Caesars Entertainment has taken the first step toward capturing a greater share of the lucrative Las Vegas convention market with the groundbreaking of its $375 million Caesars Forum.
The 550,000-square-foot facility, slated for completion in 2020, will feature 300,000 square feet of meeting space and a 100,000-square-foot outdoor plaza suitable for receptions or break space in a prime Strip location nestled behind the LINQ, Harrah’s and the Flamingo, which will connect with it via walkways.
Caesars has already booked $70 million in convention business for the venue, said Michael Massari, vice president of meeting sales and operations, evidence of the city’s robust business tourism market. The number of convention attendees traveling to Las Vegas has risen nearly 50 percent since 2010 compared with an 8 percent increase for leisure tourists.
Not surprisingly, the city’s convention space is at peak utilization rates of around 75 percent, according to a recent Morgan Stanley report, and operators are rushing to establish fresh supply. MGM Resorts International is building a 250,000-square-foot convention center at the MGM Grand that will open the end of this year. In February the company completed a 200,000-square-foot meeting space expansion at the Aria. Wynn Las Vegas this year launched construction of a 400,000-square-foot convention center.
In Las Vegas, Caesars Entertainment currently operates roughly 1.5 million square feet of meetings space, but LINQ, Harrah’s and Flamingo account for only 130,000 square feet of it, though they house a total of 8,500 hotel rooms. Caesars Forum will boost the company’s meetings space footprint in town by nearly one-third.
“Every property needs access to business travelers. (LINQ, Harrah’s and Flamingo) are really under-indexed in terms of the meeting space they have available and this gives us a chance to correct that,” Massari said.
In a separate transaction, Caesars’ VICI Properties REIT has completed its $507.5 million purchase of the Octavius Tower at Caesars Palace.
The sale calls for Caesars to continue to operate the 668-room hotel, which includes the 4,300-seat Colosseum theater, convention and meetings space and other attractions, under the terms of an existing ground lease that works out to annual rent payments to VICI of $35 million.
VICI, created last fall as a key component of the Caesars bankruptcy restructuring, currently owns 20 Caesars gaming facilities nationwide soon to be 21 with the pending $82.5 million purchase of Harrah’s Philadelphia four championship golf courses and 34 acres of undeveloped land adjacent to the Strip.
