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Wednesday, Nov. 25, 2009 | 7:21 p.m.
Sun archives
Harrah's Entertainment Inc.'s chief executive officer confirmed to employees Wednesday that the company is interested in acquiring the Planet Hollywood resort on the Las Vegas Strip.
In an internal e-mail, CEO Gary Loveman told employees of the company's interest, Harrah's spokeswoman Jacqueline Peterson said.
"The Planet Hollywood resort sits adjacent to the Paris Las Vegas Hotel & Casino, currently the southernmost of six contiguous Harrah's-owned properties on the east side of the Las Vegas Strip,'' Loveman's e-mail said.
"The Planet Hollywood resort is currently in default to its lenders. As a result of our purchase of their debt, we are working on a plan that also would allow Harrah's to own and manage the property. This is an attractive proposition because of Planet Hollywood's proximity to our other resorts on the Strip, its high-quality product offering and its strong brand name.''
"This move is the latest example of our strategy to make purchases or acquisitions capitalizing on opportunities created by current economic conditions. I look forward to sharing more details with you about this project in the future,'' the e-mail said.
Harrah's, according to the Wall Street Journal, had already purchased some $140 million of the debt of Planet Hollywood through mid-September.
Peterson said the company hasn't confirmed how much of the debt it now holds.
The 2,518-room Planet Hollywood on Nov. 16 reported a $17.5 million quarterly loss and disclosed that lenders had taken control of its finances after it defaulted on debt obligations that total $870 million.
The hotel-casino is across the street from CityCenter and, like other properties on the Strip, has already suffered from the decline in travel to Las Vegas.
One of Harrah's parent companies, Apollo Global Management LLC, had shown interest in the stalled Fontainebleau resort in Las Vegas, but Apollo hasn't made an offer for Fontainebleau.
Despite Harrah's hefty debt load of $19.3 billion, its corporate parents Apollo and TPG Capital (Texas Pacific Group) are considered to have deep pockets and financing likely wouldn't be an issue for Harrah's should it pursue the Planet Hollywood or Fontainebleau deals.
Gaming regulators should really look at doing something about this. How can it be a good thing for two companies (MGM and Harrah's) to own practically every hotel on the Strip? Oh, and let's not even talk about the irony of Harrah's buying somebody else's debt when they can't even afford to pay off their own! Can somebody explain that one??
What really irks me is that Harrah's has whined for months that the recession has hurt them so badly that they have had to eliminate the 401(k) match, fire over 9,000 employees, and cut management salaries, but yet they somehow have enough cash to pick up an $880M property next door. Meanwhile, they keep offering smaller bondholders pennies on the dollar to try to lower their heinous debt load. Unbelievable arrogance from a poorly managed company.
Makes sense. I think they'll do a great job. And if they can pick it up for pennies on the dollar and eliminate their own debt at the same time for pennies on the dollar, sounds like great management to me, as a shareholder. Sour grapes maybe?
Harrah's is not a public company, dave. So why is it of any interest to you as a shareholder???
dave202 why are you trolling here? You are not a Harrah's shareholder. Harrah's is a private company. There are no shares.
VegasObserver, you are an idiot. Of course Harrah's has shareholders, just not shares that are publicly traded.
I imagine that Harrah's bought that $140M debt at a substantially reduced rate. PH is a great hotel, just a bad location (ever since the old Alladdin days), a little too far from the hot corners at Flamingo Road or Tropicana Avenue. I think the opening of CC will help bring some new foot traffic through the doors of PH. Like the housing sales, there are deals to be had for those who have the cash.
This might make some sense for Harrahs, but is not great news for the LV visitor.
Surprisingly, Planet Hollywood turned out quite good after the rebranding from Aladdin - and now has a different feel to other Hotels on the strip.
Competition and the innovation it generates are what will keep LV a popular destination - and this is at risk when 2 companies own most of the Hotels on the strip.
What next - MGM and Harrahs swap MGM Grand for Caesars? - and have one side of the strip each?
They could then demolish the pedestrian bridges and keep their customers completely captive!
go downtown and gamble - not any of this going on - plaza - vegas club etc......not as nice - who cares if u can win something at the small places
great aquisition,great property,if anyone can make this work harrahs can we look forward to staying there again
What in the world is Harrrahs doing?If Apollo Managment and TPG have such deep pockets.Why in the world are the Harrahs properties such dumps these days.Why in the world are they laying off people and having their own debt load troubles.
