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The New America
Wednesday, November 26, 2003
Yes, You Can Earn A Decent Living Beyond The Strip
BY PETER BENESH
INVESTOR'S BUSINESS DAILY
America's fastest-growing big city is Las Vegas.
It grew 83.3% to 1.56 million residents between 1990 and 2000, according to the Census.
The U.S. Bureau of Economic Analysis projects the city's population will reach 1.84 million by 2005.
What do you do with all those people in the Nevada desert?
Entertain them, of course.
One place they turn is Station Casinos Inc., (STN) which runs 11 casinos in the Las Vegas area.
Just don't look for them on the famous Vegas Strip. They're out in the neighborhoods, away from the dancing fountains, pirate ships and mile-long limos.
Station Casinos' customers are more likely to be locals than tourists, says Glenn Christenson, the company's executive vice president and chief financial officer. Many are retirees or baby boomers heading for retirement.
"Las Vegas is the mother ship (for aging Americans)," Christenson said. "They're people with time and disposable income."
Arriving In Shifts
Most of the seniors show up in the morning and afternoon, Christenson says. Working folks come in the early evening. The younger crowd makes its rounds in the late night and "wee hours of the morning."
To be all entertainment to all people all the time, Station Casinos adds movie theaters, bowling alleys, live entertainment and restaurants to its main offering: slot machines.
Some casinos even have child care through a deal with New Horizon Kids Quest Inc., which supplies hourly supervision for youngsters. Some casinos have computer cafes for older kids.
"These local casinos target everyone by creating a family environment," said analyst Marc Falcone of Deutsche Bank Securities Inc.
What you're not likely to see at establishments owned by Station Casinos is a large crowd of tourists.
"Many (Station Casino customers) work on the Las Vegas strip but don't want to play in those casinos and deal with all the tourists," said analyst Joe Greff of Fulcrum Global Partners LLC.
In fact, Banc of America analyst Jay Cogan jokes that Station Casinos competes as much with bowling alleys as with other casinos.
He suggests the company need not worry about the volatility that afflicts big-name properties on the strip that depend on the tourist market.
Still, Station Casinos ? like its brethren on the Strip ? took a big financial hit in 2001 and 2002, when a weak economy and sluggish travel industry combined to slow business in Las Vegas.
The company suffered five straight quarters of revenue declines beginning with the September 2001 quarter. Annual sales and earnings were down in 2001, though only sales fell the next year.
Station Casinos didn't get back into double-digit growth mode until the third quarter this year, when revenue gained 14% from the prior year to $218.7 million. Quarterly earnings almost tripled to 32 cents a share.
Analysts polled by First Call expect full-year profit to rise 75% to $1.21 a share.
The company continues to build more casinos in the Las Vegas area. But analysts sound more excited by Station Casinos' new venture as manager of American Indian tribal casinos.
It runs the Thunder Valley Casino for the United Auburn Indian Community casino in Lincoln, Calif. In April, the Federated Indians of Graton Rancheria in Sonoma County, Calif., signed Station Casinos to help the tribe create and run a new casino.
Station Casinos guarantees loans the tribal groups need to build the casinos. In return, the tribes pay Station Casinos 24% of net income, Christenson says. Station Casinos also helps design the facilities.
That's not as easy as it sounds, Christenson says. Among other things, you have to make sure the facility is a good fit with local surroundings.
"People think you throw up four walls and add slot machines," Christenson said.
Station Casinos looks to expand its business with Indian-owned casinos beyond California and into other states across the nation.
Though Christenson won't say how much the work will add to the company's business, analyst Cogan says deals with tribes will be "hugely" accretive.
"With almost no capital outlay except credit support, the returns to Station Casinos will be almost infinite," he said.
Falcone says over the near term, tribal casinos could contribute 20% to 22% to Station Casino's revenue.
"They will become a more significant piece of the business," he said.
