Harrah’s Entertainment, Inc.

Company Profile
Reference Code: 754 Publication Date: Jan 2007

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Harrah’s Entertainment, Inc. © Datamonitor Page 2


TABLE OF CONTENTS Company Overview ....................................................... 4 Key Facts........................................................................ 4 Business Description .................................................... 5 History ............................................................................ 6 Key Employees .............................................................. 9 Major Products And Services..................................... 16 Products And Services Analysis................................ 18 SWOT Analysis ............................................................ 19 Top Competitors .......................................................... 23 Company View ............................................................. 24 Locations and Subsidiaries ........................................ 28

Harrah’s Entertainment, Inc. © Datamonitor Page 3

8% over 2004.4 million in fiscal year 2005. The operating profit of the company was $979.7 million during fiscal year 2005. The company recorded revenues of $7.harrahs. 72112. © Datamonitor Page 4 . 1 Harrah’s Court Las Vegas NV 89119 United States Phone Fax Web Address Revenues/turnover (US$ Mn) Financial Year End Employees SIC Codes NAICS Codes New York Ticker +1 702 407 6000 +1 702 407 6037 http://www. Company Overview COMPANY OVERVIEW Harrah’s Entertainment (Harrah’s) is a casino-entertainment provider. which conducts its business through a wholly owned subsidiary. The net profit was $236. The company owns or manages 39 casinos in the US.HARRAH’S ENTERTAINMENT.3% over 2004.000 people. an increase of 23. Nevada and employs about 85. restaurants and non-gaming entertainment facilities. and a combination of thoroughbred racetrack and casino. Its facilities also include hotel and convention space. 721191.com 7111 December 85000 SIC 7011 Hotels and Motels 72111. INC. an increase of 56.111 million during the fiscal year ended December 2005.7% over 2004. Inc. KEY FACTS Head Office Harrah’s Entertainment. a combination greyhound-racing facility and casino. The company is headquartered in Las Vegas. 721199 HET Harrah’s Entertainment. Inc. Harrah’s Operating Company. a decrease of 35.

Kentucky. Horseshoe Bossier City. Rio. Some of these casinos were forced to close down temporarily due to the damage inflicted by Hurricanes Katrina and Rita in September 2005. Rio. The company also operates casinos on board the cruise ships S. In Eastern US. Harrah’s Laughlin.971 table games. The company’s operations in Western US include Harrah’s Reno. Harrah’s North Kansas City. Caesars. Bill’s. It conducts its business through its wholly owned subsidiary. the company operates the Harrah’s Lake Charles. Flamingo Las Vegas. and racetracks including Turfway Park.050 slot machines and over 42. the company operates the Harrah’s Joliet. Punta del Este in Uruguay and Windsor. Bally’s Las Vegas. Showboat Atlantic City. Harrah’s Council Bluffs. The company derives its revenues primarily from company owned casinos. Horseshoe Tunica.HARRAH’S ENTERTAINMENT. Louis. Bluffs Run. Harrah’s Prairie Brand. Reno Hilton.S. Crystal Serenity. Grand Biloxi and Grand Gulfport properties. South Central US and other. Caesars Palace. Harrah’s Entertainment. the company operates Harrah’s Atlantic City. 74. Flamingo Laughlin and Imperial Palace. 2. Grand Tunica. Its operations are divided geographically as Western US. Crystal Symphony and S. and Showboat brand names. other casinos that are managed by the company. Harrah’s Las Vegas. In South Central US. Business Description BUSINESS DESCRIPTION Harrah’s Entertainment (Harrah’s) is one of America’s leading casino firms. Harrah’s Metropolis. INC. In North Central US. Sheraton Tunica. Harrah’s Louisiana Downs. Eastern US. Louisiana.060 hotel rooms.3 million square feet of casino space. Paris. and Louisiana Downs.S. Inc. Harrah’s New Orleans. North Central US. The other properties that Harrah’s operate include Harrah’s Ak-Chin. Harrah’s Rincon. Horseshoe Hammond and Caesars Indiana properties. Harrah’s Operating Company and its subsidiaries. The company operates under the Harrah´s. Bluegrass Downs. a racetrack located in Paducah. Altogether. Caesars Atlantic City and Bally’s Atlantic City. Harrah’s Cherokee. Harveys. Harrah’s St. Harrah’s/Harveys Lake Tahoe. © Datamonitor Page 5 . Harrah’s Entertainment operates its business in a total of over 3. a thoroughbred racetrack in Bossier City.

