Visitors to Las Vegas can't miss the Fontainebleau Resort. The 3,800-plus room hotel/casino/condominium/retail facility is, after all, the tallest building in Sin City, rising a majestic 735 feet in the air. On the face of it, the gaudy complex is the ideal place for tourists to stay, gamble, eat, and shop.
The only problem is, they can't.
The Fontainebleau is an empty shell. In 2009, work on the resort was halted when its biggest lenders, including Bank of America, cut off its funding. That left the planned $2.9 billion project, which began construction just before America's last major recession, in seemingly permanent limbo.
After the money dried up, the project's developer Fontainebleau Las Vegas unsurprisingly went bankrupt. A subsidiary of corporate raider Carl Icahn's Icahn Enterprises then swooped in and grabbed the building in a bankruptcy auction for the fire sale price of roughly $150 million.
Nothing much has happened to it since then. Earlier this year, a tower crane hugging the structure was dismantled, strongly indicating that the completion of the Fontainebleau is a fantasy in this most fantastical of American cities.
It's not the first, and it certainly won't be the last monster Vegas project to go belly up. Here's a look at two others that caused their developers no small amount of grief, and plenty of financial misfortune.
The International Hotel
The father of the Las Vegas megaproject is veteran financier Kirk Kerkorian, the man behind what's arguably the city's first megaresort, the International Hotel.
In the late 1960s Kerkorian's firm, International Leisure, bought 82 acres of land a bit north of the heart of the Strip (the stretch of Las Vegas Boulevard with the heaviest concentration of casinos). It spent a then-astronomical $60 million to build a 30-story, 1,512 room hotel/casino, which when completed in 1969 was the largest hotel in the world.
Much of that money was borrowed, and in order to fund the repayments, the company planned a floatation of new shares. But due to an issue with another International Leisure asset, the Strip's storied Flamingo, the SEC refused to approve the sale. Burdened by the heavy debt load, Kerkorian soon unloaded his stake in International Leisure to the predecessor firm of today's Hilton Worldwide (NYSE:HLT), which gained control of its assets. The International was renamed the Las Vegas Hilton.
The year after the International's record-buster of an opening, the resort had slipped from Kerkorian's hands.
But don't feel too sorry for him. Only three years later, at the helm of his new company MGM Kerkorian opened the original MGM Grand Hotel -- an even bigger complex than the International, with a room count totaling nearly 2,100. The cost was roughly $107 million; when Kerkorian sold it along with its Reno sister hotel in 1986, he took in nearly $600 million.
Imagine a complex boasting four hotels with a collective 5,300 rooms, a 140,000 square foot casino, more than double that amount of shopping space, two theaters, and a 650,000 square foot convention center ...all in the very heart of the Strip. On land once occupied by the famous Stardust Casino, no less.
Well, keep imagining because the huge Echelon Place complex devised by veteran Vegas operator Boyd Gaming (NYSE:BYD) is a dead project.
In 2007, through a series of property buys the company collected 87 acres of grade-A Strip real estate in the heart of the Vegas action. Construction soon began on the $4.8 billion complex, but the following year Boyd halted it as the recession started to bite. Initially, the company said the delay would last three to four quarters. After that time passed, the firm revised its expectations for the hiatus to three to five years.
That was the last postponement. In early 2013, Boyd gave up its hopes for Echelon, selling the barely developed property to Malaysian gaming concern Genting Group for $350 million, less than a tenth of its planned investment in the complex.
Boyd took a big bath on the deal; it forced the company to book a $994 million impairment charge in fiscal Q4 2012.