STATION CASINOS SHOULD BE ABLE TO OVER COME THE SHORT FALL IN BUSINESS

Implications: Having been an avid fan of Station Casinos for quite a long time, it always distresses me to see negative reports concerning them. Their second quarter reported loss does not seem to be outlandish. They have many thing on their plate at this time. The cost of doing business continues to rise as the affect of the economy continues to hurt the bottom line. When will gaming we see the light???  

Analysis: The truth of the matter is, Station Casinos is a sound, well run company that has fallen into the same problems that face other major resorts. The economy has a bad smell and seems not to want to rebound as quickly as the industry would like.  Everyone has been feeling the loss of room count, drive in business and general lack of enthusiasm on the part of vacationers. The lack of disposable income has hurt the general traffic into casinos. Guests are staying closer to home until there is a greater feel of recovery among the casino trade. It's not hard to see, that since room count is down in many properties, it only stands to reason that food and beverage, entertainment and retail will also feel the drop in revenue.

So, what does the future have to offer hotels like Stations and strip properties alike? Many of the suits are predicting that the recovery will come early in the first quarter of 2009. I hope they are correct. It looks more like the second quarter to me. Regardless of the timing, it will end and the future is bright for gaming. Some major projects have been placed on hold. Boyd group has decided to stop construction of the mega resort Eschelon for about a year. They are blaming short money supply and high cost of the loans. The Elad Corporations has also announce that they will hold off the start of construction of their Plaza Hotel complex until dollars are more available at better rates. Really not bad judgement on either companies part. The City Center by MGM continues to move along and so does the Encore by Steve Wynn. The Encore is scheduled to open during the last quarter of 2008.

All in all, gaming is off a bit, the numbers are not quite as soft as they could have been. I do look for some relief starting 2009............