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Harrah's postpones completion of Octavius Tower at Caesars Palace

The months-long drop in local visitor numbers has caused Harrah's Entertainment to delay the completion of Caesars Palace's sixth hotel tower.

The world's largest casino company confirmed Monday that it is postponing opening nearly 660 rooms in the new Octavius Tower from its scheduled midsummer completion "until a period of stronger demand."


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  • Construction on the exterior of the hotel tower, however, will continue, said Jonathan Halkyard, Harrah's chief financial officer.

    Once customer demand improves, Caesars will be able to bring the rooms online in a matter of months, he added.

    Bill Lerner, a gaming analyst for Deutsche Bank, said the decision makes sense given the current downward trend in tourists visiting Las Vegas.

    Las Vegas occupancy numbers were 79.2 percent in November, a 7.7 point drop from the same time the previous year, according to numbers released Friday by the Las Vegas Convention and Visitors Authority. Midweek occupancy for the city dropped nearly eight points to 75.9 percent.

    For the first 11 months of 2008, visitation has declined 3.8 percent to about 34.7 million people. Visitation fell in nine of the 11 months of 2008 reported to date.

    "Waiting makes sense," Lerner said about Harrah's decision to delay opening the new tower rooms. "Strategically speaking, especially what we've seen with the downward pressure in pricing, it makes sense to delay."

    Other parts of the company's $1 billion expansion project, including the 110,000-square-foot meeting and convention space, will open on schedule this summer, according to a company statement.

    Three 10,000-square-foot villas, an expansion of the Garden of the Gods pool and garden area also will open during the summer.

    Caesars completed a remodeling of the 500-room Forum Tower three months ago, including its two penthouse suites.

    Harrah's insisted the decision has to do with decreased room demand for its current inventory of nearly 3,350 rooms and is not a move to improve liquidity for the debt-heavy company.

    Harrah's announced the expansion of the 42-year-old Caesars in July 2007 as a way to keep the property competitive in the Strip's high-end market.

    Las Vegas Sands Corp's opening of the 3,068-room Palazzo in December 2007, followed by Wynn Resorts Ltd.'s opening of the 2,034-room Encore last month, added inventory to an already struggling market.

    "Right now is particularly tough and there isn't a lot of visibility on any segment of the business," Lerner said.

    Room rates will continue to decrease, with Strip rates expected to drop 18 percent for the week beginning Feb.1, according to a weekly room rate survey report issued on Mondays by J.P. Morgan.

    High-end property rates are projected to be down 33 percent Jan. 1 through Feb. 7, according to the report.

    Harrah's, which also owns the Rio, Paris Las Vegas, Bally's, Flamingo Las Vegas, Imperial Palace, Harrah's Las Vegas and Bill's, is expected to drop its room rates 32 percent during that time, according to J.P. Morgan.

     

    Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

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    rob-e wrote on January 13, 2009 01:16 AM:
    It's over Johnie... I'm looking for a way out of here my self, journey man in 2 trades and there is no work, i been here 14 years and never been out of work. The only thing to do is go back to school and re-train for a new job. I'm sure there is people like me out here in the same boat, we will make it brothers and sisters it wont be easy but we will find a way.

    I was pumping gas the other day and i over heard this couple telling each other lets go walk in the park to pass the time.. funny cause the wife and i said the same thing about half an hour earlier, anything to keep busy with out spending some Gelt.


    itson wrote on January 13, 2009 12:03 AM: The S#!t will hit the fan when the M resort opens in the unproven south strip. The place will be more empty than Aliante. It is too far south and the roof-tops they count are 50% empty homes in foreclosure.


    ex gambler wrote on January 12, 2009 09:38 PM: I believe Native Nevadian is correct in his comments. It is easy to blame the economy or Congress or anyone else for one's failures. The bottom line, management failed. For too long the gaming industry was a no miss scenario in a 'build it and they will come' climate. Now, those corporations are in a tough economic climate and only the experienced and competant management teams can handle the task. Which ones will fail and which will prevail is quite obvious. Which will be seeking bankruptcy protection? I think we all know the answers and therein lies the inexperienced and or incompetant leaders.


    5150 dave wrote on January 12, 2009 06:40 PM: City Center is going to tank. 11,000 jobs for a short period of time.


    milfy2001 wrote on January 12, 2009 06:33 PM: other than steve wynn and phil ruffkin, the rest of the management and boards (stations, harrahs, boyd, mgm, etc) got caught with their pants down. they are paid millions of dollar and deserve to get fired for their incompetence.













    Bill wrote on January 12, 2009 06:30 PM: Are problems started when the political system in this country decided that beating up on each other Democrats and Republicans was a sport. During the time they were beating up on each other there was no oversight to see the effect of our international and national policies. Monica Lewinsky along with Bill Clinton took up three to four years of our valuable time while the business people were busy selling Amoco, Arco to BP petroleum. And then authorize the war to fight against the people who produced the oil for the same company's. Las Vegas on the other hand never thought that gaming whatever failed to bring in revenue continuously year after year. So therefore there was no education required other than making money from tips. Most of the good jobs were given to technical people came in from the outside. Now were trying to blame every body else for our problems. Our problems is we're a one horse town gaming. No education required. Taxi drivers who long-haul people. Limousine companies that overcharge people. Hotels and give poor service. News media which says at the end of a major convention or during the convention be nice to these people that brought us $100 million this week what a damn insult. Many corporations that I've talked to about relocating to Las Vegas had said absolutely not there's no brainpower here. We're in the most difficult times nationally and both internationally. What do we have to offer gambling.


    Free Nevada wrote on January 12, 2009 05:28 PM: So they won't be finishing off the inside and staffing it for guests for a while.

    Now maybe they can open up its back entrance and let the county warehouse homeless people in there with air mattresses, MREs, etc., a make-shift medical clinic and some vocational training classes. What's the worst those guys could do to the place, given that it hasn't been painted/carpeted/furnished yet?


    buffalobob wrote on January 12, 2009 05:07 PM: Watcher - what is different about what Roland said than Bush's famous 'you're either with us or against us' stand that vilified everyone from the Dixie Chicks to the other half of the country. Get over yourself, kind sir.


    crybabies wrote on January 12, 2009 04:55 PM: For all of the crybabies, james, that are blaming someone or something, are really showing how true your lies about "boot-strapping it" were. Because, if you are really pulling yourself up by those boot-straps then you would know that this "little" interruption will only make you better. But, I have the belief that all you are good at is crying about your loss opportunity. Wah, Wah, Wah,.
    Get over it clowns, obama's in office and there's nothing you can do about it.


    navigator wrote on January 12, 2009 04:54 PM: I was wondering when they would come to the senses. Speaking of sense, it made none to continue to surround that tired old 1967 building with more new ones. They should have imploded a while ago. Also, when you spend $1 Billion, to get less than 700 rooms, you are paying nearly 1.5 million for each room with some un-needed convention space and a few more restaraunts to add to the over saturated culinary market. They should leave that unfinished building in its present state for the next 5-8 years when the market may (may) soak up the volume.


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