The company faces plenty of competition in the American Indian market, however. Rivals include industry giants Harrah's Entertainment Inc., (HET) Park Place Entertainment (PPE) and MGM Mirage. (MGG)
The New America
Wednesday, November 26, 2003
Yes, You Can Earn A Decent Living Beyond The Strip
BY PETER BENESH
INVESTOR'S BUSINESS DAILY
America's fastest-growing big city is Las Vegas.
It grew 83.3% to 1.56 million residents between 1990 and 2000, according to the Census.
The U.S. Bureau of Economic Analysis projects the city's population will reach 1.84 million by 2005.
What do you do with all those people in the Nevada desert?
Entertain them, of course.
One place they turn is Station Casinos Inc., (STN) which runs 11 casinos in the Las Vegas area.
Just don't look for them on the famous Vegas Strip. They're out in the neighborhoods, away from the dancing fountains, pirate ships and mile-long limos.
Station Casinos' customers are more likely to be locals than tourists, says Glenn Christenson, the company's executive vice president and chief financial officer. Many are retirees or baby boomers heading for retirement.
"Las Vegas is the mother ship (for aging Americans)," Christenson said. "They're people with time and disposable income."
Arriving In Shifts
Most of the seniors show up in the morning and afternoon, Christenson says. Working folks come in the early evening. The younger crowd makes its rounds in the late night and "wee hours of the morning."
To be all entertainment to all people all the time, Station Casinos adds movie theaters, bowling alleys, live entertainment and restaurants to its main offering: slot machines.
Some casinos even have child care through a deal with New Horizon Kids Quest Inc., which supplies hourly supervision for youngsters. Some casinos have computer cafes for older kids.
"These local casinos target everyone by creating a family environment," said analyst Marc Falcone of Deutsche Bank Securities Inc.
What you're not likely to see at establishments owned by Station Casinos is a large crowd of tourists.
"Many (Station Casino customers) work on the Las Vegas strip but don't want to play in those casinos and deal with all the tourists," said analyst Joe Greff of Fulcrum Global Partners LLC.
In fact, Banc of America analyst Jay Cogan jokes that Station Casinos competes as much with bowling alleys as with other casinos.
He suggests the company need not worry about the volatility that afflicts big-name properties on the strip that depend on the tourist market.
Still, Station Casinos ? like its brethren on the Strip ? took a big financial hit in 2001 and 2002, when a weak economy and sluggish travel industry combined to slow business in Las Vegas.
The company suffered five straight quarters of revenue declines beginning with the September 2001 quarter. Annual sales and earnings were down in 2001, though only sales fell the next year.
Station Casinos didn't get back into double-digit growth mode until the third quarter this year, when revenue gained 14% from the prior year to $218.7 million. Quarterly earnings almost tripled to 32 cents a share.
Analysts polled by First Call expect full-year profit to rise 75% to $1.21 a share.
The company continues to build more casinos in the Las Vegas area. But analysts sound more excited by Station Casinos' new venture as manager of American Indian tribal casinos.
It runs the Thunder Valley Casino for the United Auburn Indian Community casino in Lincoln, Calif. In April, the Federated Indians of Graton Rancheria in Sonoma County, Calif., signed Station Casinos to help the tribe create and run a new casino.
Station Casinos guarantees loans the tribal groups need to build the casinos. In return, the tribes pay Station Casinos 24% of net income, Christenson says. Station Casinos also helps design the facilities.
That's not as easy as it sounds, Christenson says. Among other things, you have to make sure the facility is a good fit with local surroundings.
"People think you throw up four walls and add slot machines," Christenson said.
Station Casinos looks to expand its business with Indian-owned casinos beyond California and into other states across the nation.
Though Christenson won't say how much the work will add to the company's business, analyst Cogan says deals with tribes will be "hugely" accretive.
"With almost no capital outlay except credit support, the returns to Station Casinos will be almost infinite," he said.
Falcone says over the near term, tribal casinos could contribute 20% to 22% to Station Casino's revenue.
"They will become a more significant piece of the business," he said.
The company faces plenty of competition in the American Indian market, however. Rivals include industry giants Harrah's Entertainment Inc., (HET) Park Place Entertainment (PPE) and MGM Mirage. (MGG)
