Harrah's Entertainment: Way Off the Beaten Path

While other Las Vegas-based casino operators flock to Asia, Harrah's Entertainment has been there, tried that, and is setting its sights on other — sometimes even remote — corners of the globe.

Tucked into a corner of Uruguay, on the easternmost shore of a peninsula surrounded by sea and covered with lush greenery and flora, is the Conrad Punta del Este Resort & Casino, a high-end property Harrah's acquired when it bought Caesars in 2005.

Boasting 50,000 square feet of meeting space, the resort hosted 180 group meetings and conventions in 2006, and is just one small jewel in the international crown that Harrah's is in the midst of assembling.

"Group meetings, including conventions, continue to be a wonderful part of our business," said Andrew Tottenham, managing director of European development for Harrah's Entertainment. "We carefully select destinations that will be attractive and easily accessible by attendees, and bring in amenities to our developments that support group business."

In addition to the Uruguay acquisition, Harrah's recently finalized a joint venture with Starwood Hotels & Resorts Worldwide for a $2 billion-plus resort in the Bahamas called Baha Mar, which will offer 175,000 sq. ft. of meeting space.

Harrah's is also extending its reach to Spain, where it signed an agreement with El Reino de Don Quijote de La Mancha to develop a Caesars casino resort in the 29-acre El Reino community of Ciudad Real, 118 miles south of Madrid, that will feature a conference center.

Late last year, Harrah's also signed an agreement to bring the Caesars brand to Casino Windsor (Ontario). The casino will be renamed Caesars Windsor in 2008 when the property completes its CAN $400 million (US $338 million) expansion that will include a new 22-story hotel, 5,000-seat entertainment center and 100,000 sq. ft. of convention space.

And that's not all. The company has signed a memorandum of understanding with the Hit Group to develop a casino resort in Slovenia with up to 1,200 rooms and 50,000 sq. ft. of meeting space near the Italian border in the city of Nova Gorica.

It's hard not to look at Harrah's international properties and wonder why the company hasn't jumped into the incredibly lucrative Asian market alongside other casino operators. Wynn Resorts, MGM Mirage and Las Vegas Sands have all staked their claims in Macau. The Sands also is set to build Singapore's first casino resort.

Harrah's may not be in the Far East yet, but it isn't for lack of trying.

In early 2006, Harrah's teamed up with Keppel Land and Star to submit a bid to build a casino resort in Singapore. Competition with other bidders was fierce. MGM Mirage partnered with CapitaLand, and the Las Vegas Sands had to go it alone after its partner, City Developments, dropped out.

The Harrah's-Keppel proposal had plenty of bells and whistles. There was a 1 million sq. ft. immersive entertainment experience called iPort produced by film director James Cameron (of "Titanic" fame), with a surrounding theme park, Centre Pompidou Gallery and other contributions by design gurus Daniel Libeskind and Peter Marino.

Despite all that, the Sands won the bid with its $3.6 billion plan for the Marina Bay Sands, a resort with 2,500 hotel rooms and 1.2 million square feet of meeting and exhibition space scheduled to open in 2009.

Even with the loss in Singapore, and the fact that Macau only hands out a fixed number of gaming development licenses, Asia may still be in the picture for Harrah's. "We continue to monitor markets around the world for the right opportunities, and there are many, many out there," Tottenham said.

One of the global opportunities Harrah's inherited with the Caesars acquisition was the Uruguayan Conrad Punta del Este Resort & Casino, a luxury Hilton Hotels property.

Uruguay may not be on most convention planners' lists when they're thinking of international destinations, but inside South America, particularly Brazil and Argentina, the resort books a lot of business.

"Forty-five percent of the attendees are from Argentina, 35 percent from Brazil, 10 percent from Uruguay and the remainder from other Latin American countries," said Edgar Feredjian, the resort's hotel director. "In 2006 we had a total of 180 group meeting and conventions, the largest of which brought 3,000 attendees."

Punta del Este has sales offices in Buenos Aires, Argentina, and Sao Paulo, Brazil, along with the offices in the resort. Staff members regularly attend the most important tradeshows in the region to drum up business, according to Feredjian.

