Red Rock Resort Gets Solid Reviews - Tuesday 11th of April 2006

by Rod Smith

Las Vegas Gaming Wire

LAS VEGAS Rave reviews from Wall Street analysts for Red Rock Resort sent Station Casinos shares soaring Wednesday.

Station Casinos held a well-attended sneak preview for analysts Tuesday at its newest property, which opens April 18. Company executives laid out their long-term growth strategy.

Deutsche Bank analyst Marc Falcone said Red Rock Resort surpassed even the loftiest expectations of analysts and investors.

"It is quite likely the best casino-resort product in all of Las Vegas, including the Strip," he said. "We also believe investors' conviction on the ability of Red Rock to generate solid returns on a $925 million project is clearly evident after previous concerns."

Station Casinos Chief Financial Officer Glenn Christenson said his company has based its plans on projections that the locals market will grow to about $3.8 billion by 2010, up 41 percent from $2.7 billion last year.

That growth will come from a combination of increasing population and greater per capita spending on gambling, he said.

CRT Capital Group gaming analyst Steve Ruggerio said the opening of Red Rock Resort will reinforce Station Casinos' dominant position in the Las Vegas locals gaming market.

Furthermore, he said, the opening will help Station Casinos reach out to the Southern California market it is also luring with Green Valley Ranch Resort in Henderson.

Brian Gordon, a partner in Las Vegas-based Applied Analysis, said Red Rock Resort will broaden Station Casinos' appeal by offering a product Las Vegas has not offered.

"They've designed a facility that has the ability to hit multiple markets, from cost-conscious locals customers to higher-end leisure travelers seeking out a luxury product," he said.

Based on preopening booking, expectations are being set high for the resort, Gordon said.

In an investor advisory, Goldman Sachs gaming analyst Steve Kent called the property "remarkably impressive."

"Some may have questioned how Station (Casinos) can spend over $900 million developing a local casino, but after seeing the quality of the rooms, restaurants, clubs and public areas, it's clear this may be a category-killer in the locals market," he said.

Falcone said the variety Red Rock Resort offers should help it establish a dominant position in the suburban market.

"While not a 'one size fits all' resort, we believe that Red Rock offers everything for everybody, locals and nonlocals, making it the premier locals spot and a top tourist and convention destination as well," he said.

While receiving top ratings from travel companies, Red Rock Resort is holding the line on prices for movies, bowling, and food and beverage in order to hold on to locals customers.

Station Casinos shares closed Wednesday at $80.32, up $1.61, or 2.05 percent, on the New York Stock Exchange. There were 1.04 million shares traded, about 63 percent above normal volume.

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