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Gaming Guru

Jeff Simpson

Gamblers Dodging Road Construction

29 March 2004

LAS VEGAS -- Las Vegas locals casino operators know their customers.

Their customers demand convenience.

And that's why major road construction projects that interfere with the easy flow of traffic frustrate big locals operators like Station Casinos.

A couple of big Clark County road projects are hurting the performance of two of Station's smaller Las Vegas-area casinos, and company Chief Financial Officer Glenn Christenson said there's not much the company can do to minimize the impact of the construction.

A major Rancho Drive road project has squeezed the performance of Station's Fiesta Rancho property, with the company citing the roadwork as a primary cause for an $11.4 million impairment charge it levied against the property in its fourth-quarter results.

Station has been through the problem before, Christenson said, citing a major reworking of the Sahara Avenue-Interstate 15 interchange completed three years ago that hurt business at the company's Palace Station for a couple of years.

"The construction disruptions are an unfortunate but necessary reality for businesses in the valley," he said. "It's short-term pain for long-term gain."

Station is particularly susceptible to Rancho Drive trouble.

Palace Station is just across Sahara Drive at its intersection with Rancho, with the Fiesta Rancho, Texas Station and the Wildfire a few miles north near the intersection of Lake Mead Boulevard. Its Santa Fe Station is a few miles north of Lake Mead, just south of Rancho's intersection with U.S. 95.

Only the Fiesta Rancho has been badly hurt by the Rancho project, Christenson said, with the Wildfire and Texas Station taking lesser hits, and Palace and Santa Fe not suffering at all.

About 60 percent of Station's Las Vegas Valley customers live within three miles of the property they visit, illustrating just how important proximity and convenience are, he said.

"A lot of our business relates to convenience," Christenson said. "If it's not convenient, they'll go elsewhere."

Many people who visit locals casinos do so on their way to or from work, or as one stop while running errands near their homes.

Station, Coast Casinos and other locals operators intentionally built their properties in locations that maximize the ability of commuters to easily drive in and out, but the road construction projects frustrate those plans.

Instead of waiting in the long lines of traffic resulting from lane closures, motorists take alternate roads, routes that bypass affected casinos and make it likely the potential customers will take their business elsewhere.

The long-awaited project connecting U.S. 95 to the Las Vegas Beltway, the so-called Henderson Spaghetti Bowl project, is also beginning to hurt business at Station's Fiesta Henderson casino, Christenson said.

He didn't think the project would affect the company's nearby Sunset Station or Green Valley Ranch properties.

Station Casinos is the locals operator most affected by the road construction projects, but a couple of others at opposite ends of the valley also have big projects ongoing at their properties' main access roads.

Silverton General Manager Craig Cavileer said an ongoing construction project on Blue Diamond Road is a necessary inconvenience.

Luckily for the Silverton, the area surrounding the property is growing so fast that business is booming despite occasional slowdowns and blockages, he said.

"We need the (road improvements), but luckily for us, our business is doing extraordinarily well," Cavileer said.

Ditto for the Cannery, a north Las Vegas project contending with the widening of Craig Road.

Owners Bill Paulos and Bill Wortman said the construction causes workday traffic tie-ups that can slow traffic on Craig, inconveniencing Cannery customers.

"In the long run, the road work is good for the Cannery," Paulos said. "In the short term, it hurts a little. But with the fast pace of growth (in the area arond the Cannery), we're doing great anyway."