Station Casinos Aims Red Rock Project at an Upscale Clientele

Station Casinos' planned $400 million plus Red Rock Station will continue the gaming company's recent evolution into more than just a locals casino company.

Like its most recent project, the $300 million Green Valley Ranch in Henderson, which Station jointly owns with the Greenspun family, Station Casinos Chairman Frank Fertitta III said the Red Rock casino will be a top-of-the-line casino targeting upscale tourists and locals.

"This will be a resort casino, right in the middle of an urban core. We're trying to create that category killer, regional entertainment center, and we don't want to build a cookie-cutter place," Fertitta said recently.

"The nicer you build a project, the bigger your market," Fertitta said. "The only way you can truly be successful is to be all-inclusive, to hit all demographic elements. At the end of the day, the fun part of this business is to improve upon what you've done, both in terms of returns for shareholders and of the quality of life in our community."

Station expects the property to open late in 2005 and plans on first year returns in the mid-teens, with 20 percent returns and higher in subsequent years, meaning the property would have to generate at least $60 million in 2006 and $80 million in 2007, based on a $400 million project cost.

Those numbers are a big leap from the business the company does at its properties in less vibrant areas, such as Palace Station and Texas Station.

And because Station will own Red Rock Station, it won't be splitting the proceeds as it does at Green Valley Ranch.

"It has the potential to be as impactful as Thunder Valley," Station President Lorenzo Fertitta said of the Sacramento, Calif.-area tribal casino the company manages, a property expected to contribute as much as $75 million to the company in its first year.

"The so-called locals places used to be sort of blue collar," agreed investor Dave Ehlers, whose Las Vegas Investment Advisors owns a great deal of Station equity. "But these (Station) guys really found something out at Green Valley Ranch. They've hit on something. If you build a nice place in a nice area, it works."

And there's no question Summerlin, particularly the Summerlin Centre urban core area, is a demographic sweet spot, Ehlers said.

"The demographics out there are outrageous," Ehlers said. "You have people waiting a year for $400,000 homes out there."

Red Rock Station, which is planned at the intersection of Charleston Boulevard and the Las Vegas Beltway, will be competing with several other area casinos.

The Rampart Casino at the JW Marriott, the only standing Summerlin casino, and Coast Casinos' Suncoast are likely to take the biggest hit when Red Rock Station opens, experts said.

Coast Chairman Michael Gaughan maintains that Station would have been better off building at one of its other west-side beltway sites, at Flamingo or Durango roads, a suggestion Station executives dismiss with a chuckle.

More distant western valley properties including Coast's Gold Coast and The Orleans as well as the Palms, Rio, and Station's Palace Station would likely take smaller hits from Red Rock Station, experts believe.

Although existing casinos will feel the competitive heat from Red Rock Station, the battle won't be a zero-sum game, Fertitta said.

"We think we'll grow the market," he said, once again citing the experience of Green Valley Ranch, which didn't cannibalize as much of nearby Sunset Station's business as execs had once predicted. "Summerlin is the fastest-growing part of the valley, and there's a real pent-up demand for our product."

Despite the political controversy surrounding the 300-foot height of the project's proposed hotel tower, the impact of the casino resort on Station Casinos and on the far west side of the valley will be a big plus, Frank Fertitta said.

"We're not cookie-cutter developers," Frank Fertitta said. "People will think Red Rock Station is a very positive addition to their community, an enhancement to their quality of life."

Fertitta cited the experience of Henderson residents, whose reaction to Green Valley Ranch has exceeded the company's expectations.

Additionally, targeting upscale tourists with top-notch hotel rooms --"Four Seasons quality," Fertitta promised -- and first-class surroundings will only enhance the property's appeal to Summerlin residents, similar to the way it worked at Green Valley Ranch.

"We broke from the middle market to the higher-end market, and now we appeal to everyone," Fertitta said. "We believe the people of Summerlin deserve a world-class destination resort."

Frank Fertitta said he hopes the company will prevail at Wednesday's Clark County Commission meeting, slated to consider the company's request to build the 300-foot tower among other items.

"Unfortunately you can't take the politics out of the political process, but anyone who's looked at this project on the merits sees that it is well-designed and fits in with its surroundings," he said.