Harrah's Entertainment's (NYSE:HET) global expansion initiative is in full gear. On Tuesday, the casino giant announced a 50-50 joint venture with Hit Group to build a $700 million casino and hotel project in Nova Gorica, Slovenia, which borders Italy and is about 93 miles from Venice. The casino will include 1,500 slots and 70 table games in 50,000 square feet, while the property will also feature 50,000 square feet of convention space and a 1,200-room luxury hotel.
Then on Wednesday, Harrah's said that it's partnering with Spanish developer El Reino de Don Quijote de La Mancha SA in a 60/40 joint venture (60% owned by Harrah's) to build a Caesars-branded casino resort in Ciudad Real, about 118 miles south of Madrid. The $670 million project will include an 850-room luxury hotel, a 50,000-square-foot casino, a 3,000-seat Colosseum theater, a conference center and a Forum Shops retail center, as well as a 30,000-square-foot spa and other amenities.
The two projects represent Harrah's first play in Europe, and follows last month's announcement of the company's $1.6 billion joint venture with StarwoodHotels & Resorts (NYSE:HOT) and BahaMar Resorts in the Bahamas.
One thing seems clear to me: Harrah's is getting max value out of its recent acquisitions, in more ways than one. For one thing, Harrah's is leveraging the Caesars brand to expand internationally. For another, we can expect to see increasing margins at Caesars properties due to operational improvements and upgraded gaming floors. In addition, the ability to comp patrons for future trips to Caesars' Las Vegas Strip properties -- as well as the proposed international resorts -- provides a competitive advantage for Harrah's regional properties.
On top of that, I suspect we'll also see that Harrah's World Series of Poker circuit events have boosted gaming activity and filled hotel rooms in locales such as the Grand Tunica in Tunica, Miss., and Caesars Indiana. That said, I should mention that admissions at Caesars Indiana -- site of the poker circuit in October -- were up only 0.6% in October, and AGRs (net win) were up only 3.6% to $27.1 million for the month.
Isle of Capri will move offices to St. Louis
Citing the increasingly disruptive hurricanes, riverboat casino operator Isle of Capri (NASDAQ:ISLE) said Tuesday that it plans to move its corporate headquarters from Biloxi to St. Louis next year.
The company operates 15 casinos in 13 markets, with the majority concentrated in Mississippi and Iowa. It operates two casinos in Missouri -- in Kansas City and Boonville, which is about an hour's drive east. However, the company doesn't have a casino in St. Louis, though it's not for a lack of trying -- Isle of Capri most recently bid to build two casinos there, including one downtown.
Instead, Pinnacle Entertainment (NYSE:PNK) was chosen for the two projects, which will open in 2007 and 2008.
It might be that Isle of Capri will have a casino in St. Louis by then: Penn National's (NASDAQ:PENN) Alton Belle to the north of St. Louis (on the Illinois side of the Mississippi River) is for sale. The bankrupt President Casino downtown -- which Isle had agreed to acquire for $50 million, but then backed out of to pursue the two new projects in the city -- is also available, though I doubt that Isle is still interested in it in the face of Pinnacle's $400 million casino project downtown.
Incidentally, Pinnacle has said that it will be interested in bidding for the President to take advantage of its experienced employees and existing customer base.
Isle of Capri has said that its attraction to St. Louis lies in its central location to its casino operations, as well as quality of life. The move will involve about 140 or 150 employees.
Three Biloxi casinos set to open again
Last week's announcement that three casinos in the Biloxi market have set re-opening dates before the end of the year is encouraging for both the market and those casinos.
The Imperial Palace will open Dec. 20 with an expanded casino -- featuring 1,900 slot machines and 52 table games, with a new 16-table poker room -- as well as 1,088 renovated hotel rooms. Isle of Capri will open Dec. 26 with its casino operations temporarily set up inside its new hotel tower. The Isle of Capri will have 960 slot machines, 27 table games, and a new poker room.
Lastly, the Palace Casino will reopen Dec. 30 -- just in time for the new year -- with a streamlined operation. Slot count will be down to 820 from 1,170, and there will be only 14 table games in play rather than 36.
In the short term, the three casinos stand to do a healthy amount of business in the absence of competition: There were 12 casinos along the Mississippi Gulf Coast before Hurricane Katrina. And for the most part, while most of the casinos in the market were destroyed, their customer base is mostly intact. According to Pinnacle Entertainment -- whose Biloxi property was among those destroyed -- only 20% of its frequent players club members came from Mississippi, while 80% came principally from Alabama, Florida, and Georgia.
Over the last few months, casinos in Tunica and Vicksburg, Mississippi -- the latter dominated by Motley Fool Hidden Gems selection AmeristarCasinos (NASDAQ:ASCA) -- have drawn more customers due to the closing of the Gulf Coast casinos.
Fool contributor Jeff Hwang owns shares of Ameristar Casinos. The Motley Fool is investors writing for investors.
