Why the Boyd Bashing?
Started by JeffinOKC on Thursday, 7th March 2013 10:30 am
I think it started a few weeks ago, when The Tripper King knocked Boyd's downtown properties on the Valentine's edition of Vegas Gang Podcast (#87, part of the greatest collection of electronic communication ever). Chuck appeared to be of the opinion that Boyd was losing ground to the new developements and would see significant erosion if they didn't act. The next onslaught, obviously, was from the sale of the Echelon site. Lost in the shuffle was the sale of the Florida Hai-Ali fronton (whatever that is).
The 3 downtown properties had a 2012 occupancy rate of 90%, with a very stable and well defined overhead structure, workforce and customer base. They 1. own a charter service that flys Hawaiian's in 2 or 3 days a week, 2. are strong in the Asian-American markets in California and Nevada, and 3. strong in the retiree market. Stable, low key...not sexy. But, this is one of the markets Phil Satre and Gary Loveman placed in highest regard when Harrah's was growing and considered a "smart" company. Even though the easy attack is to say that market is dying off, the truth is that there is a new retiree entering the msrket every day that one dies off. And I think Boyd is doing a good job of keeping themselves attractive to new retirees. I hate to admit that as I get older I have noticed my wife (who is 13 years younger) and I feel more comfortable and safer around all the walkers and oxygen tanks.
The question becomes-is there more money to be made elsewhere? I don't think there is, at least not easily enough or certainly enough to make it worthwhile.
Regarding the Stardust site: Boyd wished they hadn't torn it down. If they had it to do over, they woulda left it working. That goes without saying. Always makes me wonder when people still write that question whenever any montion of the site is made. However, the best business people I know believe that the smart move is to admit failure, learn from it and move on when the time is right. Boyd has already gotten all the praise for giving up on Echelon when they did and few people inside the industry fault them for starting the project when they did. It seemed like a good idea at the time. Their next step was to study and understand when the time was right to resume. They decided that they didn't think it was going to be anytime soon, so they moved on to acquiring money making properties in markets they were comfortable with. They next decided that disposing of non- producing assets was a good idea. This is considered the hardest decision in business-giving up on your greatest idea, taking the loss and moving on. A lot of egos have prevented this move through the eons, but arrogance isn't one of the Boyd shortcomings.
I see Boyd as a smart company keeping a low profile, and I never read any grumblings within the industry that they are less than well run.
Chuckmonster responded on Thursday, 7th March 2013
Great points Jeff. Boyd seems to have their supply network sorted out. B Connected works well as a loyalty program. Re: The Gang episode... my concern with their Fremont properties is that the market is changing, rapidly, in offerings and demographic, and unless Boyd engages in some more active evolution, they are liable to get pinched by the competition. There are almost a dozen joints within walking distance eager to serve better food, pour better booze and offer better odds in nicer, cleaner, more exuberant atmosphere. Unless they can get (keep) folks doing these things in their property, Boyd risks becoming a Hawaiian shuttle service for surrounding casinos. Total spend.
Boyd started the renovation process for all their Las Vegas hotel rooms shortly after Stardust closed. I posted reviews of The Cal and Fremont from around that time in the Features. I learned yesterday that Boyd is also soliciting bids for repainting and cleaning up of the Orleans exterior. Is new exterior paint going to entice anybody to stay there? Probably not, but it will reduce the number of passes by finicky folks like me.
Competition drives the market. The Golden Nugget is in a state of continual upgrades. The Plaza is completely redone. El Cortez has been freshened up and polished. Golden Gate expanded and renovated everything (twice) in the last 7 years. Dumpy Fitzgeralds is swapped for the shiny D. Four Queens is doing some renovations now. Binions' casino floor has been overhauled a coupla times and their hotel is closed. Downtown Grand has awoken from its slumber, Gold Spike was redone... yet Cal, Fremont and MSS remain largely unchanged. Yes, MSS is a garage sale antique masterpiece as is, but even museums change and rearrange their collections.
Boyd is prudent, but they might be little short sighted. They mothballed Echelon 8 floors in, prudent. They jettisoned South Coast months after opening it, short sighted. Demolishing Stardust instead of building in, around and over it, dropping the old stuff as new stuff gets built a la Caesars was short sighted. (The Echelon parcel is massive - roughly the same size as CityCenter + Monte Carlo.) Finally, Losing Echelon at the price they did, time will tell if this was prudent or short sighted, I'm thinking they got hosed on the price. Perhaps the sale of Echelon 'as is' was their exit plan from the moment they pulled the plug and all they were doing was waiting for an offer. Enter Genting's checkbook.
In my book, without a Strip property Boyd drops an echelon. The Orleans may as well be in Arizona for all I care.
jmtheman replied on Thursday, 7th March 2013
I think the original post and Chuckmonster's reply are two of the most interesting things on this website recently. I don't even mean that as a dig, because this is my favorite website.
From my own personal experience, I've been to Vegas at least seven times in the last five years and never been all that compelled to visit Boyd properties.
I've spent ample time downtown and spent the following time at Boyd properties: ate at the MSS buffet and gambled there for 15 minutes, gambled once at California, walked in and out of Fremont, which struck me as kind of dumpy, a little more interesting than Fitzgerald's (now D) and Vegas Club only among Fremont Street-area properties. I'm 31 years old, maybe both of you pointed out that they skew older and don't care about a gambler like me.