Bill Harrah opened his first parlor in Reno. Due to the success of the first establishment. Holiday Inn had 1. the company sold its interests in the Star City Casino in Sydney. Inc. During 1999.000 over-the-counter shares and one year later Harrah’s got listed on the American Stock Exchange. he then opened Harrah’s club at its present location in downtown Reno in 1946.HARRAH’S ENTERTAINMENT. spinning-off Holiday Corporation’s remaining brands and assets into the Promus Companies. The remaining company.600 hotels and interests in two casinos. History HISTORY The Harrah’s brand was established in Reno. In 1985. the company grew further with the acquisition of Rio Hotel & Casino. The new Umbrella organization reflected the growing diversity of the company’s products: Harrah’s casinos. the Board of Holiday Inns approved a proposal to build and operate a hotel/ casino in the marina area of Atlantic City. The company also opened Harrah’s New Orleans in that year. Nevada. At that time. and has since grown to become the largest casino entertainment company in North America. On the international front. The company began public trading in 1970 with an issue of 450. INC. By 1973 Harrah’s was the first casino to be listed on the New York Stock Exchange. This complemented its Strip Casino. and in 1980. Holiday Corporation. The Promus Companies spun-off its hotel brands into a new corporation in the middle of 1995. Nevada. all of Harrah’s assets and a majority of the Promus headquarters and people. In 1978. Holiday Inn Hotels. Embassy Suite Hotels and Hampton Inn Hotels. the only land based casino in the city. Nevada in the late 1930s. Holiday Inns acquired Harrah’s hotel casino company. Holiday Inns shareholders approved a new corporate name. Harrah’s Entertainment. in 2000. In the US. In 1989 Holiday’s Corporation approved the transfer of the Holiday Inn hotel business to Bass. was then renamed Harrah’s Entertainment. it also sold Showboat Hotel & Casino to VSS Enterprises. to Tabcorp Holdings. © Datamonitor Page 6 . returning Harrah’s to the NYSE for the first time in 15 years. In the 1950s the company purchased several clubs at Lake Tahoe in Stateline. In 1937. which comprised Harrah’s brand.

the property has 118 hotel rooms. Harrah’s Tunica. Harrah’s added to its portfolio Horseshoe properties in Hammond. Indiana. and Shreveport-Bossier City. a wholly owned subsidiary of MTR Gaming Group. Atlantic City Hilton and Bally’s Tunica to an affiliate of Colony Capital. The transaction was completed in June 2005. including assumption of Caesars debt. Louisiana. This added the Harveys Resort & Casino in Lake Tahoe. Nevada. Inc. the company completed the sale of Harrah’s East Chicago and Harrah’s Tunica for a sales price of Harrah’s Entertainment. a greyhound racing facility in Council Bluffs. With the acquisition. Harrah’s acquired rights to the Horseshoe brand in Nevada and to the World Series of Poker. Indiana. and parcels of land near the company’s properties on the Las Vegas Strip. had completed the purchase of Binion’s Horseshoe Hotel & Casino in downtown Las Vegas. would be approximately $9. Bossier City. Later in February 2004 the company announced plans to jointly operate the property with MTR Gaming Group.45 billion. the company signed an agreement to acquire Horseshoe Gaming Holding. 1. Harrah’s announced that Speakeasy Gaming of Fremont. In March 2004. In conjunction with the MTR transaction. In September 2004 the company announced it was to sell four casinos: Harrah’s East Chicago.44 billion. Tunica. During 2005. The total transaction value. Harrah’s Entertainment acquired Wagon Wheel in 2001 as part of its acquisition of Harveys Casino Resorts. Also. © Datamonitor Page 7 . the company acquired the Imperial Palace. for $1. Louisiana and Tunica.055 slot machines and 22 table games. In 2004 the company signed a definitive agreement to purchase Binion’s Horseshoe Hotel & Casino in downtown Las Vegas. as part of the 2001 Harveys Casino Resorts acquisition. History The company continued to acquire new casinos in 2001 with the purchase of Harveys Casino Resorts. Mississippi. INC. Harrah’s announced in June 2004 that it had recently paid about $73 million to an Iowa West Racing Association affiliate as an additional purchase price consideration for the Bluffs Run Casino. Located 40 miles west of Denver. In 2003. the Harveys Casino Hotel and the Bluffs Run Casino to its portfolio. In April 2005.HARRAH’S ENTERTAINMENT. Iowa. the company confirmed its intention to acquire Caesars Entertainment in a cash and stock transaction that would be the largest in gaming-industry history. a leading operator of casino’s in Hammond. Mississippi. The company acquired Bluffs Run Casino. Harrah’s announced in July 2004 that it had completed its acquisition of Horseshoe Gaming Holding.

