Amid the complicated macroeconomic atmosphere, Tilman Fertitta is taking a sensible course of action with the more than six acres of land he owns on the Las Vegas Strip. Last year, he purchased 6.2 acres of land at Las Vegas Boulevard and Harmon Avenue for $270 million, leading to speculation that he will eventually construct a much-awaited casino-hotel on the Strip. Nonetheless, the billionaire is taking his time with the project. This was confirmed by Truist Securities analyst Barry Jonas, who met with Fertitta and Feritta Entertainment CFO Rick Liem in Houston.
At the moment, no start date has been set and the company is willing to wait until economic conditions become clearer. This is in line with recent statements from Feritta Entertainment, which suggest they are monitoring the state of the economy before they make any progress on their Strip plans. In October of last year, the Clark County Commission approved Fertitta’s plans to develop a new gaming venue across from MGM Resorts’ CityCenter. Several businesses have been removed from the land, but some still remain.
Nevertheless, inflation and high interest rates could have an effect on Fertitta Entertainment’s Strip plans. After the design and construction schedule has been detailed, the company will need to negotiate with builders and contractors to determine a maximum price for the project. Unfortunately, long-term inflation and COVID-19 supply chain problems have caused prices to rise, making it more expensive to build.
The Federal Reserve recently increased the Fed funds rate to 5%, meaning non-investment grade borrowers such as Fertitta Entertainment will be subject to higher interest rates. This could be why Fertitta didn’t mention the Strip casino in his meeting with Jonas. Fortunately, Fertitta’s restaurant empire and Golden Nugget casinos are receiving some benefits from inflation as older patrons get more money through their Social Security checks.
Finally, Jonas commented that Fertitta was surprisingly quiet on the subject of casinos in Texas. Several bills regarding the matter are currently before the Texas legislature, although Fertitta doesn’t believe the potential opening of tribal casinos would be a problem for the Golden Nugget in Lake Charles, Louisiana. This is because the casino-hotel is located closer to Houston than it would be to any tribal casinos in Texas.
