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Rod Smith

Where to Now, Old Friend?

15 June 2005

The prospect that Harrah's Entertainment will assimilate Caesars Palace and turn it into another Harrah's casino has been keeping some loyal high rollers away, even though plans for the property so far are little more than informed speculation.

Shirley Marx, a widowed Chicago businesswoman, said she has been sampling other properties for the past year, despite her 25-year history as a loyal Caesars Palace customer.

"I think they're going to change. It may be a whole different thing and I don't like Harrah's here in Indiana. But then I don't like riverboats," she said.

She's been trying the likes of The Venetian and Wynn Las Vegas. But she is coming back to try out Caesars in August for the first time in a year.

Marx said that while she liked the other properties and was flattered at being invited by developer Steve Wynn to the opening of his $2.7 billion resort, she'll return to Caesars Palace as a loyal customer as long it is not turned into another Harrah's casino.

"I never went anywhere else than Caesars before and I liked Wynn, but I still feel Caesars is the best in town if they keep it the way it was a year ago," Marx said.

Marx added that she was amazed by the number of former Caesars casino workers and customers Wynn has landed.

Industry insiders pointed out that Wynn deliberately lured casino executives, particularly Larry Altschul, away from Caesars Palace in order to court its customers.

Gaming Control Board Chairman Dennis Neilander expressed concerns Friday that Harrah's might homogenize the former Caesars Entertainment hotel-casinos in Las Vegas -- Caesars Palace, Paris Las Vegas, Bally's and the Flamingo.

Harrah's Chairman Gary Loveman assured Neilander that the differences in the company's offerings would be preserved.

However, Loveman has also told Wall Street analysts and investors that he intends to introduce Harrah's loyalty program to Caesars Palace customers as quickly as possible, and much more quickly than he has done with Horseshoe Gaming riverboats in the Mississippi Gulf Coast area.

Harrah's bought Horseshoe Gaming Holding Corp. last year.

University of Nevada, Las Vegas history department Chairman Hal Rothman said Harrah's has no history of managing a high roller-oriented property.

Harrah's bought Rio thinking it was aimed at high rollers. But the company discovered Rio was more of a locals casino with high-end entertainment, much like the Palms, he said.

In this case, history is little guide and it is impossible to tell whether Harrah's will try to maintain Caesars Palace's orientation toward high rollers or impose its imprimatur on its properties, Rothman said.

"The danger for Harrah's, however, is that high rollers have choices that other people don't have, and they're right to be exploring them now," he said. "Competition for high rollers is the most intense that goes on in Las Vegas. But high rollers care less about the place than the people. So the question becomes how (many) personnel shifts there are and that's a hard process to predict."

Harrah's has announced it is retaining Caesars Palace President Marc Juliano and other top executives.

Last year, the prospect of Harrah's Entertainment assuming ownership of Caesars Palace and imposing its imprint prompted some Caesars Palace veterans to threaten to gamble elsewhere.

Even marketing gurus warned that playing with the Caesars brand, arguably the most recognized in gaming, could damage the value of the former Caesars Entertainment properties.

Caesars executives, however, have been telling players quietly in recent weeks that it could take months before changes are made in the players club or comps programs, and there may be no changes at all.

"The reason for no changes is that Caesars has a formula that is unique: more players with an expected loss of $25,000 per visit than any other Vegas casino. Therefore, changing the comps formula at Caesars might not work," said Alan Mendelson, a television business reporter in Los Angeles who has talked with top Caesars executives. "Execs I spoke with said that if Harrah's does merge the other Caesars Entertainment properties into the Harrah's players club and comp systems, Caesars Palace might remain independent because of the unique math in the business plan of Caesars Palace."

Some dealers have feared Harrah's would add more slot machines and remove table games, which are more expensive to run. But managers asking not to be named said turning Caesars Palace into a "slot shack" won't work because guests at the upscale resort are looking for first-class amenities and table games.

Jack Hood, a self-employed businessman from Valparaiso, Ind., said he will wait and see before deciding whether to abandon his 20-year affair with Caesars Palace.

"You don't know what's going to happen. Like everything else, everything changes," he said.

However, Hood said he comes to Las Vegas for Caesars Palace. And if it is redeveloped, he said he is likelier to stay away from Las Vegas altogether.

Hood, previously a frequent visitor, has only been to Las Vegas -- and to Caesars Palace -- once in the past year.

Katie Johnson, another Caesars Palace loyalist from New York who was in Las Vegas over the weekend, said she came to visit "the old lady" one last time -- perhaps -- just in case there are operational changes ahead.

"I love the Palace and I'm not going to come here for the moral equivalent of a riverboat junket," she said, conceding she'll come back to Caesars at least one more time to get a feel for the place.

Heidi Strauss, whose father, Jay Sarno, developed Caesars Palace in 1966, was more philosophical.

"This is not the first owner since my father sold (in 1969) -- it's the fifth we've dealt with," she said. "The most recent owner did the best job of restoring its glory, but it's not a baby anymore and I don't know why anyone would want to change it.

"You'd buy the brand and I hope they keep the hotel the way it is. Caesars, after all, is still Caesars."

Another source close to the property over its long history, however, said the sale to Harrah's is like Aristotle Onassis marrying Jackie Kennedy.

"You knew it was just for the conquest. She was always too good for him," she said.

But Strauss said she was not sure how much her father would care if he was still alive.

"He'd have built three more (resorts) by now. He wasn't one for holding onto things, but he also wasn't one (for just changing them), either," she said.

Where to Now, Old Friend? is republished from