Caesars to sell Reno Hilton property

Thursday, May 12, 2005 | 10:52 a.m.

Caesars Entertainment Inc. has signed an agreement to sell its Reno Hilton property for about $150 million to a Nevada development company with plans to redevelop the aging property into a family resort.

The resort's signature feature wouldn't be its casino but a 150,000-square-foot indoor waterpark, the country's largest.

Nevada-based Grand Sierra Resort Corp. -- a private company whose principals have developed casinos for Indian tribes as well as hotel complexes with waterparks -- also is eyeing Las Vegas and other resort cities such as Los Angeles and Orlando for similar family resorts to be built over the next several years.

The sale, subject to regulatory approval, is expected to close by the end of the year. The resort could open by 2007 and is expected to keep the Hilton brand.

Under terms of the agreement, the Reno Hilton's casino would be operated by Navegante Group, a Las Vegas casino management and consulting company. Navegante Group founder and Chief Executive Larry Woolf will lease the property's gaming operations from Grand Sierra.

Grand Sierra expects to convert some of the property's nearly 2,000 rooms into condominium units and is considering adding another tower with 1,200 hotel-condo units that owners could rent out for part of the year, President Thomas J. Schrade said.

The company also expects to add up to 100,000 square feet of retail space and expand its 107,000-square-foot casino. The property would be upgraded with a "Tahoe-style lodge" theme.

Schrade was involved in the inception of the predecessor company to the Grand Casinos Inc. chain in the South and co-founded Gaming Corp. of America, which developed casinos for tribes in the Midwest. He also developed a waterpark with a hotel and convention center in Wisconsin Dells, a complex in Wisconsin called the "waterpark capital of the world."

Another principal is Terry Ramaker, whose engineering company has designed more than 50 waterparks nationwide.

Schrade, who retired to Las Vegas several years ago, said he was attracted to the Reno Hilton site in particular because it sits on 148 acres of largely undeveloped land near the Truckee River that is conducive to developing a family waterpark attraction. The waterpark would feature swim lanes, waterslides, rock climbing, surf rising, wave pools, raft rides and a children's area, among other features.

Climate-controlled, indoor waterparks began in Europe but are spreading across the United States, he said. The company expects to take a cue from Disneyland to develop "heavily themed" waterparks with characters that appeal to families, he said.

"We think we'll be the largest and the first on the West Coast," he said. If the Reno project works the company expects to expand into Las Vegas and other cities, he said.

The Reno Hilton is one of several properties that Caesars had earmarked for sale more than a year ago and well before Harrah's Entertainment Inc. made its $9.4 billion offer the company.

The property is the least profitable of Caesars wholly-owned casinos and is located in the heart of a declining gaming market that has been hurt by competition from tribal casinos in nearby California. Even so, the property makes money and reported small increases last year in revenue and operating cash flow -- a key profit indicator.

Navegante Group was founded in 1995 by Woolf, former chairman and chief executive of the MGM Grand hotel in the early 1990s. Woolf opened Caesars Atlantic City in 1984 and that year became president of Caesars Tahoe, helping that property turn its first profit in history after 12 months. Woolf began his casino career as a dealer at Harrah's Reno and rose to become casino manager.

Woolf manages the Casino Fandango in Carson City for Olympia Land Corp. of Las Vegas, which purchased the property in 2003. Navegante also has served as a consultant for several casinos including the Venetian and Bally's in Las Vegas.