Business Week – With $23 billion in debt, the most of any U.S. hotel or casino company, Caesars Entertainment (CZR) wants to expand its business in Las Vegas without dropping a bundle or adding to the glut of rooms in the city. So the owner of eight properties on the storied Strip, including Caesars Palace and the Planet Hollywood casino resort, is placing its limited expansion budget on an unlikely bet: a 550-foot Ferris wheel.
The High Roller, set to make its debut in 2014, and the surrounding Linq “party district,” opening in stages starting in December, represent Las Vegas’s latest bid to reinvent itself for low-rolling tourists who’ve grown stingy at the blackjack tables. The $550 million project is transforming the neighborhood into a pedestrian-friendly dining, gambling, and shopping experience, anchored by an observation wheel that Caesars says could outdraw the London Eye observation wheel or the Empire State Building. Despite being in one of the Strip’s prime locations, it’s a relatively low-stakes wager that reflects the reduced circumstances of gaming operators.
“This is the new model in Las Vegas,” says Brent Pirosch, a gambling consultant for commercial-property broker Newmark Grubb Knight Frank and a one-time Caesars adviser. “Ten or 20 years ago these projects would have been considered competition for the bread-and-butter gaming business.” Casino operators have good reason to look beyond the gaming tables: The average Las Vegas visitor spent $485 per trip at the slots and tables last year, down 30 percent from $652 in 2006, according to the local convention authority. The amount spent on food, shopping, and shows rose 1 percent to $457.
