Casinos investing in renovations
March 22, 2014
What’s in the works at Boomtown?
Dean DiLullo, chief executive officer of M1 Gaming, the owner of Boomtown, says the 50-year-old property nine miles west of Reno functions best as a complete package — and that means bringing a truck stop back to the site.
Truckers for decades stopped at Boomtown before passing over the Sierra but lost that option when Cabela’s opened in early 2008. DiLullo says adding a truck stop component at Boomtown is a near-term goal.
“We are working to put the pieces of Boomtown back,” DiLullo says. “We would like to see the truck stop added back. If we do that the 700 trucks that park on I-80 during a snowstorm will have somewhere to park, fuel, gamble and stay.”
DiLullo says M1 Gaming currently is reviewing legal and developmental aspects of adding a truck stop to the property. M1 Gaming owns 100 acres at the site and also is mulling plans to develop parcels fronting the Truckee River.
“I could see mixed use development or a riverwalk happing here,” DiLullo says.
Casino operators in Greater Reno Tahoe are doubling down on their properties.
The more than $100 million spent or tabbed for renovations at regional hotel-casinos includes $50 million at JA Nugget, $20 million at Boomtown, $30 million at Grand Sierra Resort, $20 million at the Lake Tahoe Hyatt in Incline Village and more than $40 million at the Horizon at South Lake Tahoe.
Casino operators are bullish on Northern Nevada for any number of reasons, said Carlton Geer, president and chief executive officer of JA Nugget. First and foremost, Geer said, is the significant rise in year-over-year gaming revenue at large casino properties in Northern Nevada.
“If you look at the Nevada Gaming Control Board revenue reports, large casinos in Northern Nevada gained about 6 percent year over year through December in gaming win,” Geer said.
That, coupled with other tangible signs that the economy in Northern Nevada has found its legs — solid movement in the residential and industrial construction markets, a rise in revenues from room rates at properties in Washoe County, continued signs of economic recovery from neighboring California — has casino operators scrambling to upgrade their properties to capture greater market share.
“We have a real economic recovery in Northern Nevada. It is tangible; we can see it,” Geer said. “And we have the recovery of the Northern California economy. We want to deploy capital to reposition ourselves to become more competitive.”
Deployment of capital is a fundamental element of growth, said Dean DiLullo, chief executive officer of M1 gaming, owner of Boomtown. Repositioning Boomtown with $8 million in capital improvements was made easier by the modest $12 million purchase price M1 Gaming paid to former owner Pinnacle Entertainment in June 2012. The property has been profitable every month since then, DiLullo noted.
“The key to any good investment comes on the buy,” he said. “You have to invest the right amount of capital without overspending — and our industry has been known to overspend. You have to make sure your capital is focused on the products the guests want.”
Sometimes upgrades are a necessary course of business. The Nugget, Geer said, is 58 years old and requires substantial capital expenditure for routine and deferred maintenance that had been delayed over the years. JA Nugget will paint the entire property in coming months and upgrade behind-the-scenes functions such as its HVAC and mechanical and plumbing systems to increase the properties airflow and energy efficiency.
In addition to the large-scale renovations, JA Nugget plans to add a country bar, upgrade its bingo operations and move bingo, gift shop, deli and sports book operations to the main casino floor — all part of a sweeping effort to gain an edge in a crowded marketplace.
“The intent is to make us more competitive,” Geer said. “Strategically we are not just expending capital because we think it is a good thing to do; we will become more competitive and get a return on our invested capital.”