Interstate 215 and its airport proximity. It includes a 201-room hotel, a fraction of the number of rooms found in the newest mega-resorts on the Strip.
"Some people don't want to stay in a big hotel with thousands of rooms," Fertitta said. "They want to hang out where the locals do."
Some industry experts believe Station Casinos is taking a risk and point to the recent failure of the bankrupt Las Vegas Regent, an upscale hotel-casino 10 miles from the Strip that hoped to attract affluent visitors as well as locals to its restaurants and casino.
Others believe that the management team's experience improve the new resort's chances for success.
"It's going to be interesting," said Jason Ader, a gambling industry analyst for Bear Stearns Co. in New York. "I think if anyone can pull it off, it will be them. Station Casinos are really best at understanding local Las Vegas and customers that make up that market."
Ader said he thinks Green Valley Ranch will succeed because it's easy to get to and easy to navigate once inside.
"And it's beautiful," he said. "It's the nicest product I've seen in the local market."
The Station resort is only the second new hotel-casino scheduled to open this year in the Las Vegas valley, and both contrast with the huge hotels that have transformed the Strip in recent years. The other resort, the Palms hotel-casino, has 455 rooms.
The Palms, a small percentage of which is owned by Station, opened in November. Its partners include the Greenspun family, owners of the Las Vegas Sun newspaper, who are also partners with Station in Green Valley Ranch.
In addition to Palace Station, the company owns and operates Boulder Station, Texas Station, Sunset Station and Santa Fe Station as well as the Fiesta, the Reserve and Wild Wild West hotel-casinos and has a 50 percent interest in Barleys Casino and Brewery in Henderson.
It sold its Missouri riverboat casinos in Kansas City and St. Charles to Ameristar Casinos Inc. of Las Vegas for $475 million earlier this year.
The company reported net revenues of $991.7 million for fiscal 2000, and employs 11,000 workers.
Station was the only Las Vegas casino corporation that didn't lay off workers when tourism dropped after Sept. 11, chief financial officer Glenn Christenson said.
Many of the company's customers are employed in the gambling industry, however, so the estimated 15,000 layoffs on the Strip has affected Station's business. The company's stock has not escaped the wrath of investors who have sold off travel-related issues in general; Station is now trading in the $9 range, about half of its 52-week high of $18.75.
But Christenson remains optimistic.
"As Strip occupancy and visitor volumes increase, so will rehiring (by Strip casinos)," he said. "Many of those (rehired employees) will be Station customers."
Ader said Station Casinos is well positioned for a Las Vegas recovery, which he predicts will come in mid-2002.
"We are still long-term believers in the Station story," he wrote in an evaluation of the company.