The strip is becoming monopolized by MGM and Harrahs.Harrahs is a very poorly run company who has no people managment skills ,Customer wise nor employee wise.I have the opprotunity ,on a daily basis to work with consumers and have delt with many Harahs employees who say they hate working for Harahs and how insensitive they are to their employees.
I have also been in Harrahs owned properties and found the service very poor in them.I wonder why?
Unhappy employees are not what a company needs to maintain good customer relations.I just dont understand why the corporate dodos of Harrahs,who dont understand that their employees are the frontline to customer service and then the appearence of the building.Wore out carpet walls that need paint and they need to offer value at thier properties.
My suggestion is fire the over paid accountants who set the opperation standards,I can hear them now,to save, we need to cut here and here and tighten here and here.Need more hands delt per minute,need to raise prices here and here.Oh the comps no more of that.
If you guys out their heard the stories I have about Harrahs you would not visit their establishments.Layoffs lordy they needed to start at the top.Oh I know that the execs at Harrahs think it is beneath them to read the LV Sun but maybe one of them will and I hope they do and maybe start thinking that the economy is not why they are struggling maybe its their managment.Remember not one person I have talked to,who works for Harrahs,has said anything positive about Harrahs management.I ask them why not leave and they say heck they own everything and their are no jobs or I would.So this tells me Harrahs knows this and abuses the situation One day things will thrive and the Harrahs will either re evaluate thie mngt pratices or be on of the largest Bankruptcies in casino history goodluck PH employees hope you can bare their garbage.
Harrah's is NWO simple as that, they use every trick in the book to cheat people and Just for talking bad about them gets me arrested on trumped up charges everytime I step into one of their dens of horror.
This would not be good for tourists. The state stopped Howard Hughes from monopolizing the strip back in the sixties when he tried to add The Stardust to his kingdom, so why is this going to be allowed?
Obviously Harrah's and MGM hold major influence over the gaming board, the city, and the state of Nevada for that matter. Otherwise there is no way in hell two companies would be allowed to gobble up property after property this way. It is good for nobody except the fat cats on the top. Employees suffer, visitors suffer, and in the end Vegas itself suffers. I would not be surprised to see an eventual merger between MGM and Harrah's which will result in virtually the entire Strip being owned by a single company.
I'll trade you Park Place for Marvin Gardens and Tennessee Ave.
Take a ride on the reading.
How will Clark County Commissioners ever say NO!! to these people?
Hmm, how will they lower the ceiling in the casino for better containment of plumes of smoke, bring in the smell of 50 year old tainted carpet throughout the establishment, and turn the rooms into tacky replicas of all their other "posh" properties. Hey, if any can do it, Harrah's has a proven track record of operating the biggest dumps on the strip.
Don't think the Department of Justice wouldn't like to flex some muscle and file a conspiracy in the restraint of trade suit in federal court naming both Harrah's and MGM as codefendants. Especially if it means staying in Las Vegas for the duration of the litigation.
I work for a Harrahs property and can tell you that they are a great company to work for!! Yes they have cut back on some things for employees but I feel with this aquisition it will position itself for the future and be able give the employees a return on the money they invested. The PH is in need of the Customer service skills that all of Harrahs employees are trained extensively to give. People that say bad things about Harrahs are former employees that couldn't cut it and got fired and feel the need to bash them on this blog...I invite you stay at a Harrahs property and you will see that it is the best place to stay in Las Vegas for the money!!!!
Bad news. One of the big elephants getting bigger is bad for the consumer, and maybe bad for the Vegas economy overall.
it's one more step in the death of las vegas.
less competition always leads to an inferior product because there's less motivation to be better than the guy next door.
There are too few companies controlling too much of gaming in Las Vegas. It's bad for competition which is bad for consumers... for that reason, it has become bad for Las Vegas because consumers are very value-driven now and will continue to be for the foreseeable future.
Harrah's parent company might have deep pockets but they bought Harrah's shareholders out at the height of the market - not too bright - and what would happen to the local economy if an even bigger corporation fails because they are new to the gaming business? As talented as he is, Gary Loveman is just one person.
I hope the Nevada Gaming Commission considers the big picture as it relates to competition in our industry.
When I go to LV I do NOT gamble on the Strip, and many out-of-town visitors are seeing that the LOCALS properties, the Boyd Gaming and the Cannery family of properties, are the best value. Not as crowded, not as "cheesy" and a better chance to win something. The only reason the Strip is hanging on is because most out-of-town folks and first-timers still don't know any better. BTW, save some money, find a good non-gaming hotel and stay there, just drive or take the RTC buses to your casino of choice.