Not sure where I was really going with this, but very compelling topic. Would love to see editorials on topics like this!
JeffinOKC responded on Thursday, 7th March 2013
Your response reflects why I love you so much, Chuck. Because I have limited time, my only comment right now is regarding the South Point.
My recollection is that life long friends Michael Gaughan and Bill Boyd had dinner at Ruth's Chris Steakhouse and worked out the merger of Boyd Gaming and Coast Casinos (as well as the Orleans), including all the Coast debt and minority partners. About a year later, Michael tells Boyd that he doesn't like the structure of the public company and doesn't want to be part of it anymore. Very quickly it was agreed that Gaughan would leave the Boyd company and take only the South Coast (renamed South Point). Gaughan took 100% ownership, debt-free and without any minority partners. I've always thought this was a buddy deal, informally worked out in advance, rather than Boyd bailing on an under performing property after only 8 months.
Chuckmonster replied on Friday, 8th March 2013
Awww. Thanks pal. And thanks for putting some background on the South Coast deal. Memory is the first thing to go.
SaratogaEd responded on Friday, 8th March 2013
My take is Boyd will sit tight and wait for the great Caesar Bankruptcy Casino Sale, and purchase Bally's & Paris.
Boyd would gain Centre Strip presence, renovate Paris, then implode Bally's towers. New Bally's could then be remade in to Stardust Centre !
Having these casinos with a strong loyalty program, and new updated product in 2018-2020, would be highly profitable. Much better than some mammoth North strip location.
Will Sam be still running SLS in 2018? Would FB be still girders in 2018? Would Riviera be open in 2018?
Chuckmonster replied on Friday, 8th March 2013
Strangely feel like I've been transported to 2006 again.
MEMO1 responded on Friday, 8th March 2013
The only Boyd property in Las Vegas that doesn't have full tables all the time is Suncoast, which to me is funny because seems to have a bigger crowd of retired people than the other properties. if that's the group of people they're after then their doing good, if they go to the strip then good luck to them , I see a lot of empty tables in most of the strip casinos nowadays.
level42 responded on Friday, 8th March 2013
JeffinOKC, read through this thread I posted last year:
Why I gave up on Boyd
In that very thread, you confirmed what Chuck said about Boyd on the podcast.
"I doubt they get many demands for Wi-fi in their customer surveys, judging by the age of the customers I see at the Fremont." - JeffinOKC
That perfectly illustrates Chuck's point...while everyone else downtown is actively spending money to improve their properties, Boyd still hasn't made it to 2002 by installing Wifi in the rooms at MSS or Fremont!
-chall
@dustinofholland
JeffinOKC responded on Friday, 8th March 2013
Their occupancy last year was 90%. Is that doing something wrong? Or is that not doing what we think they should, and not marketing directly to our demographic?
level42 replied on Saturday, 9th March 2013
I guess the point is...there's no way their occupancy will stay at 90% if they don't make an effort to improve their properties. Eventually, some of the loyal Boydites will check out The D and have a great time...and maybe try staying their one night...and realize that for the same money they can get a nicer, recently renovated room with modern amenities. Eventually...Boyd's occupancy is 85%, then 80%...etc. Of course, that's probably what it will take to get them to improve their joints.
JeffinOKC replied on Saturday, 9th March 2013
level42
I love your work, buddy.
But, I feel certain that Boyd is smart enough to know their customer base and move in the direction of serivce and quality that base wants. If they feel that the D is eroding their base they would act accordingly. Likewise, if the D customer isn't their customer base, or has a negative effect on their customer base, I think they would respond properly, as well.
We stayed at the Plaza right after they reopened (I think it was for VIMFP 2011), and I could never figure out how to use the free wi-fi. It was easier for me to use the 3g services I had for both our iPhones and my IPad. In fact, I'm so inept, I can't remember ever using wi-fi during any of our 3-4 trips to Las Vegas over the years.
I'm hoping to put up a fuller comment at VegasGangPodcast.com later today
MinVegas replied on Monday, 11th March 2013
Their occupancy may be staying high by giving a lot of rooms away. Boyd's downtown properties aren't terrible by any means (although the Fremont's poor parking situation suggests they should either lease parking from Binion's or buy Binion's outright), but they're basically in a holding pattern while even stuff like the Plaza is improving. Boyd management is still rolling along with the traditional trends of 20 years ago.
Put it simply: Boyd is run like a casino company, while the others are travel/leisure companies, which makes them look better and cuts down on expenses. That's why MGM touts LEED all the time and replacing old incandescent bulbs with flourescents through their older properties. It's why you see MGM and Sands touting their recycling facilities, which is both saving them money and looking like good public relations. It's why Wynn and Caesars talk up how they give full benefits to same-sex partners (both have a perfect 100 score with the Human Rights Commission, an LGBT advocacy group that surveys these things. Boyd has a goose egg.)
MGM and Caesars and Wynn onwards are all competing in the very progressive travel industry, looking for talent in certain positions that competes with airlines and luxury hotels around the country. If you want staff that can compete with Big City's Ritz-Carlton, then you need to compete with them as an employer.
It is just my opinion that Boyd is run more like a traditional casino company, akin to the riverboat operators, tribal casinos, etc. Downtown used to be in that sector but as of late downtown is having something of a gentrification and Boyd isn't participating.