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Rebooting Echelon

By Chuckmonster on Wednesday, 2nd September 2009 3:43pm
  » filed under Las Vegas  comments: 10


Over one year ago, Boyd Gaming put its Stardust replacement Echelon in mothballs.

Due to the difficult environment in today's capital markets, as well as weak economic conditions, we have decided to delay our Echelon project on the Las Vegas Strip. Our present expectation is to resume construction in three to four quarters, assuming credit market conditions and the economic outlook improves.

Four quarters later.... Echelon remains dormant and Boyd hasn't said boo about when it might start up again.

With MGM Mirage's once-doomed CityCenter project settling into the finishing touches and Fontainebleau taking an extended time out to strategize how it can go from 3rd and really long to the goal line - fighting the whole way with its own financially uncooperative offensive line - could the time be right to bring the cranes back to Echelon?

Around the time Stardust closed, Boyd had drawn up plans for major capital reinvestment in their existing properties in Las Vegas - Orleans, Gold Coast, The Cal, Sam's Town, Fremont and Main Street Station - hoping to keep displaced Stardust players 'in the family.' Most of these improvements - complete modernization of hotel rooms, restaurants and public areas coupled with the consolidation of the B Connected rewards card throughout their properties - were well in process before the economic landscape had shifted out of favor.

Boyd Echelon Reboot

Boyd met the challenging environment head on, simultaneously announcing Echelon's postponement, the cessation of quarterly stock dividends and a $100M stock buy back program - thereby taking advantage of investors being scared off by Messchelon and/or the economy. They also managed to submit an offer to take over bankrupt competitor Station Casinos.

With occupancy rates at MGM properties starting to creep back to the 90th percentile - an accomplishment which will surely be followed by a sharp increase in room rates everywhere - it is becoming clear that the "Golden Age of Vegas Visitation" is drawing to a close. When demand out paces supply, the price goes up. When demand driven price reaches a certain threshold, investing in increasing supply becomes financially feasible. We're about two steps ahead of that happening, but looking at the overall pipeline and the aging of Echelon's quarter built towers and completely built designs, Boyd could run the risk of having their $500M already invested losing value at the hands of time.

Later this year, ARIA's 4,004 rooms will come online, as will Vdara's 1,495 condotel suites and whatever else is made available from the Mandarin Oriental and the PHo Towers across the street. Fontainebleau's 3,889 rooms could come online in late 2010/11, should bankruptcy proceedings go smoothly and the new owners opt to go with what they got (which they won't.)

Echelon will probably take about 2 years to complete if the cranes arrived there before Halloween. I'm not exactly sure how construction jobs are contracted and priced out, but one would expect that if there are less projects going on in Las Vegas, contractors will bid lower to secure whatever work they can. In this scenario, one can look at the completion of CityCenter and mothballing of Fontainebleau as a keyhole through which Echelon can be sneakily rebooted and ramped up.

Echelon Las Vegas.



Comments & Discussion:

I thought they had left the cranes in place, as it was cheaper to keep them in place than it was to take them down only to put them back up later.

Yeah, last time I was there, the cranes were still in place.

Personally, I very much doubt we will see Echelon restarted this year. If nothing else, I expect Boyd to see how City Center's opening goes before getting cooking again.

After an extended period of reflection, I believe they should convert the project into an office complex. They should include a new Las Vegas city hall (yes, I know it is technically not in vegas), a mob museum, a federal/state courthouse complex, police and fire stations, an emergency room, office buildings for law firms, lobbyists, and government related agencies. I am confident they could get federal money to support this construction. Boyd will get great tax credits, can recoup some of their investment, and can rent the office space. The entire strip would benefit from having access to these services. The Echelon project will not be feasible until several years after FB is finished.

"cranes" was meant to be a metaphor.

My 25 cents in this tight slot is that none of the projects will open for a long, long time -- I'd guess 2015 or 2016 at the earliest. There are plenty of underutilized properties on the striplike the Riviera and the Trop to name two. It's a shame they knocked the Stardust down.

I'd love to see this project come back online.

It would be nice to see this project get back on track but I do not see it happening until some point next year when the economy improves. That end of the Strip is in dire need of complete redevelopment since at this point when you get past Encore there is no real reason to continue walking.

They should reconsider making this place into a high(er) roller joint and make it a brand new mid-level joint for the strip. Give the regular joes like me a new place on the strip where i can get a good room for 100 bucks or less.

yes i know i can find that right now (like the luxor for $38 or whatever their current promo is). i'm talking about 2-5 years from now when this will be completed. we have enough brand new high roller joints, make a brand new low-to-mid- roller joint that can also cater towards locals, just like the Stardust was.

they should also SERIOUSLY consider a bar/restaurant/section of the casino to pay tribute to what the Stardust was in it's glory, kinda like a throwback room or something.

I thought it was a mistake to tear down the 'Dust in the first place. I really don't care what happens or when.

that's a great graph!

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