Boyd Waffling On Echelon Place

According to spokesperson Rob Stillwell, the company is working to finish the designing of the project. Stilwell told Reuters the $4 billion price tag "is likely to be a little different." However, he did not provide any more details. What is known is that Las Vegas construction prices have skyrocketed as much as 30 percent in the last year alone, which could impact the ability to deliver such an auspicious product on the set budget. There are also concerns Las Vegas cannot support all of the new projects currently in development. There is approximately $30 billion in proposed and under construction resorts currently planned for the market.
However, JP Morgan analyst Harry Curtis said in a memo released this week that recent speculation that Boyd would reduce the scope of the project is true, but the company does not plan to cancel it entirely.
“Depending on the magnitude, a reduction in cost/scope would be positive for the shares because it would reduce concerns about returns…[and] improve negative sentiment/supply concerns for Las Vegas as a whole since Echelon accounts for a significant portion of the capacity entering the market by 2010,” Curtis wrote in Monday’s memo.

Earlier this summer Boyd Gaming reported during an analyst conference call, Echelon Place was a go and will replace the Stardust Casino on the Las Vegas Strip. Construction is expected to commence during the second quarter of next year and is expected to open in mid 2010. While the property has no specific closure date, the Stardust will no longer accept reservations after November 1.

Though Boyd Gaming has been a company that builds casinos typically for Las Vegas locals, it has had tremendous success with its Borgata property in Atlantic City. The property, which is half owned by MGM-Mirage is the city by the shore’s moist successful casino development project and is already in the midst of its second expansion.

Echelon Place is being spearheaded by Bob Boughner, the same man who created Borgata, and is in a large part credited with its success in creating the first Las Vegas style casino in Atlantic City. The casino has attracted a younger, more affluent demographic than the other 11 casinos and brings in millions a day in revenue.

The Echelon Place project is a resort complex situated in 63-acres on the Las Vegas Strip. The development, scheduled to open in early 2010, is expected to be among the most significant projects in Las Vegas' ongoing evolution, which continues to transform the city into one of the leading resort destinations in the world.

When complete, the site will combine the $2.9 billion wholly-owned Echelon Resort with hotel and retail joint ventures between the Company and key strategic partners. The wholly-owned Echelon Resort will be operated principally by the Company, but include operating arrangements with hotel, restaurant, nightlife and entertainment companies
The final project is expected to include a 140,000 square foot casino, 25 restaurants and bars, and lushly landscaped pool and garden areas. Echelon will be a contemporary and upscale resort, complemented by extensive, high quality and innovative business and meeting facilities. There will be a 4,000-seat theater and a more intimate 1,500-seat theater.
Other hotels in site will include a 400 room Shangri-La Hotel, a 600 room Delano Hotel and a 1,000 room.
JP Morgan is maintaining its “Neutral” rating on Boyd’s shares.

In morning trading, Boyd shares have dropped 1.58 percent to $35.44. Shares of the stick have been on the skids since Monday and sat at a 52 week low of $33.10 on August 1 after reaching as high as $54.72 on April 25 of this year.

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