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December 19, 2014

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Analyst: Caesars Palace moving forward on stalled tower

Harrah’s disputes report, says it’s waiting for economy to improve

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Tiffany Brown

Caesars Palace is seen on Jan. 14, 2010.

Caesars Palace - Octavius Tower

 The Octavius tower at Caesars Palace is the newest addition to the hotel-casino, located on the southwest part of the property, seen on Thursday, Jan. 14, 2010. Launch slideshow »

A gaming industry analyst says he believes Harrah’s Entertainment has begun soliciting bids to complete construction on the Octavius Tower at Caesars Palace.

But a Harrah’s spokesman said today that the company hasn’t made any moves to restart work on the 23-story tower that was the centerpiece of a $1 billion expansion at the company’s showcase Strip property.

“We believe that Harrah’s Entertainment has begun to solicit bids from general contractors in order to finish the mothballed 665-room Octavius Tower at Caesars Palace,” said gaming analyst Bill Lerner of Las Vegas-based Union Gaming Group in his daily “Heard on the Strip” newsletter.

Harrah’s spokesman Gary Thompson said the company hasn’t approached any contractors about completing the work, adding that the company is still awaiting signs of a market rebound.

Responding to an e-mail query, Lerner said he received the information from contacts within the industry.

Lerner’s report suggested that Harrah’s has “very prudently managed (its) balance sheet by pushing out maturities, while at the same time ‘creating’ cash flow by cutting costs and managing (capital expense) budgets over the past 12-plus months.”

He added that Harrah’s needs fresh high-end room product to compete with MGM Mirage’s CityCenter opening and relatively new product at Wynn Resort’s Encore and Las Vegas Sands’ Palazzo.

“The completion of Octavius would give Harrah’s this fresh product to offer to its database,” the report said. “At the mid-level, we see the same reasoning with Harrah’s possible acquisition of Planet Hollywood – which would allow the company to offer fresh mid-level room product to its database (much fresher than any of its contiguous product), which happens to be at the center of gravity on the Strip across from CityCenter.”

Lerner said he believes the project would take six to 12 months to complete once started.

Harrah’s announced plans to build the 350-foot tower in July 2007 and topped it off in October 2008. But when the economy faltered and credit markets collapsed, the company followed others by shutting construction down, announcing the stoppage Jan. 12, 2009.

Some 110,000 square feet of convention space, three 10,000-square-foot villas and an expanded Garden of the Gods pool and garden area opened in the summer as planned.

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