When Las Vegas casinos reopen, properties that count heavily on locals could initially lead the way to a recovery from the coronavirus-induced economic downturn.
That’s how Keith Smith, Boyd Gaming’s president and CEO, is picturing the pending reopening of Southern Nevada’s gaming industry. Casinos and other nonessential businesses have been shuttered since mid-March out of virus concerns and should remain closed into May. Gov. Steve Sisolak is expected to detail his “Nevada United: Roadmap to Recovery” plans on Thursday to gradually reopen the state.
“If you look back at 2008 and 2009, the recovery from that period in time, there was this expectation that the rebound on the Strip would fuel the rebound in the locals market,” Smith said. “It really never did. We all kept waiting for the health of the Strip to trickle into the locals market and it took years for that to show up. I’m not sure there’s a direct correlation there.”
Smith made his comments Tuesday during an earnings call, where he announced revenue earnings of $680.5 million for the quarter ending March 31 to represent an 18% dip from the same quarter in 2019.
With shuttered properties across the country — Boyd has 10 casinos in Las Vegas and another 19 throughout the U.S. — the company has monthly cash requirements of about $60 million, according to its earnings report. Boyd has just over $830 million in available cash, according to CFO Josh Hirsberg, which means that it should have more than enough slack to wait out the different business closure mandates around the country.
While it’s widely expected that vacationers’ confidence in air travel might take some time to rebound — especially with no COVID-19 vaccine in place — Smith said he believes there will be demand this summer for casino patrons who may not have to go far.
“I think there will be good pent-up demand once we are able to reopen,” Smith said. “People are at home and needing to get out. They’re looking for an escape and I think, once we reopen, we’ll be part of that escape.”
Though a sizable chunk of visitors to the Strip are out-of-town visitors, Smith said Boyd’s Las Vegas properties normally see very little business from that crowd. Many of the folks who frequent places like Sam’s Town and Suncoast, two of Boyd’s Las Vegas Valley casinos, are local retirees who might be ready to venture out once casinos reopen.
“Roughly 20% of visitation coming into Las Vegas is international visitation,” Smith said. “Very little, if any, of that shows up in our buildings, so we don’t have to worry about that. I think the Las Vegas locals market will be healthy. A large percentage of our business is from retirees who live here. Those retirees didn’t have a job when this started and they don’t have a job now, but they still have their income.”
Smith expects casinos to initially open under limited capacity guidelines. Boyd, like other gaming companies that operate in Nevada, is waiting for direction from Gov. Steve Sisolak on what those guidelines might look like.
“We’re not going to be offering the same product that we closed with in March,” Smith said. “When you think about opening a local property, most of our customers are local and drive to us. Having restaurants and bars open will be important. The number, which ones, whether they’re high-end or mid-tier restaurants, each property and operator will have different issues based on what their buildings look like.”
Smith did say Boyd has been “fully supportive” of the actions taken by local and state officials across the country to help slow the spread of the coronavirus.
“We look forward to reopening our properties — following strict safety protocols that will meet or exceed the requirements set forth by health officials — when state authorities determine it is appropriate to do so,” Smith said. “We’re having good, constructive dialogues with state leadership in each of the 10 states where we operate. None have talked about opening casinos in the next two weeks, but they’re all talking about the opening of casinos at some point in the future, which is a good sign that we’re in the conversation.”
While he said he expects different states to allow for casino openings at “their own pace,” Smith said he hopes to have “not all, but many” of Boyd’s properties open by early June at the latest.
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