A Swap on the Strip
By Heidi Genoist -- Tradeshow Week, 10/16/2006
The big news on Wall Street the first week of October might have been Apollo Management and Texas Pacific Group's $15.1 billion bid to buy Harrah's Entertainment, but it overshadowed a deal of potentially more significance to the tradeshow industry: Harrah's land swap with Boyd Gaming.
On Oct. 2, the same day Harrah's board confirmed it had received the buyout offer, the company revealed an agreement with Boyd for a tax-deferred exchange that stands to consolidate each company's holdings of contiguous property on the Las Vegas Strip.
According to the deal, Boyd receives approximately 24 acres that Harrah's has acquired from third parties, and Harrah's gets Boyd's Barbary Coast Hotel and Casino on the corner of Flamingo Road and the Strip.
The 24 acres Boyd would receive are directly north of the 63 acres where the Stardust Resort & Casino (slated for demolition next year) now stands. It is also where Boyd plans to build Echelon Place, a mega-resort company officials have said could include as much as 1 million square feet of meeting and exhibit space. The deal gives Boyd a total of 87 acres for the project.
The Barbary Coast, meanwhile, gives Harrah's a total of 350 acres on the Strip, spread between Harrah's Las Vegas hotel to the north, Paris Las Vegas to the south, Koval Avenue to the east and the Rio All-Suites Casino Hotel to the west. With this acquisition, "Harrah's will have substantially completed its land assemblage goals in Las Vegas," said Charles Atwood, the company's senior vice president and CFO, in an internal memo.
What does Harrah's plan to do with the massive chunk of property? Good question. That it has development plans is clear; what they are is a closely held secret.
In any case, from a meetings and conventions standpoint, Harrah's Strip holdings are strategically located. The company now controls most of the block along the Strip immediately south of the Sands Expo & Convention Center/Venetian Resort Hotel Casino. It offers about 1 million sq. ft. of meeting and convention space and 17,000 hotel rooms on the Strip, compared with MGM Mirage's 37,000 hotel rooms and 2 million sq. ft. of meeting and exhibit space.
Three Harrah's-owned hotels also have dedicated stops along the Las Vegas Monorail — whose management has publicly stated its goal of targeting convention attendees for increased ridership — connecting them to the Las Vegas Convention Center (and, coincidentally, bypassing the Venetian).
Following Harrah's merger with Caesars last year, the company reorganized its group business management team and launched several initiatives aimed at improving service and increasing cross-property bookings.
Michael Massari, Harrah's vice president of Las Vegas meeting sales and operations, said the most significant thing about the Barbary Coast acquisition was that "it allows us to continue along our path of thinking about all of the businesses as one, in such a way that it makes it possible for tradeshow customers to experience all of our diverse properties with a great amount of simplicity and ease."
As the spotlight shines on Harrah's Las Vegas activities, the sun is setting on at least one of its plans for Asia. Less than a week after receiving the buyout bid from Apollo and Texas Pacific, Harrah's took itself out of the running for the Singapore Tourism Board's RFP to develop an integrated resort on Sentosa Island.
Harrah's had been working with Singapore-based Keppel Land Management and several other partners on a proposal for three months, but decided "it would not be possible to deliver a development on the scale we envisioned for Sentosa Island," according to a joint statement by the companies. The withdrawal came four days before proposals were due.
In May, the company lost the bid to develop the first casino property in Singapore to Las Vegas Sands, whose winning proposal, the Marina Bay Resort, included 1.2 million sq. ft. of convention space.
Sands, as well as fellow Las Vegas competitors MGM Mirage and Wynn Resorts, all have projects going in Macau.
In the joint statement with Keppel, Harrah's said it "remains committed to development in Asia." The company has also announced plans for projects in the Caribbean, Slovenia and Spain.