But there are drawbacks to being in such a faraway location.

"Punta del Este's biggest challenge is the air transportation," Feredjian said. "During the months of April through November there are only two daily flights from Buenos Aires into Punta, and no flights from Brazil other than the ones Conrad charters from Sao Paulo once a week."

As if that weren't enough of a challenge, there's also a lack of hotel space on the same level as Punta's.

"Conrad is the only five-star hotel in the city with the highest level of product and service," Feredjian added. "Having no similar hotels in the area makes it hard to book larger groups, since we only have 296 rooms and suites in our property."

Still, since the Caesars merger, Tottenham said, the property has performed well under Harrah's management, which he attributes in part to the company's Total Rewards program.

The program allows customers to earn reward credits based on how much and which games they play, and also allows them to redeem the credits for meals, merchandise, trips and concerts at any other Harrah's Entertainment property.

"Total Rewards is the industry's first and leading customer loyalty program," he added. "Today, we nearly have 40 million members."

Harrah's doesn't just throw darts at a map when it's considering new international properties.

"This is a terribly long process involving economic, tourism and infrastructure studies, negotiations with government officials, financial modeling and identifying development partners," Tottenham said.

Bringing Casino Windsor into the fold, and renaming it Caesars Windsor in early 2008 was a no-brainer, he added. With the $400 million dollar expansion and added exhibition space, it's yet another feather in Harrah's cap.

"We expect 30 to 40 percent of our guestroom business will be from the group sector when the Caesars Windsor convention center opens in early 2008," said Holly Ward, director of communications and community affairs for the property.

Ward also said the center would be the largest meeting facility in Ontario outside the Toronto area, and would include seven conference rooms. "We expect up to 100 groups of various sizes annually," she said. "Our ideal size group would be 250 to 1,000 people with the capacity to hold a group of 2,100 for functions, with the partnership of other hotels city-wide."

Detroit is a 10-minute drive away, so 80 percent of the customer base is American. "Our primary target markets include Ontario, Canada and the American Midwest," Ward added.

Casino Windsor attracts approximately 4.5 million visitors annually, and it hopes to pull in even more with an early launch of Harrah's Total Rewards program in the second quarter.

The hotel books meeting and convention business through direct sales, tradeshows and association relationships, Ward said. "Also, the Caesars name is an incredible draw, representing luxury, indulgence and superior customer service."

The company will upgrade the existing 389-room hotel tower to what it refers to as "Caesars' exacting and luxury standards" for a total of close to 800 four-diamond hotel rooms when the renovation and expansion is completed.

In January, Harrah's and Starwood Hotels and Resorts Worldwide finalized a deal with Baha Mar Resorts for a $2 billion-plus resort in the Bahamas.

The resort, called Baha Mar, is a mixed-use project with meeting space on a 1,000-acre site in Nassau. It will compete directly with another huge property, Atlantis, on nearby Paradise Island.

"Caesars Resort and Hotel at Baha Mar in the Bahamas will be a complete warm-weather destination resort that conventioneers and their families will enjoy year-round," Tottenham said.

Baha Mar will contain approximately 3,000 hotel rooms. Harrah's new Caesars Resort Hotel at Baha Mar, with another 1,000 guest rooms and a 100,000 sq. ft. casino, the largest in the Caribbean, is slated to open in 2010.

In Spain, Harrah's is also tackling an untapped market. It will build the country's first large-scale casino resort, according to the company. Besides the conference center, the property will have an 850-room hotel.

"The Caesars resort planned for El Reino will offer all the amenities of an integrated resort, including restaurants, golf courses, spas, a casino, entertainment, shopping and plenty of convention space," Tottenham said.

In their 60-40 ownership agreement, Harrah's and El Reino will invest approximately $670 million in the project.

And what about Slovenia? Why, one might ask, is Harrah's interested in this obscure European country?

"Slovenia is a beautiful country that is easily accessible from many Western European countries," Tottenham said. "The country is fairly well-appointed, infrastructure-wise, but underserved by the entertainment industry."

In its preliminary proposal, Harrah's and Hit Group, one of the country's largest casino operators, expect to invest approximately $700 million through a 50-50 partnership.