Financial Week weighs in the casino industry's current doldrums, amplifying the newly recurrent refrain that the revenue diversification which we thought would shield Las Vegas and other destination markets from the bad times is instead increasing its exposure to same. A gentleman over at RateVegas.com/blog was asking why Boyd Gaming said Echelon didn't "make sense" without its retail-mall and boutique-hotel components.
I was a bit stumped for an answer. Aesthetically, Echelon might have looked lopsided if it had opened without those amenities. But, with a bit more foresight, Boyd might have advisedly split the project into phases and mothballed the more troubled southern half before any significant work was done. (Sort of the way Sheldon Adelson once planned to launch successive "Venetian" and "Lido" resorts — a plan that came a-cropper betwixt the Venetian's craptacular opening, the '01 recession and the post-9/11 blight.)
Such a bifurcation of Echelon would have left the core of the project, including the casino and the Anschutz Entertainment Group-steered concert hall, intact. Hugh Jackson's previously-cited analysis that Boyd got caught up in emulating CityCenter and consequently bit off more than it could chew seems especially pertinent to this aspect of Echelon's freeze. Or, as my Mom used to tell me at the buffet line, "Your eyes are bigger than your stomach."
Of course, we don't have access to whatever financial models Boyd used to determine that the mall, and the Mondrian and Delano hotels planned by attention-deficient Morgans Hotel Group were essential to project's fiscal health. Morgans' contribution can't have been that integral, seeing as Boyd stated publicly that it wasn't necessary that Mondrian and Delano open alongside the rest of Echelon. (Of course, that was back when there was still a slim hope that Morgans could raise the money, so positive thinking was the order of the day.)
Boyd ultimately made the right call and is, again, to be congratulated for going through with what could have been a humiliating decision. I just can't help wondering if coming to that realization sooner might have meant keep at least part of Echelon moving forward for the time being.
Does this look like a $5 billion project to you?
Further down in the Financial Week piece, it forecasts bankruptices for Indiana's usual market laggard, French Lick Resort & Casino, and for Herbst Gaming, which has missed two interest payments. (News that got little, if any, play around here.) Meanwhile, Elad Properties and IDB Group must know something we don't, because they've got their Plaza project budgeted at $4.75 billion-$6.75 billion, once land costs are backed out.
Whatever crystal ball they're using, some folks in Las Vegas would like to borrow it, probably starting with Jim Murren. After all, Moody's is predicting we're going to have endure another year of this slump before the good times return.
Knee-jerk Journalism 101. Our local papers don't usually make it a practice to deride the very conventioneers upon whose patronage we're so reliant. However, exceptions are annually made for the people attending the porn-industry show and the ones who turn out for the Star Trek Convention at the Las Vegas Hilton.
Hence the Las Vegas Sun is treating us to the obligatory "Let's make fun of these strange Trekkies" story. What really puzzles me is that a story about a concert that took place on Saturday didn't run until Tuesday morning. Evidently the rapid-response capabilities of a Web-based business model are as nothing when pitted against human indolence.
Update: The Las Vegas Review-Journal's Doug Elfman shows how this kind of story can and should be done. Bravo, Mr. Elfman.
