Jeff Simpson on Red Rock: It’s great, but let’s not get carried away with the hype

By Jeff Simpson

Sunday, April 9, 2006 | 7:34 a.m.

Station Casinos has a certain winner in its Red Rock Resort, set to open April 18 at Charleston Boulevard and the Las Vegas Beltway.

One respected Wall Street analyst who toured the property went so far as to send out a research note calling the property the best resort product in all of Las Vegas.

That's a bit of a reach.

Red Rock will absolutely be the city's best locals casino, and its amenities compare favorably to all but the newest and best Strip resorts.

Top Station executives Frank Fertitta III and Lorenzo Fertitta got their $925 million's worth. But to rank Red Rock ahead of Bellagio and Wynn Las Vegas is a stretch. Dining, entertainment and retail options at the best two Strip casinos are much more extensive. Wynn Las Vegas has its own high-caliber golf course on site, and Bellagio has Shadow Creek in North Las Vegas.

What Red Rock does have that trumps its high-end Strip competitors is its relative isolation on the valley's extreme west side. For those resort customers looking to get off the Strip, Red Rock will make an appealing choice.

One overlooked impact of Red Rock will be a big positive for Station Casinos.

The company has done a brilliant job of breaking out of its older, demographically inferior locations, and Red Rock is its best effort yet.

Palace Station, Boulder Station, Texas Station and Fiesta Rancho draw gambling revenue from less vibrant parts of the valley.

But starting with its Sunset Station, and continuing with its purchase of and reinvestment in the Santa Fe Station and Fiesta Henderson, the company broke out of the box it was in.

Station's Green Valley Ranch partnership with the Greenspun family, owners of the Las Vegas Sun, proved to be an overwhelming success, as the stellar demographics of Green Valley fueled incredible profits and justified continuing expansion and improvement.

It's Red Rock that will have the most dramatic impact on Station's top and bottom lines, however. The company doesn't have to split profits like it does at Green Valley Ranch.

When Harrah's Entertainment was kicking Coast Casinos and Station Casinos' tires a couple of years ago, the Coast's Michael Gaughan and the Fertittas reportedly wanted more than Harrah's boss Gary Loveman was willing to pay for the locals giants.

Loveman said at the time that he wanted into the Las Vegas locals market, but couldn't figure a way to do it - Station and Coast Casinos, the two biggest locals players, were asking too much.

But competitor Boyd Gaming Corp., the third-biggest locals operator, paid Gaughan his price. The move has been great for Boyd, which has seen its shares skyrocket - and for Gaughan, who was savvy enough to take payment in Boyd shares.

I visited Laughlin last week, and I think the Colorado River gaming market is poised to capitalize on Las Vegas' ongoing luxury trend.

As Strip room rates continue rising, Laughlin's affordability and distinct laid-back flavor should make the market more and more appealing.

When I first visited Laughlin in the 1980s, the market was undergoing a tremendous growth period. At the same time, Las Vegas was in the midst of doldrums that didn't end until Steve Wynn opened the Mirage in 1989.

Now it's Laughlin in a slow period, with major casino operators trying to sell some of their properties and no recent hotel openings or expansions.

It's a great opportunity for casino operators with imagination and resources.