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Gaylord Stock Tanks; Outlook for Business Group Bookings Weakens Sharply

Some San Diegans are still hoping that Nashville-based Gaylord Entertainment will build a $1 billion hotel and convention center on the Chula Vista bayfront, with more than $300 million of government subsidy, or corporate welfare. The facility would concentrate on business meetings. However, that business is crumbling in the current economic environment, notes analyst Mark Basham of Standard & Poor's. Gaylord stock has plunged over the last 52 weeks from a high of $59.89 to $20.26 this morning (July 8). It's down more than 5 percent already today. Gaylord opened its new facility near Washington D.C. in March. In February, the company raised the estimated cost by $50 million to $80 million. Originally, it was to cost $870 million. Gaylord took on more debt than expected for the project. Already, debt tops equity on the balance sheet. What's hurting the stock is "the company's reliance on the business group travel market," which always gets cut back when the economy softens or goes into a recession. S&P gives Gaylord a quality ranking of C, its second worst of 8 categories. Morningstar, a stock rating firm, gives Gaylord a grade of F for profitability and C for financial position.

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Some San Diegans are still hoping that Nashville-based Gaylord Entertainment will build a $1 billion hotel and convention center on the Chula Vista bayfront, with more than $300 million of government subsidy, or corporate welfare. The facility would concentrate on business meetings. However, that business is crumbling in the current economic environment, notes analyst Mark Basham of Standard & Poor's. Gaylord stock has plunged over the last 52 weeks from a high of $59.89 to $20.26 this morning (July 8). It's down more than 5 percent already today. Gaylord opened its new facility near Washington D.C. in March. In February, the company raised the estimated cost by $50 million to $80 million. Originally, it was to cost $870 million. Gaylord took on more debt than expected for the project. Already, debt tops equity on the balance sheet. What's hurting the stock is "the company's reliance on the business group travel market," which always gets cut back when the economy softens or goes into a recession. S&P gives Gaylord a quality ranking of C, its second worst of 8 categories. Morningstar, a stock rating firm, gives Gaylord a grade of F for profitability and C for financial position.

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Comments
7

There is not going to be any building by anyone on the Chula Vista bay front anytime soon-including Gaylord.

The credit crunch had dried up funding for virtually all big commercial projects.

The equation is very simple and straight forward: no credit, no capital, no building, no convention center. End of this CV/Gaylord story.

July 8, 2008

Response to post #1: Good points. And particularly true since Gaylord and Chula Vista are both such poor credits. Best, Don Bauder

July 8, 2008

Johhny Vegas,

I've missed your stupid dribble on the UT. Glad an attorney is so knowledgeable in the field of big business. Well, at least your spelling is spot on here and I knew you could overcome your dislexia.....LOL!!!

July 16, 2008

Response to post #3: We do have some questionable spelling that makes its way on to this blog. Best, Don Bauder

July 16, 2008

Video conferencing over the net is great.

There's also some nifty software out there that allows me to share what I see on my screen with anyone anywhere in the world. Couple this with a phone call (VOIP preferably) and you can get a lot done that used to require face to face meetings.

Compared to Gaylord how are the companies that make video conferencing equipment...?

Cities that have overbuilt tourism and convention facilities may be in for a rude awakening. Building more in this economic climate is just foolish.

July 16, 2008

Response to post #5: Convention centers were already overbuilt when San Diego did its expansion. There are problems around the U.S. now and they can only get worse in the present economic climate. And as you point out, after the recession is over (probably in a couple of years), the videoconferencing will bite into convention centers further. Best, Don Bauder

July 20, 2008

Response to post #6: Videoconferencing is great; however, it can't match a southern tier convention center in February. I lived in east Iowa for 2.5 years and am personally aware of the strong desire to get away, if only for a week, during the worst of winter, to mentally recharge.

July 21, 2008

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