Harrah's Ups Convention Profile

The purchase of Imperial Palace may signal plans for new exhibit space

By Heidi Genoist -- Tradeshow Week, 9/5/2005

Las Vegas—With two recent acquisitions, a convention center expansion and the reorganization of its group sales staff, Harrah's Entertainment is upping its profile as a player in the meetings and convention business.

In mid-June, the company completed the acquisition of Caesars Entertainment for $1.9 billion and 67.9 million shares of Harrah's common stock. In the midst of the deal, begun more than a year ago, Caesars added 60,000 square feet of meeting and exhibit space to Caesars Palace, bringing its total to 240,000 sq. ft.

Along with an expansion of the Rio All-Suites Hotel & Casino's Pavilion Convention Center, finished in May, the Caesars acquisition gives Harrah's nearly 750,000 sq. ft. of Las Vegas meeting and exhibit space.

That space is backed by 17,000 rooms in six properties: Caesars, the Rio, Bally's Las Vegas, the Flamingo, Harrah's Las Vegas and Paris Las Vegas.

Soon, Harrah's will add the Imperial Palace Hotel, or IP as locals call it. The Ralph Engelstad and Betty Engelstad Trust agreed on Aug. 22 to sell the 2,640-room IP to Harrah's for $370 million in a deal expected to close by the end of this year.

Although the IP has 40,000 sq. ft. of meeting and exhibit space, the property's potential is is commanding more attention than its existing qualities.

"This was a strategic acquisition, because of its location on the Strip and between two of our other properties," said David Stroud, spokesman for Harrah's.

The IP sits on 18.5 acres in the heart of the Strip, between the Flamingo and Harrah's hotels, and across the street from Caesars Palace. There is a station for Harrah's/IP on the Las Vegas Monorail line.

That stop, coincidentally, is adjacent to the lot off Koval Lane where Sheldon Adelson, chairman of Las Vegas Sands, has said he plans to build an 800,000 sq. ft. expansion of the 1.1 million sq. ft. Sands Expo & Convention Center.

Assuming the IP acquisition closes as expected, Harrah's will own the block on the east side of the Strip from Flamingo to Sands Avenue, with the exception of the property occupied by the Sands and connected Venetian Resort Hotel Casino.

Sands executives declined comment on the progresss of their construction project or the Harrah's expansion.

As for the future of the IP, Michael Massari, Harrah's vice president of meeting sales and operations, said, "I can't speak to specific long-term plans." But, he added, "We just expanded at the Rio and Caesars. Definitely, expanding our inventory of meeting space is top of mind for everybody."

Also a top priority for Massari is executing a staff reorganization meant to make the newly combined properties more accessible to meeting planners and tradeshow organizers.

Last month, Harrah's announced that it had restructured its convention sales and operations force. One consolidated team now will sell and service all six (soon to be seven) properties. Individuals will be assigned to sell each property in certain geographic and industrial markets, while each site's operations team will handle the meetings at its respective building.

"With one call to any of our facilities, (organizers) will have access to all six facilities. There's not a lead referral system in place; it's one integrated sales organization," explained Massari, who will lead this organization.

He said the system would benefit organizers by allowing them to leverage their business across the company. For instance, if a client spends $1 million at Caesars, he would be treated like a $1 million client at the Rio and Flamingo as well.

At the same time, having separate salespeople for each facility keeps the internal competition going to help control room and meeting space rates.

The system also allows organizers to more easily spread out events across properties, Massari said. "If somebody wants to have their opening reception at Harrah's, their tradeshow at the Rio and their gala at Caesars, that's much easier now."

As for maintaining continuity with existing clients while shifting staff responsibilities, Massari said he and the other top convention executives were meeting with customers personally to explain the benefits of the new system.

So, does all this mean Harrah's is changing its meetings-market strategy? Not really, according to Massari. The company will continue to focus on corporate and association business that wants high-end space surrounded by entertainment and hotel amenities. Although all the available exhibit space is in ballrooms, Massari is quick to point out that it's equipped with large loading doors and docking access for trucks.

He added, "We've been working diligently to grow the group segment for the past four years, just after we took over the business at the Rio. But with 1 million sq. ft. of meeting space and 17,000 hotel rooms, we've just increased our visibility."