Coronavirus pandemic slows visitation by core customers to the Strat

Some of the Strat’s core customers, those 55 and older, are still on the sidelines waiting out the coronavirus pandemic, a Golden Entertainment Inc. executive said Thursday.

But all the customers who have returned are coming more often and spending more.

Blake Sartini, chairman and CEO of Las Vegas-based Golden, told investors during the company’s fourth-quarter earnings call that an estimated 40 percent of the 55-and-older database hasn’t returned to the casino based on data from the company’s True Rewards loyalty program.

But he added that those who have returned, including all ages, have spent 25 percent more per visit than they had a year ago.

He expects visitation from that demographic to rise as more people receive vaccinations.

Strat, Golden Entertainment’s signature property, has seen a rise in visitation to its Top of the World restaurant on the 106th floor of the tower.

Sartini said it has become “a must-see attraction.” That, he said, bodes well for a robust recovery from the pandemic and exemplifies the effects of pent-up demand.

Sartini said the fourth quarter started strong for Golden properties, but that progress languished in November and December as additional state restrictions on casino capacity were imposed. In addition, California, a key feeder market for Golden, imposed stay-at-home recommendations.

The Strat had 50 percent occupancy in October that fell to about 30 percent in November and December. But visitors have begun returning in February and March, he said, and on weekends, occupancy has been close to 80 percent.

Sartini said that February operational performance has been better than January and January was better than November and December.

He attributes improvements to operational adjustments the company has made to provide a foundation for sustainable margin improvements and better cash flow.

“Looking forward, we expect the changes we have made to our cost structure will provide us with sustainable margin improvement, which (is) expected to result in higher cash generation and allow us to reduce leverage, pursue future strategic initiatives and return capital to shareholders,” Sartini said on the call.

Fourth-quarter revenue was down 15.1 percent from a year ago. The company reported a net loss of $18.5 million, 66 cents a share, on revenue of $205.6 million for the quarter that ended Dec. 31. By comparison, the company had a net loss of $7.7 million, 28 cents a share, on revenue of $242.1 million in the fourth quarter of 2019.

President and Chief Financial Officer Charles Protell told investors the company’s distributive gaming operation — the slot machine routes to service small outlets at taverns, restaurants, grocery stores and convenience stores — performed well in Nevada and Montana.

Nevada distributed operations adjusted cash flow rose 2.5 percent, primarily due to growth at wholly-owned taverns and in Montana, distributed operations grew revenue and adjusted cash flow, 5 percent and 4 percent, respectively, in the quarter.

The company is exploring expanding its distributive gaming to Pennsylvania and other states.

Protell also said the company expects to generate new revenue through sports wagering with partner William Hill in Maryland when sports-betting legislation is scheduled to become operative in June.

Golden shares, traded on the Nasdaq exchange, on Thursday closed up 26 cents a share, 2.2 percent, to $26.06 a share on average trading volume.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.