Sands combats ReTRAC effects

As an old hand at the business of marketing gaming properties, Ferenc Szony knows it's darned difficult to woo back a former customer who's spending his time elsewhere.

That's why Szony, the president and chief executive officer of The Sands Regent in Reno, devotes so much time these days to making sure his downtown property doesn't lose market share because of ReTRAC.

ReTRAC, the construction of a train trench through the downtown region, already has created some disruption at the Sands Regency.

But Szony said effects of the construction should be blunted as his marketing staff builds skill in battling ReTRAC.

Most important, he said in an interview last week, is learning to time promotions at the Sands Regency when ReTRAC construction is likely to be most disruptive.

That's challenging because marketing campaigns a direct mail campaign centered on college bowl games, for instance can take weeks to ramp up while the progress of construction can vary.

But so far, Szony said, his marketing team has gotten good predictions from Granite Construction, the general contractor on the train trench.

Holding its share of the locals market is particularly important at the Sands Regency, where locals account for about 37 percent of the

property's business.

And although the battle will add to the company's marketing expenses in coming months, Szony said it's less expensive in the long run than attempting to woo back a lost customer.

At the same time, Szony and his team are keeping a wary eye on other downtown properties as the ill effects of Indian gaming in California spread.

Talking with analysts recently after the company released its quarterly

earnings, Szony said the Thunder Valley casino near Auburn, Calif., appears to be attracting gaming customers who are outside the Sands Regency's core demographic.

But, he worried that downtown properties which are losing higher-end customers to Indian gaming may decide to come after the Sands Regency's customers.

So far, the Sands Regency is holding its own.

Occupancy rates at the 830-room hotel during December were 74.5 percent, the highest December figures in 10 years.

"We can get customers to come over the hill," Szony said.

Much of the company's attention, meanwhile, is focused on wrapping up its acquisition of Rail City in Sparks.

The Sands Regent expects to pay about $38 million to buy the property from Alliance Gaming Corp. including $35 million in cash and $3 million in a note carried back by Alliance.

The deal is expected to close about April 1.

The acquisition is part of a strategy in which The Sands Regent hopes to leverage its marketing dollars across The Sands Regency, Rail City, and Gold Ranch near Verdi, a property it acquired in mid-2002.

And Szony said the company continues to look for other acquisition possibilities.

Gold Ranch, which combines an 8,000-square-foot casino with an RV park and a busy ARCO gas station, increasingly has possibilities as a locals casino targeted both toward the fast-growing Verdi area as well as Truckee, Calif., Szony said.

For its most recent quarter, The Sands Regent reported net income of $4.33 million on revenues of $12.7 million.

This compares with a loss of $244,000 on revenues of $12.6 million in the comparable quarter a year earlier.

This year's figures were boosted sharply, however, by a $4.2 million lump sum received by The Sands Regent to settle a debt from a company that purchased a casino in Gulfport, Miss., from the Reno company.

Without that settlement, the company's quarterly earnings would have been $19,000.

That's not bad considering the season and competitive pressures, Szony told analysts.

"The company is generating cash even in a challenging environment," he said.