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Gaming Guru

Rod Smith
 

Caesars Palace Approved for Expansion

11 September 2003

Caesars Palace got the green light Wednesday for a $376 million expansion that will include a new 949-room, 26-story luxury hotel tower as its centerpiece.

The project approved by Park Place Entertainment Corp.'s board of directors includes a $76 million expansion of Caesars Palace's convention and meeting facility and $11 million in related amenity enhancements in addition to the $289 million tower. The total cost of the planned expansion excludes capitalized interest and preopening expenses.

When completed in 2005, the new 345-foot-tall luxury tower will bring the total number of rooms at Caesars Palace to 3,370.

The tower is part of a continuing program aimed at refurbishing the 37-year-old megaresort that has included the addition of a 4,100-seat Colosseum, an open-air Roman Plaza, an expanded Forum Shops and a new Forum Casino entrance.

"Caesars has always been first in the hearts of everyone who loves Las Vegas," Park Place President Wally Barr said in a statement. "With the completion of our new attractions, including the new luxury hotel tower, we will create a virtually new resort that will exceed the high expectations."

Wall Street analysts said the recent expansion projects created problems for Caesars Palace because of the construction disruptions they caused, but Park Place spokesman Robert Stewart said the new expansion program will avoid such problems.

"Because of its location, we're confident the construction activity can be isolated to areas that are not otherwise in use. (New) construction at the tower won't impede any traffic flows," he said.

With the new tower and added attractions planned or under way, Caesars Palace will be the first major Las Vegas resort to completely remake itself without using dynamite to implode the property, Caesars Palace President Mark Juliano said.

Caesars Palace has pioneered some of the most important trends in Las Vegas and the gaming industry, including being at the forefront of themed resort development in Las Vegas, hosting the first casino megaboxing event, debuting the city's first celebrity chef restaurant and creating the first luxury retail operation connected to a casino, he said.

Juliano also said Caesars Palace clearly has room to grow, given its average occupancy rate of more than 94 percent over the past five years and record room rates for six out of the past six months.

"The new tower will enable us to capture significantly more hotel business, both from meetings and conventions, as well as independent travelers. That will drive incremental revenue from gaming and nongaming venues alike," Juliano said.

"Our company is committed to paying down debt. Since the beginning of 2002, we've reduced our indebtedness by $570 million, but we also have an obligation to look for growth opportunities," Stewart added.

"Clearly, this (expansion) is one of those opportunities that we think will deliver significant returns for our investment," he said.

Overlooking the new pools and water features on the south property perimeter, the new all-suite tower will include:

-- 23 three-bay, 2,470-square-foot suites.

--6 two-bay, 1,470-square-foot suites.

--23 1 1/2-bay, 1,060-square-foot suites.

--874 petite suites ranging from 650- to 760-square-feet.

The rooms have been designed with nine-foot ceilings and floor plans that begin at 650 square feet, about 50 percent larger than typical upscale hotel rooms in major cities.

The tower will include a swimming pool that will complement the resort's three existing pools.

The current registration area at Caesars Palace also will be upgraded to serve the new tower, along with the resort's 2,420 other rooms.

Other features will include a VIP lounge, concierge and business center facilities, wedding chapels, new retail space and new dining and restaurant venues.

The new, 140,000-square-foot meeting and convention space will be attached on two levels to the west end of the resort's Palace Tower convention area, which is adjacent to the hotel's guest rooms.

Featured in the addition will be a 36,400-square-foot ballroom and junior ballrooms.

The tower's top floor initially will be left unfinished to accommodate future development.

The new and expanded facilities are expected to create 500 to 600 new jobs at Caesars Palace.

Park Place Entertainment shares fell 14 cents, or 1.66 percent, Wednesday to close at $8.31.