In November 2005. the company entered into a memorandum of understanding to form a joint venture with Keppel Land Investment for an integrated resort in the Republic of Singapore. the company signed a memorandum of understanding with the Hit Group to form a joint venture to develop a casino resort and hotel in Nova Gorica. Spain. Caesars entered into an agreement to sell the Reno Hilton for $150 million in May 2005. History approximately $627 million. Harrah’s Entertainment. The proposal includes a Caesars Resort Hotel and Casino. Also. and Caesars sold its Atlantic City Hilton and Bally’s Tunica properties for a sales price of approximately $612 million. the company agreed to sell the Flamingo Laughlin hotel and an undeveloped land parcel in Atlantic City for $170 million. Bahamas. The company completed the acquisition of the Imperial Palace Hotel & Casino in Las Vegas for approximately $370 million in December 2005. the company signed a letter of intent to form a joint venture with Baha Mar Resorts and Starwood Hotels and Resorts Worldwide to create a mixed-use property in Nassau. INC. Slovenia on the border of Italy. In November 2005.HARRAH’S ENTERTAINMENT. Inc. © Datamonitor Page 8 . In the same month. The company signed a definitive agreement with El Reino de Don Quijote de La Mancha in November 2005 to develop a Caesars casino resort in Ciudad Real.

Michael Robert G. Key Employees KEY EMPLOYEES Name Gary W. Miller Boake A. Eastern Division President. Western Division Board Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Senior Management Senior Management Senior Management Senior Management Senior Management Compensation Harrah’s Entertainment. Chief Executive Officer and President Director Director Director Director Director Director Director Director Director Director Chief Operating Officer Senior Vice President and Chief Information Officer President. Loveman Barbara T. © Datamonitor Page 9 . Central Division President. Sells Christopher J. INC. Atwood Frank J. Bollenbach Ralph Horn R.HARRAH’S ENTERTAINMENT. Williams Tim Wilmott Tim Stanley Anthony Sanfilippo Carlos Tolosa Tom Jenkin Job Title Chairman. Brad Martin Gary G. Inc. Biondi Stephen F. Alexander Charles L.

Barbara T. he has also been member of the Office of the President from May 1999 to April 2001. She is a member of the Audit Committee. an owner and operator of multi-family properties since July 2003. a designer and marketer of handbags and accessories. Harvard University Graduate School of Business Administration from 1994 to 1998 and Director of Coach.HARRAH’S ENTERTAINMENT. Associate Professor of Business Administration. Ms. an independent oil and gas company. an independent consultant. Atwood has served as Senior Vice President and Chief Financial Officer since 2001. Loveman has been a Director since 2000. Harrah’s Entertainment. Key Employee Biographies KEY EMPLOYEE BIOGRAPHIES Gary W. She was a Managing Director of Dillon Read & Co. Executive Vice President from May 1998 to May 1999. from October 1999 to January 2004. Atwood Board: Non Executive Board Job Title: Director Since: 2005 Mr. © Datamonitor Page 10 . and successor companies from January 1992 until October 1999. a building and related services company. She is also a Director of Centex Corporation. President since April 2001 and Chief Operating Officer from 1998 to 2003. an investment banking firm. Loveman Board: Executive Board Job Title: Chairman. Chief Executive Officer since January 2003. INC. an investment banking firm. Alexander Board: Non Executive Board Job Title: Director Since: 2002 Ms. Chief Executive Officer and President Since: 2003 Mr. Inc. Alexander has been a Director of the company since February 2002. Treasurer from October 1996 to November 2003 and Vice President from October 1996 to April 2001. and of Burlington Resources. was Senior Advisor for UBS Warburg. Alexander. Charles L. He has also served as Director of Equity Residential.

