Rio Makes Plans for Wheel in Sky

LAS VEGAS -- The Rio Tuesday announced plans to build the world's tallest observation wheel, part of an $86 million project that it promised would change Las Vegas' skyline and bring millions of new visitors to the off-Strip property each year.

Harrah's Entertainment, owner of the Rio, estimates the 600-foot-high observation tower will draw at least 2 million added visitors a year to the West Flamingo Road hotel-casino and have a significant effect on revenues, said Harrah's Western Division President Tom Jenkins.

However, Richard Hannigan, chief executive officer of Voyager Entertainment International, said the observation wheel will have the capacity of carrying 7 1/2 million passengers a year, "so Harrah's is being very conservative, and I don't intend to have it half empty."

Las Vegas-based Voyager Entertainment would build the observation wheel and entertainment complex in partnership with Harrah's, which would put up the property for the development.

Hannigan said his company will provide a blend of institutional financing, which will be announced in January, to build the attraction.

Questions persist about the financing, however, because the company said in a quarterly report filed with the Securities and Exchange Commission on Nov. 14, that it has "limited operations and is still in the development stage." The company said it will need to raise a substantial amount of capital in order to continue its business plan.

Jenkins and Hannigan both said their goal is to attract guests from other properties as well as more local residents.

"I can fill (the Rio) up with gamblers, but once you've done that, your options are to continue to build rooms or to find things to get other casino customers to want to visit your property," Jenkins said.

"Look at the (financial) performance of Caesars Palace with Celine Dion, and I think this wheel will draw significantly more visitation than Celine Dion does," he said.

Park Place Entertainment Corp. opened its new Colosseum theater in the spring featuring 200 performances a year by Celine Dion. It has been estimated that the development boosts Caesars' bottom line by $50 million a year.

Industry experts said the Ferris wheel-like tower also should add to the total Las Vegas visitor count.

"This is a new idea, a new kind of attraction. Just a new casino you can do on a napkin in a bar, but this is more what Las Vegas needs (to attract added visitors)," said University of Nevada, Las Vegas professor and casino industry expert Bill Thompson.

Only two other observation wheel entertainment complexes are planned in the United States: one in Dallas and the other in lower Manhattan, Hannigan said.

Deutsche Bank analyst Andrew Zarnett called the observation wheel a "clever idea."

"Anything that drives customer visits in the casino industry from hotel to hotel is a clever idea," he said, citing art galleries, retail outlets and entertainment venues.

Because customers spend money on slot machines and table games as well, they drive added revenues. This will drive added revenue for the Rio hotel as it's being built and as it opens," Zarnett said.

"And overall, this kind of creative attraction isn't just good for the people who bring them, but they're good for all Las Vegas," he said.

The 600-foot observation wheel, which is expected to open in July 2005, will have 30 "orbitors" with a capacity of 20 passengers each that can be used for weddings, special events or scenic viewing, much like the 450-foot-high London's Eye observation wheel on the Thames River.

The new attraction will include an 80,000-square-foot, three-story complex of retail outlets, restaurants and specialty shops. It also will have a night club and restaurant at the 300-foot hub level with private sky boxes.

"(Casino operators) always want to find ways to bring bigger, bolder attractions to Las Vegas and this is true to a bigger, bolder and brighter Las Vegas," Jenkins said.

Although London's Eye is notorious for its long lines, Hannigan said most rides on the Rio's observation wheel will be booked in advance through the Internet and hotel desks. The half-hour rides will cost $18 per person.

The new entertainment complex will be built on the southeast side of the Rio parking lot near Interstate 15.

Responding to speculation that the Rio is proceeding with a reported third tower, Jenkins said the company is always reviewing possibilities, but is not close to a decision and will base any development on guest demand.

The Associated Press contributed to this report.

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