There isn't that much hope in the locals market either. Boyd is still looking to take over Stations, and both companies are far stingier than they used to be when it comes to comps and loose machines.
When I come to Vegas, I stay and play off-strip. Very very seldom I go to the Strip. I might drive to the Orleans, using I-15, and look at the lights, but then I remind myself of the terrible traffic conditions on the Strip, which usually makes me stay away from the entire chaos zone.
I don't even think it's because of the gamble conditions on the Stip that are said to be worse than at the off-strip properties. Everybody knows that if you're gambling with a negative expectation, it's only a matter of time till you run out of money, regardless. However, the off-Strip casinos are not as crowded by masses that actually just walk through the casino without playing. The point value is usually higher, there are better promotions available, plus, it's not as noisy as it is at many casinos on Vegas Boulevard.
Obviously the weekend crowd from California likes it when it's loud and noisy, but the real Vegas enthusiast comes to Vegas for gambling and good food and perhaps some sun in the morning. And not for the loud music coming out of every corner on the Strip. This is something that can drive people crazy. Harrah's obviously wants the California crowd, the party animals. Are there still enough of them around with pockets full of money?
From Switzerland
The only noisy place that is really fun visiting......that's the Ellis Island Casino. Great food specials, and great atmosphere in general. The drinks are cheap and there are a lot of average people to have fun with.
Oh I have to say that as a CURRENT employee of Harrahs, it has the worst rep. of any company ( all it is, is a JOB for me just like the ivory tower guys. no more no less, they are now getting what they pay for in employees. You want to cut corners and not take remote care of them, they will do the same . This company has a morale problem that is un beleivable... The thanksgiving dinner that they served this year was a bad really bad. That tells you what they think of the employees ,, F*ck them,, there are more people out there that would love to have your job.. that mental mind set is what killed this hack second tier company.
Henry ford said. IF you take care of the employees and make them happy, the will proform better thay youcan imagine. If not they will be only as good as you let them be. ( sic)
If they can get it cheap then they would be foolish not to buy it.
Gary Loveman: if you do takeover Planet Hollywood please can you change the font they used for the Westgate logo, it's truly shocking and almost up there with comic sans. Thanks in advance.
I believe the gaming companies are using the economy as reason to lower wages and benefits. If they can afford to expand their companies, why then, can they not afford better heath care insurance and a 401K? Screw the employees but executive pay is skyrocketing. No need to wonder why service levels in Las Vegas are disintegrating.
The indian casinos are going to get all the gambling dollars now and for years to come. They are close to home, don't require several tanks of gas, and you are not trapped chasing your money before having to make that trip back across the desert. They are competitive and offer good meals value and comps. All these things are what built Vegas.
Harrahs has done this same thing in Atlantic City, 3 out of 4 are dumps
A couple of quick points.....
Look at what Harrah's did to the Rio.....anybody remember the Rio BEFORE Harrah's took over? It was a fun, happening place with great food and great service.....now it is just another one of Harrah's "McCasinos".
The PH went under not because of location but because of poor design. There is no Strip entrance for vehicles and the parking is atrocious. That's why this property sucks wind....and for what PH put into the property, they had no shot at making their money back, let alone making interest payments. Harrah's is getting this property cheap.....that's how they will be able to make it work. Don't you think making an interest payment on $140 mil is easier than $870 mil?
This is bad for the city....both employees and guests. We need more competition, not more consolidation.....my opinion only.
S711
Sinatra711--
PH has a cool, mod-hip classy style, but, like you say, access suckkks. I get dizzy trying to remember which way to walk in that circular shopping route to get back into the casino.
So, if PH is undesirable as is, wouldn't Harrah's have to spend big $$$ to make it a success? I don't get it.
In2wishin - Let me clarify. I didn't mean to say that PH was undesirable. I meant that at $870 mil with their accessibility issues, they had no chance of making it. I happen to like PH. At $140 mil, Harrah's will be able to make the interest payment and profit.....consider this:
10% interest for $870 mil is $87 mil vs $14 mil for a debt load of $140 mil. That's a big difference when you are talking about staying in business or going bankrupt. I don't work at PH, but I'd be willing to guess that they probably make in the neighborhood of $50 mil in EBITDA.....so, if Harrah's picks it up, they will make a cool $36 mil in profit....without spending a dime in improvements.
However, I think they will screw it up....just like the Rio. Make it un-hip and house their 60 year old grandma/grandpa slot customers....chasing away the younger crowd. If I was the Hard Rock, Palms, or Mandalay Bay I would be salivating right now.
S711