Developers minimize Strip resort delays

By Liz Benston

Thursday, Sept. 25, 2008 | 6:14 p.m.

The smart money on Wall Street says developers won't be financing resorts that aren't already far along in the construction process – at least not until banks have had a few years to recover from The Great Bad Mortgage Purge of 2008.

Boyd Gaming and El Ad Group, with resorts that have either barely broken ground or not at all, are putting on a brave face.

Today, Morgans Hotel Group amended its joint venture agreement with Boyd to develop Mondrian and Delano-branded hotels at the $5 billion Echelon resort complex. The amendment extends a deadline to obtain construction financing to December 31, 2009.

The amended agreement waives certain fees and obligations for both parties, tying up less of their money up front.

The company still hopes to resume construction on Echelon next year, though Wall Street analysts now say that's unlikely.

These are the same analysts who were bullish on Las Vegas a year ago, Boyd Gaming spokesman Rob Stillwell said.

"A lot can happen in a year," he said.

Cynicism aside, the agreement indicates that Boyd isn't giving up on Morgans. Executives say the two boutique hotels are key to the resort's success.

While Boyd had secured financing for its portion of Echelon before the market soured, two joint ventures formed to build components of the resort, including the $1 billion partnership with Morgans, weren't able to lock up financing.

Meanwhile, El Ad Group has again pushed back construction of its Plaza Las Vegas resort.

Executives have attributed the delays to changes in the design and scope of the $8 billion project rather than financing challenges.

"Financing will not be a problem and construction is planned to start in spring 2010," spokesman Lloyd Kaplan said.

The company had originally planned to break ground next year.