Harrah’s Chief Wants to Bring Caesars Palace to Macau
Dec. 22 (Bloomberg) -- Harrah's Entertainment Inc. Chairman and Chief Executive Officer Gary Loveman wants to bring the Caesars Palace brand to Macau, China, as the world's biggest casino company seeks new markets for growth.
Harrah's, owner of a golf course in Macau, has held exploratory talks there and will likely hold more in the future, Loveman said in an interview last week. Entering the market would require working with an existing operator because the government limits the number of licenses to six.
"There's nothing immediately active that could lead us there," Loveman said. "We've made it very clear we would like to see the Caesars Palace brand in Macau. We certainly recognize there are six licensees, and somehow or other it has to fit through that lens."
Harrah's is also looking to expand in other parts of Asia, and in Massachusetts and Ohio, Loveman said. Macau, the only part of China where casinos are legal, is the world's largest gambling hub, and Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Mirage already have a presence. The territory, once ruled by Portugal, overtook the Las Vegas Strip in 2006, after China ended a 40-year monopoly held by billionaire Stanley Ho.
"We need to try to bring our footprint into markets that are appealing to us," Loveman said. "We are not a one- or two- city company, we are a system of brands distributed to as many people as possible, so we need to continue to expand."
Macau Growth
Harrah's, owner of four properties in Atlantic City, New Jersey, and seven on the Las Vegas Strip, including Caesars Palace, will seek to open a casino near Boston if Massachusetts allows gambling, Loveman said. Harrah's bid successfully in September for a racetrack near Cleveland, where slot machine- style gambling is set to become legal.
"I am unaware of any contact with Harrah's about Macau," said Alan Feldman, a Las Vegas-based spokesman with MGM Mirage, joint owner of the MGM Grand Macau with Pansy Ho, daughter of casino billionaire Stanley Ho.
Spokespeople at other Macau casino operators, including Galaxy Entertainment Group Ltd., SJM Holdings Ltd., Sands China Ltd. and Wynn Macau Ltd. weren't immediately available for comment. Maggie Ma, spokeswoman for Melco International Development Ltd., owner of a stake in operator Melco Crown Entertainment Ltd., was also unavailable.
Gambling revenue in Macau rose more than 6 percent in the first 11 months of this year, Portuguese news agency Lusa reported Dec. 1, citing casino operator data. Las Vegas is battling a two-year slump, its worst on record.
Harrah's IPO?
MGM Mirage operates in Macau through a venture with Pansy Ho. In addition to Wynn and Las Vegas Sands, the others include Melco Crown Entertainment Ltd., Galaxy Entertainment Group Ltd., and Stanley Ho's SJM Holdings Ltd., all based in Hong Kong.
Leon Black's Apollo Management LP and TPG Inc. took Harrah's private for $30.7 billion including debt in January 2008. Amid the credit crunch, the casino company exchanged existing bonds for smaller amounts of new securities, lowering long-term debt to $19.3 billion at June 30 from $23.1 billion at the end of 2008.
Now Loveman is buying Planet Hollywood Resort & Casino, having purchased some of the property's debt at a discount.
"If you were to start building it today it would cost an awful lot of money," Loveman said. "We can do much, much better with it than a standalone operator could do."
The Planet Hollywood brand will be kept to appeal to younger visitors in the company's 40 million-customer database.
A public offering of Harrah's is likely in the future, though isn't being discussed now, Loveman said.
‘Pent-Up Demand'
Convention attendance in Las Vegas tumbled 26 percent in the 10 months through October, according to the Las Vegas Convention & Visitors Authority.
Event bookings will be "lean" next year, improving in 2011 as businesses resume meetings, Loveman said.
His outlook compares with MGM Mirage CEO Jim Murren's forecast for a 7 percent increase in travel to Las Vegas in 2010. Las Vegas Sands CEO Sheldon Adelson has said convention bookings are "coming back in force" each quarter.
"2011 looks much, much better" than 2010, Loveman said. "There will certainly be a lot of pent-up demand."
Las Vegas Sands, based in Las Vegas, fell 21 cents to $15.31 at 4:15 p.m. in New York Stock Exchange composite trading and has more than doubled this year. MGM Mirage founded by billionaire Kirk Kerkorian, fell 39 cents to $9.13 and has lost 34 percent year-to-date.
MGM Mirage and Dubai World's $8.5 billion CityCenter project, which opened this month with 6,000 rooms, will worsen discounting in the city, Loveman said.
--With assistance from Chia-Peck Wong and Wing-gar Cheng in Hong Kong. Editors: Anthony Palazzo, Josh Fellman
