LAS VEGAS (KLAS) — Renovations at The STRAT Hotel, Casino & SkyPod took their toll on company profits over the past three months, but Golden Entertainment officials expect to reap the rewards this fall.
Blake Sartini, chairman and chief executive officer, said Golden is doing “as best we can” as the last set of rooms come online by the end of September. The STRAT pool and 537 rooms were the focus of the renovations.
With F1 and the Super Bowl on the way, those freshly updated rooms are going for $20-$25 more per night, according to Charles Protell, president and chief financial officer of Golden Entertainment. The company says it lost about $40 million in revenue directly due to renovation that eliminated 50,000 potential room nights for guests.
In the second quarter of this year, Golden completed the $260 million sale of its Rocky Gap Casino Resort in northern Maryland and announced a $322.5 million deal to sell its slot routes in Nevada and Montana to J&J Ventures Gaming of Illinois. That deal is expected to close by the end of the year.
Golden is keeping the taverns — PT’s, Sierra Gold and others — and they see expansion opportunities in the partnership with J&J. Golden opened its 65th tavern this year.
Those slot routes accounted for a little less than a third of Golden’s revenue in 2022.
The shift puts a big focus on what’s happening at The STRAT.
The Atomic Range golf project tees off this fall, too. That’s a venture with Flite Golf & Entertainment on a four-story playground adjacent to The STRAT that is expected to attract locals and tourists.
Golden’s second-quarter report shows revenue of $286.7 million and net income of $12.3 million. Compared to the second quarter of 2022, revenue was down about 4% overall, but it was 10% lower at The STRAT with about 15% of the rooms unavailable.
Profit, measured by Golden Entertainment as EBITDA (earnings before interest, taxes, depreciation and amortization), was down 22%. Profit dropped from $75 million last year down to $58.4 million this year.
The company announced a one-time $2-per-share dividend and authorized repurchase of as much as $100 million in stock.
Most of the money from the Rocky Gap sale — $175 million — is being used to repay loans, part of refinancing the company’s debt. In 2016, Sartini’s company merged with the company that owned Rocky Gap to form Golden Entertainment. The company estimates Rocky Gap was worth $60 million at the time.
The extra money from that sale and the deal to sell the slot routes give Golden Entertainment some room to grow, but Protell said the focus immediately is on the company’s current projects. It owns more land around The STRAT, and it also owns the shuttered Colorado Belle in Laughlin.
“I’m very patient, but I’m opportunistic,” Sartini told investors during Monday’s call.
Golden Entertainment owns three Las Vegas casinos: The STRAT, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder. Golden also owns Laughlin properties Aquarius Casino and Resort and Edgewater Casino and Resort, along with three casinos in Pahrump: Pahrump Nugget, Gold Town Casino and Lakeside Casino and RV Park.