Monday, November 24, 2008

The Tribe In The Media: Kerzner Discusses Current Casino Environment

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This installment of The Tribe In The Media is an AP article on Sun International's current activities in the gaming world. Sol Kerzner, one of the priniciples behind the company that developed and once managed the Mohegan Sun, is the head of Sun International, a global casino and hotel company.

Kerzner rethinks hotel growth, staffing needs
Thursday November 20, 2008
By Adam Schreck
AP Business Writer
Thursday November 20

Hotel magnate Sol Kerzner parties in Dubai, but reassesses plans elsewhere as economy tanks

DUBAI, United Arab Emirates (AP) -- Even as he toasts his new Atlantis resort in true Dubai style, hotel magnate Sol Kerzner said Thursday he is cutting jobs and shelving projects elsewhere as his empire grapples with the economic slump.

In an interview in the new coral-colored hotel overlooking the Dubai mainland, the head of Kerzner International said last week's sweeping layoffs at his flagship Bahamas resort were part of a broader retrenchment for the privately held company.

New projects have been put on hold, he said, and costs are being scaled back throughout the company as cash-strapped tourists rethink their holiday plans.

"Some countries and some regions are affected more so than others, but there's no question that everyone's feeling it to a greater or lesser extent. And we're not immune from that," Kerzner said, as Hollywood celebrities and other VIPs bronzed by the pool nearby.

Kerzner was in town for the gala grand opening of the second Atlantis resort in his stable. The project is a partnership with Dubai-based developer Nakheel, the state-owned creator of the palm-shaped island atop which the hotel sits.

The project is but one of several making up the real estate boom in this wealthy emirate, one of seven semiautonomous city-states comprising the UAE.

The companies spent $1.5 billion to develop the property, which includes an open-air aquarium and a water park billed as the Middle East's biggest.

They split the $20 million bill for Thursday night's launch party, which features a private concert by Australian pop singer Kylie Minogue and a fireworks show that organizers say will be the world's biggest. Invited guests include Robert DeNiro, Janet Jackson, Lindsay Lohan and Charlize Theron.

Kerzner said the party -- which he described as a high-profile attention-getter designed to generate buzz about the resort -- was planned long before the global economy slipped into a tailspin.

The hotel "is a $1.5 billion investment. It would be a huge mistake not to launch it worldwide as effectively as we possibly can," he said.

"If I had it all over again and I understood that the timing was what it was, one might modify a couple of the things ... but not significantly," Kerzner added.

Still, the party comes at a tricky time for the global tourism industry and for Bahamas-based Kerzner International itself.

Occupancy figures from Smith Travel Research show hotel demand fell sharply around the world in September, the most recent month for which data is available.

Middle East and Africa demand was down 5.3 percent, a bit more than Europe but less the Americas. In Asia, occupancy rates plunged 12.4 percent. Analysts say October numbers could be even worse -- as early figures for Europe and the U.S. suggest.

"The deteriorating economic conditions have become so pervasive that it is affecting all areas of travel -- nearly all of which have an impact on hotels," Mark Lomanno, president of the travel advisory firm, said Thursday.

Kerzner last week laid off roughly 800 employees, or 10 percent of its work force, at its original Atlantis resort in the Bahamas because of low occupancy rates.

More modest layoffs have begun at the company's other properties as well, Kerzner said, without providing specifics.

"This is ongoing throughout the whole organization," he said.

Meanwhile, the company is putting all expansion -- aside from two nearly completed projects in Cape Town, South Africa, and Casablanca, Morocco -- "on hold," Kerzner said.

That includes a large joint venture Kerzner valued at $6 billion with casino operator MGM Mirage Inc. and a Nakheel affiliate on the Las Vegas Strip.

"We've taken the action that we have to take," he said. "This has been something I've communicated to our top folks, it's something that everyone is focused on: being as efficient, as cost-conscious as possible."

AP Business Writer Kristen Lee in New York contributed reporting.