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Mandalay Bay Postpones Convention Center Project

LAS VEGAS — Mandalay Resort Group announced Friday it will temporarily halt construction of a 1.8-million-square-foot convention center next to Mandalay Bay, a move prompted by the dramatic decline in travel to Las Vegas caused by the Sept. 11 terrorist attacks.

The facility is expected to compete with the Las Vegas Convention Center and Sands Expo Center for conventions and trade shows, and is designed to boost midweek room rates and spending at the South Strip Mandalay Bay and the neighboring Luxor.

Mandalay Resort Group shares were off nearly 40 percent Friday from their Sept. 10 closing price of $23.90, which was recorded the day before the attacks. The stock was down 86 cents Friday to $14.54.

Mandalay was the week's leading decliner on the LVIA Gaming Stock Index, a 13-company gauge of casino industry stocks, which was down 35.9 points, or 14 percent. The index is down nearly 30 percent since the attacks.

Earlier this week, Caesars Palace owner Park Place Entertainment announced plans will be put on hold for construction of a $475 million hotel tower at the Strip megaresort.

Park Place shares are off about 36 percent from their Sept. 10 closing price of $9.92. The company's stock was down 9 cents Friday to $6.31.

A Wall Street source said Venetian executives have told bankers that the business disruptions could delay construction of a planned 1,000-room tower at the center Strip megaresort. A Venetian spokesman failed to return phone messages seeking comment.

Yet, executives at several standalone, low-price operators, including the Stratosphere, Riviera and Binion's Horseshoe say their occupancy rates are better than those of their multibuilding competitors.

"Individuals who are traveling are thinking about value," said Stratosphere Chief Operating Officer Rich Brown.

Mandalay Resort Group has yet to spend the bulk of the money for the $235 million convention facility, and the delay is expected to save the company "well over" $100 million during the next 12 months, said Glenn Schaeffer, the company’s President and Chief Financial Officer.

"The pause makes sense in light of the recent events," Schaeffer said.

Company executives said they'd like to see 40 percent of their hotel business come from conventioneers and trade-showgoers, rather than the current 21 percent.

Friday's announcement is expected to delay the convention center opening from next summer to some time in 2003, and Schaeffer declined to say when construction will resume.

"It's remains a vital part of our Mandalay project," he said.

Hotel occupancy rates have dramatically declined since the attacks on the World Trade Center and Pentagon, with Strip megaresorts filling just half their rooms.

Despite the traveler uncertainty, McCarran International Airport spokeswoman Debbie Millett said the airport had an estimated 910 landings and takeoffs Thursday, which was slightly more than the typical 900 recorded on the average September Thursday.

No numbers were available for Friday's air count at McCarran, but Millett said its terminals were "very, very full."

"It means people are traveling. It means we're rebuilding this whole aviation system," she said.

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