An article in today’s Wall Street Journal (subscriber link) mentions that Harrahs is delaying plans to build a new $1 billion dollar resort in Biloxi.
Harrah’s Entertainment Inc. has delayed plans for a $1 billion resort-casino along the Biloxi, Miss., coast, the second time it has pulled back on plans in the wake of a $15.5 billion acquisition offer from two private-equity firms.
Harrah’s executives last week told analysts on a conference call that high construction costs and the “volatility of the marketplace” in Biloxi were factors that have effectively postponed any major development. Plans for the resort-casino had been drawn up by late July.[...]
In the conference call, Harrah’s executives said results at [Harrahs' reopened Biloxi Grand casino] were “encouraging” but acknowledged there was a supply problem. The Mississippi Gulf Coast’s casino recovery has far outpaced the recovery of infrastructure to support the tourist market.
Considering the amount of devastaion wrought by Katrina last year, it’s understandable that the lack of recovery in the tourist infrastructure would be an issue…but presumably that situation would improve over time, while the new resort were being built.
I’d also hope that the elevated construction costs would soon be less of a concern. With 2006 having been such a quiet storm season, one would hope that the pressures on the construction market imposed by the 2004 and 2005 storm seasons would start to ease. However, it will still be along time before that situation stabilizes, I think.
