Boyd CEO Keith Smith on Las Vegas appeal: “It’s one of the top brands in the world. You can put it up there with Apple and Nike. It’s a top entertainment destination. “
Courtesy Boyd Gaming
Barron met with Keith Smith, the 60-year-old CEO of
at the company’s headquarters near the Las Vegas Strip. Boyd (ticker: BYD), whose stock is up about 45% this year, has benefited from its regional casinos and Las Vegas off-Strip properties that are more geared towards the local audience. These casinos were more durable during the pandemic as they are much less dependent on air travel and more focused on gambling and drive-to customers compared to strip resorts. Here are five questions from our interview that have been edited for clarity.
Barron’s: What’s the post-pandemic outlook for Las Vegas?
Keith Smith: The future is always difficult to predict, and the future will always be different from the past. The look of Las Vegas in ’22 and ’23 will be different than in ’18 and ’19 for a number of reasons. But Las Vegas is certainly on the upswing when it comes to recovering from this pandemic. The weekend occupancy has risen again, the weekend traffic has risen again and the room prices are starting to rise again due to the occupancy.
All of this is driven by making destination travelers comfortable, getting vaccinated, and conveniently returning to Las Vegas by hopping on airplanes or driving a car. So we’re clearly recovering and we’re starting to see conventions come back. This includes the World of Concrete, a very large convention planned for this week [June 8-10]. In order for Las Vegas to fully recover, we need to resume business during the week. Midweek business is all about company meetings and congresses. That will be a little slower to return.
As in the past, does Las Vegas have to keep reinventing itself to stay relevant?
Las Vegas doesn’t have to reinvent itself to keep attracting customers. It is one of the top brands in the world. You can set it up there with Apple and
It’s a top entertainment destination. When you think of the number of hotel rooms here – over 150,000 rooms and the amount of meeting space here – it’s hard to reinvent yourself at this point. But what Las Vegas does is keep expanding and growing. For example, there’s the MSG Sphere, a venue that’s being built near the Strip. There’s also the Resorts World project, a new, multi-room resort on the Strip slated to open later this month, to name several projects.
Boyd Gaming’s margins were very strong in the first quarter. How are you going to balance those good results with added amenities like pools, restaurants, and spas when you are out of the pandemic?
It is based on demand, not just volume, that is, actual customer requirements and wishes. When you think of how a cafe or spa operated before Covid, we need to reinvent this business, remodel this business so that when we open this particular facility it will work differently and more efficiently for us – and yet it still is offers the customer what he is looking for.
What are some of the considerations when deciding when to reopen a restaurant or, for example, a buffet?
When we talk about rethinking and reinventing and reinventing convenience, it’s about how we bring them back. Are we bringing them back at more restricted times? Are we bringing them back with a slightly different menu? What do we do with the buffet room? We need the space, we need the seats to feed the people, but what is that supposed to be? Does it have to be the old-time buffet or should it be a new type of offering? These are things that are thought through to ensure that in the future we will work at a high level and let customers come into the building. We want to have the conveniences that keep them coming back.
Boyd has a 5% stake in FanDuel, which enables exposure to the rapidly growing digital sports betting business. They also launched their own online gambling platforms in Pennsylvania and New Jersey. Where does all of this in Boyd’s plans come from?
We were early adopters of online gaming and digital sports betting. We firmly believed it was an area of growth in the industry and it remains an important area of growth for the industry. It is not a competitor to our traditional business. It’s complementary. It enables us to target a new customer base and offer a new product either to a new customer or to our existing customers. If our customer is not in the stationary building and he is at home and wants to participate, we can offer him a product. We are able to market a new client who likes to do this from the comfort of their home – and maybe they come to us and visit our building because we can market for them and offer them something.
Write to Lawrence C. Strauss at [email protected]