So the financing climate has seen better days lately, and one of the casualties of the current crisis is Morgans Hotel Group’splan to expand their brands into Las Vegas by building not one, but two hotels – the Delano with 550 rooms and Mondrian with 860 rooms.

In July Morgan’s announced that they were not going to proceed with the development of the hotels because they were having difficulty getting financing, then, a day or two later, Boyd Gaming announced that the entire Echelon Resorts project would be put on hold primarily due to Boyd’s anticipated difficulty in getting future financing to finish the project.

At the time, it was left open ended if Morgans would ever finish building those two hotels – even after Echelon starts construction again, personally, I always thought that once Echelon’s development starts again, Morgans would continue to build as originally planned. Morgans would be very silly to throw everything they have worked on thus far down the drain – especially since they are trying to build their presence in Las Vegas.

Today Morgans announced that they were able to change their joint venture agreement with Boyd in regards to the Delano and Mondrian at the Echelon project, essentially Boyd’s gave Morgans until late 2009 to line up financing.

This gives two huge hints as to whats to come:

1. Morgans is still a major part of the project. The only major change is the ownership – the new agreement allows Boyd’s or Morgans to step back from the 50/50 ownership interest they currently have, this has nothing to do with the management.. In other words – Morgans may not own the project, but it will still be built and managed by them.

2. Echelon is still shooting for a late 2009 or early 2010 date to begin construction again, and Boyd is still committed to finishing the entire Echelon project.

Also, as a side note, I just took a look at the Echelon project’s webcam, and it looks as though all the cranes are still on site and setup. It’s been about two months since the project was initially shut down – I’d have expected the cranes to be packed up by this time right? I don’t think it would be too much of a guess to think that Boyd is expecting to start up construction even sooner than late-2009, if not – why would they keep all the expensive cranes still on site?

andrew@alconic-inc.com