About a year ago, this post noted the boondoggle status of Las Vegas’ then new $650 million, 4.4 mile monorail project. As is typical with such boondoggles, passage of time does not make the problem any better:
Donna Washington loves riding the Las Vegas Monorail, but not for a reason that would cheer its owners.
ìIn my town, the trains are always jam-packed, so itís nice to have a train car to myself here,î said Ms. Washington, 44, a Chicagoan vacationing here. ìI do wonder, though, where all the people are.î[. . .]
. . . ridership numbers for the Disney-inspired system, which stops at nine hotel-casinos and the Las Vegas Convention Center, are falling amid a lackluster marketing campaign, technical problems and revenues so far below projections that Wall Street fears that a default on its bonds could occur by the end of the decade.
December was the monorailís worst month, with 18,197 riders per day, far below the 53,000 predicted by studies used to sell the bonds to investors and to persuade public officials to give up public right of way. Despite a management shakeup in mid-2005 that purged the company of its founding executives, the systemís average ridership plunged 31 percent in 2006, to 19,219 per day.
The companyís new chief executive, Curtis L. Myles III, said that drop was somewhat anticipated after fares were raised in December 2005 to $5 a ride from $3. That move increased revenues by 4 percent, to $31.4 million for the year, still far short of the $44.9 million needed to break even. The total cost of the system per year is about $61 million; the monorail receives about $16 million in advertising revenues from companies like Sprint, which is about to start providing wireless Internet access on the trains and has a 15,000-square-foot store at the convention center stop.
Mr. Myles acknowledged in an interview that the companyís cash reserves, estimated by Fitch at about $89 million, would run dry by 2010 if revenues did not improve. To break even, he said, the monorail would need to increase ridership by about 50 percent.
And can you guess the Las Vegas Monorail Company’s proposed solution? Of course, double-down on the monorail bet — a $500 million expansion!
Read the entire article. And yes, a similar thing could happen here.
