Fresh off the news that CityCenter's Harmon Hotel & Resort cut their tower project in half, Harrah's Entertainment decided to postpone the opening of its Octavius Tower at Caesars Palace until the hotel market improves. The tower was supposed to open this summer. (Convention space, three villas and an expanded pool and garden will still open.)
"It was not prudent to bring this to market," Harrah's spokesman Gary Thompson told the Las Vegas Sun. "We have not had the advance bookings we anticipated for those rooms."
The 660-room tower is part of the hotel's $1 billion expansion. The financing was secured before the credit crunch and Harrah's, like many gaming companies, is deeply in debt. The company plans to open the tower later this year if demand picks up.
More situations like this are going to happen in Las Vegas casinos and hotels because the financing is no longer there. It's not just Las Vegas -- it's everywhere there are hotels or businesses. But something else has happened -- previously casinos would do everything they could to hide the fact they were scaling down or losing money. Now, the recession has seemingly lifted that fear of ridicule. Company spokesmen and women are openly telling the press they don't have the money or the demand. Who would have thought a Caesars Palace spokesman would say they aren't getting enough guests to open a section of the hotel?
Another candid interview came from MGM Mirage chairman Jim Murren.
"The banks had literally put down their pencils in October and said 'come back next year,' which is what they told everybody in corporate America," Murren told the Las Vegas Sun.
The recession seems to have made both people and corporate America more open about discussing their failing finances, perhaps because they seem to believe most people will understand. However, once the financial crisis ends, it will probably be back to business as usual.