Two Las Vegas projects suspend construction
Back in June, we reported that Las Vegas is seeing a downturn in its economy. Now The Wall Street Journal is reporting that The Las Vegas Plaza’s project owners have delayed their groundbreaking from the end of 2008 to sometime in 2009. Plans for the Plaza Las Vegas were approved by the Clark County Planning Commission back in March.
Michelle Tsang, spokeswoman for Elad IDB Las Vegas LLC, which co-owns New York’s Plaza Hotel with IDB Group of Israel, said despite the postponement and a deferred payment of the $625 million loan used to buy the project site, the owners plan to go forward with the project. “They’re doing what everyone else is doing,” she said. “They’re going to wait a little bit and see. It’s the same at a lot of different projects.”
One of the other projects Tsang is referring to is the Echelon. Boyd Gaming Corporation, which owns the project, announced that the construction of its $4.8 billion Las Vegas Strip project will be suspended. It hopes to resume construction in three or four quarters when market conditions improve.
Investors, for their part, thought this was a wise move by Boyd. Some analysts also think so. With Encore scheduled to open in December, Fountainebleau and MGM Mirage’s City Center set to open in 2009, “putting some time between a wave of property openings would spread out the increase in the city’s capacity and give it a better chance to absorb all the new rooms coming on line.”
What will make it harder for Boyd to resume construction is that one of its financing partners, Morgans Hotel Group, said that it “believes that the joint venture will be unable to secure financing at favorable rates and conditions by Sept. 15, 2008″ because of Boyd’s decision and market conditions.
Keith Schwer, director of UNLV’s Center for Business and Economic Research, said that, although it was hard to see some of the bad economic times coming, Boyd made a mistake by not having a backup plan. He points to Southwest Arirlines as an example. They were “perceptive about [rising oil prices] and few others were.”
You may also be interested in these articles
Comments
Please share your thoughts...