Now that Golden Entertainment Inc. is nearing completion of close to $100 million in renovations at The Strat, company executives Thursday said they are willing to let the property run without disruption while the Strip grows to the north.
Earlier this year, the company — operators of nine Southern Nevada resorts and the nation’s largest slot route operation — opened a new tap house, lounge and sportsbook at The Strat. It also completed renovations to the SkyPod on the 108th floor of the tower, which includes a remodeled gift shop and food and beverage outlets and improvements to the SkyJump experience.
There have been renovations to other food and beverage outlets, including Top of the World, Strat Café and Starbucks, and to the exterior lighting and landscaping of the property.
Most of the renovations at The Strat are scheduled to be completed by the end of 2019. With the ongoing casino renovations, 130 hotel rooms were renovated in the third quarter. Golden expects to renovate an additional 126 rooms by year end, bringing the number of renovated rooms to 573 since June 2018.
Golden Chairman and CEO Blake Sartini and President and Chief Financial Officer Charles Protell indicated in the company’s earnings call with investors that The Strat has not fulfilled its greatest potential because of construction-related disruptions at its flagship property.
“From where we sit right now, as we think about how we position the business heading into 2020, it’s about getting to the point where we see what we have in terms of The Strat earning the return on the investment that we’ve made and evaluating where we are from an EBITDA (cash-flow) generation standpoint in the first half of the year,” Protell said. “That’ll allow us to look at a bunch of opportunities, including potentially exploring alternatives with our real estate.”
The company might back off from rushing to develop acreage on The Strat’s periphery into a conference center, a proposal aired earlier this year, particularly because there is about 2 million square feet of convention space coming on line in Southern Nevada in the next year.
“In terms of what we do with that excess real estate, I would note that we have excess real estate at a number of our properties,” Sartini said. Noting that there are several big projects under way in the north end of the Strip, including Resorts World Las Vegas and The Drew, he said the company is “looking at various ways to generate value out of that real estate.”
“The activity that’s being presented coming north on the Strip is creating real opportunities for us on the excess acreage we have on The Strat, from high density, to entertainment, to other options,” Sartini said.
Golden, which operates the PT’s Tavern chain of pubs, plans to roll out its TrueRewards one-card loyalty program card at its tavern network by the end of the year.
“To us, that’s really the true test,” Protell said, “and we do think that the ecosystem we will build here in Southern Nevada, particularly in Las Vegas, will demonstrate that there is a hub-and-spoke model with a distributive business and having casinos in jurisdictions where that’s allowed.”
The Las Vegas company reported record third-quarter revenue and cash flow while year-over-year growth was driven mainly by the acquisition of two casinos in Laughlin in January.
The company reported a net loss of $9.4 million, 34 cents a share, on revenue of $243.3 million for the quarter that ended Sept. 30. In the same quarter a year earlier, the company had a loss of $3.1 million, 11 cents a share, on revenue of $210.3 million.
Golden shares were up 23 cents, 1.5 percent, in light trading on the Nasdaq exchange Thursday. After hours, the stock settled at $15.56 a share.
Golden Entertainment Inc.
Third-quarter revenue and earnings for Las Vegas-based Golden Entertainment Inc., which operates The Strat and two Arizona Charlies properties in Las Vegas and properties in Laughlin, Pahrump and Flintstone, Maryland. (Nasdaq: GDEN)
3Q 2019: $243.3 million
3Q 2018: $210.3 million
3Q 2019: ($9.4 million)
3Q 2018: ($3.1 million)
(Loss) per share
3Q 2019: (34 cents)
3Q 2018: (11 cents)