The reviews are in: Pinnacle Entertainment's $368 million hotel-casino in Baton Rouge, La., is a winner.
The Las Vegas-based regional casino operator conducted an analyst day recently for the L'Auberge Baton Rouge, which opened on Sept. 1. The opening was delayed a few days because of Hurricane Isaac.
L'Auberge Baton Rouge, with a 74,000-square-foot casino, a 206-room hotel, four restaurants and a 13,000 square-foot events center, is larger than the two competing casinos in the market; Hollywood Baton Rouge and the Belle of Baton Rouge.
The newness may allow the property to grow the market.
"We left Baton Rouge impressed with the quality of the asset and believe the property should be able to attract play from higher-end consumers residing in the local metro area, many of whom likely currently frequent more upscale regional destination assets in Biloxi (Miss.) and New Orleans," Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors.
Brean Murray Carret gaming analyst Justin Sebastiano said L'Auberge Baton Rouge would easily rise to top-of-the-market status.
"Based on our conversations with various property managers and tours of several casinos, we believe Pinnacle will indeed cannibalize the existing Baton Rouge casinos by 35-40 percent, grow the market by about a third, and take some share from the destination casinos in New Orleans and Biloxi/Gulfport," Sebastiano wrote in a research note.
JP Morgan gaming analyst Joe Greff told investors Pinnacle executives believe the new hotel-casino could achieve the cash flow necessary for a mid-teens return on invested capital.
"Management noted that the property has seen solid trends to date, while recognizing the property has been open only 10 days," Greff said. "Since opening, management noted it has had over 53,000 casino admissions."