Harrah’s will continue Ceasars Palace expansion plans

Despite of the net loss in the second quarter reported by Harrah's Entertainment, the company announced last week that it will continue with its plan to invest over $1 billion in the Caesars Palace. During a conference call with analysts, Harrah's Chief Executive Officer Gary Loveman said the company won’t delay the Caesars Palace’s expansion, which includes a new hotel tower and a larger convention space.

Harrah's reported a $97.6 million loss in the second quarter, compared with the same quarter a year ago. Revenues in the second quarter reached the $2.6 billion, which represents a 3.7% decline compared with the second quarter of 2007, which generated $2.7 billion. For the first half of the year, Harrah's net loss ascends the $285.4 million, compared with a net income of $422.8 million in 2007; revenues also declined 2.9% to $5.2 billion.
 
Loveman expressed that Caesars needs the expansion due its strategic importance in the market and the upcoming opening of several Las Vegas hotels and resorts including the Encore at Wynn Las Vegas and the $9.2 billion CityCenter planned to open in 2009. Loveman said that the market tendencies in Las Vegas are much tougher to predict than before, the fuel prices and reduced consumer spending have decreased the Las Vegas gaming revenues to the lowest point ever. Loveman said the difficult situation will continue, possibly for another year.

"The first half of the year presented us with the most turbulent economic conditions the casino industry has faced in years. Customer visitation fell in the second quarter as consumers coped with higher fuel costs, declining asset values, the impact of widespread flooding in the Midwest and other financial challenges." Loveman said.

Regardless of the difficult economic landscape, Harrah’s said that the company will continue to invest in properties’ expansions and rebranding some of them. Harrah's finished a $485 million expansion at Horseshoe Hammond in Northern Indiana and completed a $565 million expansion of Harrah's Atlantic City. Harrah's also completed the rebranding of Caesars Indiana to Horseshoe Southern Indiana and Grand Tunica to Harrah's Casino Tunica.