Gaming Companies: Harrah's Joins Caribbean Venture

Las Vegas-based Harrah's Entertainment, the world's largest gaming company, Monday announced plans to dip its toes into the Caribbean area, joining forces with two other hospitality giants to develop a $1.6 billion destination resort.

Baha Mar Resorts will ante up 57 percent of the largest-ever, single resort development in Caribbean history, Starwood Hotels & Resorts Worldwide will contribute 10 percent and Harrah's will put up one-third.

Harrah's Chairman Gary Loveman said this will be the first time his company has used the Caesars brand for an international expansion since its $9.4 billion takeover of Caesars Entertainment this summer.

"Caesars' name is one we will use for luxury developments around the world," he told a New York City news conference announcing the new deal.

In addition to the power of the Caesars brand, Loveman said, the deal will bring Harrah's Total Rewards databank, with 40 million customers, combined with "tens of millions" in the Starwood database, together to create "a remarkable engine for the development of relationships with guests."

Baha Mar Chairman Sarkis Izmirlian said Harrah's will bring all the signature elements guests expect from Caesars to the largest casino in the Caribbean while Starwood will bring the premier names in lodging to the Bahamas project.

Deutsche Bank analyst Marc Falcone said the 1,000-acre resort will give Harrah's another distribution point for the Caesars brand, underwritten by the partnership with the Starwood family of brands and the Baha Mar site in the Bahamas, with what has been called one of the most beautiful beaches in the Western Hemisphere.

The Baha Mar "resort metropolis" will be built in the Nassau Cable Beach area of New Providence Island and offer a massive casino and six hotels with 3,550 rooms.

Construction will start in 2007, and when the new resort opens in 2010, it will represent head-to-head competition for Kerzner International's 2,300-room Atlantis on Paradise Island in the Bahamas.

Harrah's will build a 1,000-room Caesars Resort Hotel with a 95,000-square-foot casino in the resort.

Baha Mar will feature the first collection of four Starwood brands at a single resort, including a 300-room W with 100 condo units, a 300-room St. Regis with 100 condo units, a 700-room Westin and a 700-room Sheraton, each of which will be managed by Starwood.

A renovation of the existing Wyndham Nassau Resort is also planned, bringing the number of hotels on the property to six.

All together, the resort will offer 3,550 guest rooms, including a variety of residential units.

Baha Mar Development will run the services tying the casino and the hotels together, including the largest spa facility in the Caribbean; an eco-water park attraction; 175,000 square feet of meeting space; and a 20-acre beach and pool with 3,000 feet of continuous beachfront. Baha Mar's plans also include a 50,000-square-foot village with upscale retail, chef-branded restaurants and entertainment venues.

"This will have a powerful effect in elevating the profile of the Bahamas and grow the market for Harrah's and for the region," Falcone said.

"It's another growth opportunity for the company and a smart use of its capital given the leveraged capital structure," he said. "I think we'll see them participate in other international growth opportunities where they can leverage the Caesars brand with limited investments of their own."

Los Angeles-based MHA Studio is the project architect and Baha Mar Resorts will serve as the developer for the project.

Mike Hong, founder of MHA Studio and Design, also designed the Bellagio and Wynn Las Vegas.

Harrah's stock closed Monday at $64.23, up 90 cents, or 1.4 percent, on 1.5 million shares traded, smaller than normal trading volume.

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