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Nashville flood could impact Mesa project

6 comments by Gary Nelson - May. 3, 2010 03:04 PM
The Arizona Republic
Nearly two years after announcing it would build a massive resort and conference center in Mesa, Gaylord Entertainment Co. has yet to wave the green flag because of the economy.

Now massive flooding in downtown Nashville has closed the fabled Gaylord Opryland Resort and threatens to further dent the company's bottom line.


Opryland evacuated about 1,500 guests and employees Sunday night as the Cumberland River lapped at levees designed to withstand a 100-year flood. The guests spent the night in a high school.

Early Monday the levees were breached, causing major damage to the hotel. Hotel spokeswoman Kim Keelor was quoted by The Associated Press as saying the building had "significant water" inside and would remain closed indefinitely.

The company said in a press release it is too soon to even assess the damage. The company said it has insurance to cover business interruptions and flood damage up to $50 million.

One immediate headache: Determining what to do with conventions already booked at Opryland for the next several months. The company relies on a system of rotating conventions and groups among its four major properties in Nashville, Texas, Florida and the Washington, D.C., area, and hopes its property in Mesa will become part of that system.

Gaylord canceled a conference call, previously scheduled for Tuesday, to discuss its first-quarter earnings report so it could focus on caring for the displaced guests and deal with other problems caused by Opryland's closure.

Gaylord's press release said the company would not issue a previously expected financial forecast for the remainder of 2010. It added: "It is likely that financial results for Gaylord Opryland and thus Gaylord Entertainment will be impacted for the next two quarters" by the flooding.

The company did release its first-quarter report on Monday afternoon, saying it lost $1.9 million on revenue of $217 million. Revenue grew by about $4.4 million over the same quarter in 2009.

Regarding the Mesa project, Gaylord echoed language in an earlier earnings report and said it "remains in the very early stages of planning, and specific details of the property and budget have not yet been determined. The company anticipates that any expenditure associated with the project will not have a material impact in the near term."

According to its development agreement with Mesa, Gaylord must break ground by Dec. 31, 2011.

After a similarly ambitious development project, the Waveyard in northwest Mesa, ran afoul of the financial meltdown, Mesa negotiated an extension with its developers. But Waveyard remains in financial limbo.



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