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Station Casinos Investment in Buying and Remodeling the
 Santa Fe Station Casino Approaching $458 million

By Howard Stutz, Las Vegas Review-JournalMcClatchy-Tribune Business News

Dec. 26, 2006 - For the money Station Casinos has spent buying and remodeling the Santa Fe since it acquired the northwest Las Vegas property in 2000, the company could have built an entirely new hotel-casino.

That's exactly what took place.

Other than its 200-room hotel tower, not much remains of the original Santa Fe that opened in 1990 on North Rancho Road.

The latest amenities added to the Santa Fe Station, part of a $130 million expenditure, were unveiled earlier this month. The attractions include a 2,900-space parking structure, a 259-seat race and sports book, expanded casino space, and additional restaurants. Two other restaurants and an entertainment lounge will open early next year.

Station Casinos has spent $458 million on Santa Fe Station, including $205 million to buy the casino from Sahara Casino Partners. After initially spending $71 million to renovate its acquisition, the company embarked on a full-scale $182 million master-plan for the property, which stands on a 38-acre triangular lot.

The Santa Fe Station now has 2,900 slot machines, 39 table games and a 12-table poker room, along with two large parking structures with 5,200 spaces.

"What we added and what was done to this property was a reflection of what it needed to compete in this market," Station Casinos spokeswoman Lori Nelson said.

One of the more controversial changes was removing the ice skating rink last year, which was home to many figure skating and youth hockey programs. A replacement ice rink was built at the Fiesta and a 16-screen movie cinema replaced the skating complex at Santa Fe Station.

Also, Santa Fe Station's 60-lane bowling center was remodeled.

The company needed to renovate the Santa Fe so the casino wouldn't lose customers to rival casino operators. However, the competition also turned out to be other nearby Station Casinos-operated properties, including the Fiesta Rancho and Texas Station, which are a few miles south on Rancho Road.

Majestic Research gaming analyst Matthew Jacob said the Santa Fe acquisition is an example of Station Casinos seeing, and seizing, an investment chance.

"Station management has demonstrated an ability to consistently get excellent returns on its master planned expansions, and it saw an opportunity to reinvest in Santa Fe Station," Jacob said. "Our data indicated a year-over-year weakness at Santa Fe Station prior to the opening of its expansion."

Meanwhile, Station Casinos spent almost $1 billion to build the Red Rock Resort in Summerlin, which opened in April, and formulated plans for the $600 million Aliante Station in North Las Vegas that is expected to break ground by February.

Despite an ever-growing customer base from nearby Centennial Hills, the Santa Fe Station continues to face a challenge from within.

"As we have seen with Red Rock, once Aliante Station opens it could cannibalize Station's other properties nearby, including Santa Fe," Jacob said. "Also, Station's properties could receive some competitive pressure from Boyd (Gaming's) planned North Coast casino (in North Las Vegas) once that opens."

Longtime Santa Fe Station customers said they were pleased with the renovations.

Phyllis Bodell, who has been coming to Santa Fe Station for nine years, said even though she lives close to the site of the Aliante Station, which will likely open in 2008, she won't change her allegiance.

"The changes are nice and they were needed," Bodell said. "It was getting a little old and worn out and they have made it a lot better. I'm glad they put in the parking garages."

Santa Fe, built at a cost of $53 million in 1990, was initially opposed by its residential neighbors; they thought the hotel-casino would disrupt their somewhat rural lifestyle. But the casino also brought bowling, an ice skating arena and a few dining choices to what was a sparsely populated area.

Residential development expanded quickly around the Santa Fe, but the casino couldn't keep up with the growth until Station Casinos took over.

"Generally speaking, the growth pattern follows the residential base of the area in order to respond to market demand," said Brian Gordon, a partner in Applied Analysis, a Las Vegas financial consulting firm. "The northwest portion of the valley has seen significant growth and will continue to see significant growth."

REBUILDING SANTA FE STATION:

--Highlights: Two parking structures; casino expansion including new race and sports book and poker room; additional convention space; new restaurants; removing ice skating arena; adding movie theaters; remodel bowling center; hotel renovation

--Purchase price: $205 million

--Initial renovation: $71 million

--Movie theater and showroom expansion: $52 million

--Current expansion projects: $130 million

--Total investment: $458 million

Source: Station Casinos

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Copyright (c) 2006, Las Vegas Review-Journal

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