Hotel operator Gaylord Entertainment has revealed the total cost of rebuilding its flood hit properties in Nashville, Tennessee, is likely to run to between $215 million and $225 million.
The Gaylord Opryland Resort, the Grand Ole Opry and other Nashville-area facilities owned by the company were hit by flooding on May 2nd and May 3rd this year.
“We have made significant progress in our work to assess and repair the damage inflicted by the historic flooding,” explained Colin Reed, chairman and chief executive officer of Gaylord Entertainment.
“Our Nashville-area assets have been stabilised and we have a large group of contractors and experts working diligently alongside our management team to get us back to business as soon as possible.”
With repairs likely to take over five months, Gaylord also announced it would release 1,743 employees from their contracts on June 12th.
In the interim Gaylord Opryland will continue to employ 919 employees, primarily in the areas of reservations, accounting, sales, IT, engineering, horticulture, and security.
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“We are deeply sorry to have to make this incredibly difficult decision, as our employees are and have always been the driving force behind the success of our business,” added Mr Reed.
“The cost of this disaster has meant that we have to balance the future of our business and our fiduciary duty to our shareholders with the duty we have to our employees.”
In addition to the repair costs, Gaylord expects to incur a non-cash write-off related to the impairment of certain assets and generate a significantly lower level of consolidated cash flow during the remaining quarters of 2010 as a result of the flood damage.
The repair costs outlined include $23 million to $28 million of previously scheduled enhancement projects, while the company anticipates operating expenses of $57 million to $62 million for maintaining its assets until re-launch.
“Flood damage requires an extraordinarily complicated repair process,” continued Mr Reed.
“We have had to manually test every aspect of our mechanical, electrical, information technology, and power generating systems in order to understand what works, what needs to be repaired, and what needs to be replaced.
“There is an entire city of infrastructure which operates under the Gaylord Opryland campus, the majority of which was fully under water, and thus the assessment process has been extensive.”
At present Gaylord expects The Wildhorse Saloon and General Jackson to reopen on June 5th, followed by the Grand Ole Opry House in October and Gaylord Opryland on November 15th.