Friday, February 21, 2003
Copyright © Las Vegas Review-Journal

Park Place CEO's focusing on Caesars

New boss on mission to restore Strip property

Park Place Entertainment CEO Wally Barr discusses plans to re-establish the tarnished image of Caesars Palace. Photo by John Gurzinski. Wally Barr Having fun in his new position as Park Place Entertainment boss Click on the image for an enlargement.

For a long time, the longest line at Caesars Palace was the cab line to get away from the place.

Wally Barr said Thursday his primary mission after taking over as Park Place Entertainment Corp.'s new president and chief executive officer three months ago was to turn that line around and restore Caesars as a premier magnet for visitors to the Strip.

Far from a mission impossible, Barr said Park Place already is "proving successful in turning the cab line around, and Caesars now is showing the traffic count coming in."

Even with continued construction disruptions, Caesars is fully booked and "people are walking through in the tens of thousands to see it. It's still a place people want to come to" and are willing to pay a premium to visit, he said.

The question for Park Place, Barr said, is deciding what will take Caesars to "the next level."

Specifically, Barr is revisiting a proposal to build a new tower at Caesars that was put on hold after the terrorist attacks Sept. 11, 2001, and the subsequent downturn in the tourism industry.

"Demand on the Strip is for the high-end market. We can be in the same ball game with the competition and have (our tower) on line by late '04 or early '05," he said.

Right now, Barr said he plans to take the proposal for a new tower to the March board meeting "and see what their pleasure is."

When originally announced, Caesars planned a 900-suite hotel tower as part of an effort to re-establish the tarnished brand, which languished during the mid- to late-1990s under the ownership of ITT Corp. and later Starwood Hotels & Resorts.

Critics have long-argued that ITT and Starwood wasted the Caesars brand, failing to adequately upgrade the 2,419-room property to keep pace with such late 1990s Strip arrivals as Bellagio and The Venetian.

Barr said the previous owners were not willing to invest in Caesars to maintain the quality of the property.

"So when (Park Place) acquired it (in December 1999), it was capital deferred," he said.

The key challenge he has tackled is relaunching the "signature Caesars brand to take it back to what it was in the late '70s -- the premier place to come to enjoy Las Vegas," he said.

"We're in the midst of finalizing the plan to get Caesars' four walls completed. Then we're going to take a look at expanding it further," Barr said.

Park Place completed the $95 million, 4,000-seat Colosseum, adjoining Caesars Palace, two months ago and its new Celine Dion show will debut there March 25.

Nevertheless, some construction disruptions are expected in the next six months which will adversely affect Caesars' performance.

To compliment the new Colosseum, Park Place also has launched the third phase, 200,000-square-foot expansion of the Forum Shops at Caesars, which should be completed in 2004.

"Caesars is an exciting property. It been at the heart of the history of Las Vegas for five decades and will continue to be the heart of Las Vegas," Barr said.

"There will always be a new kid on the block, but people will always want to come to Caesars," he said.

The biggest challenge for Barr professionally has been whipping the Western region into shape and relaunching Caesars Palace.

The Eastern region of Park Place contributes 48 percent of the company's cash flow, or earnings before interest, taxes, depreciation and amortization, and the mid-South region contributes 23 percent, Deutsche Bank data show. Las Vegas and the Western region contribute the remainder, or about 30 percent.

"Real improvement has to be shown here in Las Vegas and more specifically with Caesars Palace," Barr said.

There are three criteria, he said, for judging the likely success of a gaming operation: quality of management, location and financing.

"Caesars Palace has all three, plus Caesars adds to it a name. It'll be a force to be dealt with for the next five decades," Barr said.

With regards to prospects for the Atlantic City market, Barr said The Borgata, the new Las Vegas-style resort jointly owned by Boyd Gaming and MGM Mirage, will have a successful opening, but little effect on Park Place's operations.

"It'll do exactly what history tells us. Patronage will find its way back after a new months. Not all will come back, but in this case, the market will expand dramatically and the rising tide will lift all the boats," Barr said.

By the fourth quarter, excluding the effects of a possible war with Iraq, operations will be back to normal for Park Place in Atlantic City.

Barr took exception to Wall Street criticisms that Park Place needs top-line growth.

"We're looking at all our marketing programs, not just pricing, but the whole array of how we do business," Barr said.

"We can get top-line growth, but we want quality revenues, not just quantity. I want Park Place to be known as the most profitable casino company in the world, not the one with the most revenues, whatever the cost," he said.

In 2002, Park Place was the largest casino company in the world, with revenues of $4.65 billion. It ranked third in profits, with $158 million, behind Harrah's Entertainment and MGM Mirage.

The biggest change for Barr personally in his first three months heading the company has been spending more time in Las Vegas.

Previously, when he was chief operating officer, he spent about half his time here and divided the remainder of his time between Atlantic City and the mid-South region where Park Place operates casinos.

The big exception was January when he spent six days with his wife in New Jersey, thanks to the massive snowstorm that closed East Coast airports.

He said his first three months at the helm have been exhilarating, educational and, most of all, fun, although they have been challenging, too. Bottom line: He said he is still having a lot of fun having the responsibility that goes with guiding the largest gaming company in the country.