He is also a Director of The Bank of New York Company (a financial holding company and provider of banking and financial services). Biondi Board: Non Executive Board Job Title: Director Since: 2002 Mr. was Chairman of First Tennessee National Corporation. a hospitality and entertainment company. a hotel and hospitality company. a banking corporation. He has been a Director of the company since 2002. a private investor. He is also a Director of Gaylord Entertainment Company. He is also a Director of Time Warner. He was also a Director and Chairman of Caesars Entertainment from 1998 until the effective date of its merger with the company. Bollenbach has been Co-Chairman of the Board and Chief Executive Officer of Hilton Hotels Corporation. and Mid-America Apartment Communities. its President from 1991 to 2002. and was its Chief Executive Officer and President from February 1996 to May 2004.HARRAH’S ENTERTAINMENT. He was Chairman and Chief Executive Officer of Universal Studios from April 1996 through November 1998 and President and Chief Executive Officer of Viacom from 1987 through 1996. Inc. He is a member of the Audit Committee. since May 2004. He has held this position since June 1999. He was a Director of that company from 1991 to 2003 and was its Chief Executive Officer from 1994 to 2002. from 1996 until 2003. Amgen (a biotechnology company). Bollenbach Board: Non Executive Board Job Title: Director Mr. He is a Harrah’s Entertainment. an umbrella partnership real estate investment trust. and its Chief Operating Officer from 1991 to 1994. Biondi is Senior Managing Director of WaterView Advisors. INC. Horn. He has been a Director of the company since July 1995. Stephen F. Ralph Horn Board: Non Executive Board Job Title: Director Since: 1995 Mr. Key Employee Biographies Frank J. a media and entertainment company. a mountain resort operator. a private equity fund specializing in media. Hasbro (a developer of children’s and family leisure time entertainment products) and Vail Resorts. © Datamonitor Page 11 .

since 1989. from 1998 to 1999. a retail pharmacy chain.HARRAH’S ENTERTAINMENT. a retail department store company. and from 1996 to 2004. He is also a Director of First Tennessee National Corporation. R. He was Vice Chairman and Chief Operating Officer of The Kroger Company. Inc. Harrah’s Entertainment. He was Chairman and Chief Executive Officer of Albertsons. a private investor. Brad Martin Board: Non Executive Board Job Title: Director Since: 1996 Mr. a grocery supermarket company. He was Chief Executive Officer of that company from 1999 to 2003. INC. Key Employee Biographies member of the Human Resources and Nominating/Corporate Governance Committees. He is also a Director of Questar (an energy development company). from 1991 to 2001. © Datamonitor Page 12 . a banking corporation. Mr. he was a member of the Human Resources Committee. Vice Chairman and Chief Executive Officer of Fred Meyer. has been serving as interim President of the University of Idaho since 2003. a position he has held since 1999. He is a member of the Audit Committee. Martin has been a Director of the company since 1996. Robert G. from May 1999 until December 1999. Gary G. IDACORP (an energy company) and The Clorox Company (a household products manufacturing company). Boise Cascade Corporation (a forest products company). Miller is Chairman of Rite-Aid. Miller Board: Non Executive Board Job Title: Director Since: 1999 Mr. Michael Board: Non Executive Board Job Title: Director Since: 2001 Mr. Martin has been Chairman and Chief Executive Officer of Saks Incorporated (formerly Proffitt’s). and Chairman and Chief Executive Officer of Fred Meyer from 1991 to 1998. a grocery supermarket company. a grocery supermarket company. Michael has been a Director of the company since November 2001. Mr. Michael. He is a member of the Executive Committee.

Three years later. since 2002. Christopher J. He is also a Director of The Partnership for New York City. Sells Board: Non Executive Board Job Title: Director Since: 1990 Mr. he became a member of the Audit Committee. the company’s first riverboat casino operation. He is a member of the Executive. a retail pharmacy chain. His performance ultimately resulted in his Harrah’s Entertainment. INC. Boake A. Sells. the National Association of Securities Professionals. a private investor. Key Employee Biographies He has been a Director of the company since 1999 and is a member of the Human Resources and Nominating/Corporate Governance Committees. an investment bank. Human Resources and Nominating/Corporate Governance Committees. from 1987 to 1992 and was President of that company from 1988 to 1992. since 1994. © Datamonitor Page 13 . Williams Board: Non Executive Board Job Title: Director Since: 2003 Mr. Mr. Tim Wilmott Board: Senior Management Job Title: Chief Operating Officer Since: 2003 Mr. Williams has been Chairman and Chief Executive Officer of Williams Capital Group. he was appointed President and General Manager of Harrah’s Atlantic City. He has been a Director of the Company since 2003 and in 2004. an investment management firm. and Chairman and Chief Executive Officer of Williams Capital Management.HARRAH’S ENTERTAINMENT. Wilmott was named Vice President and General Manager of Harrah’s Joliet. In 1992. Wilmott is Chief Operating Officer of Harrah’s Entertainment. Inc. He has been a Director of the company since 1990. and the Securities Industry Association. was Chairman and Chief Executive Officer of Revco DS.

He moved into operations in 1984. and in 1994 he was promoted to serve as General Manager for the opening of Harrah’s former property in Shreveport. Key Employee Biographies being promoted to President of Harrah’s Eastern Division. Sanfilippo joined the company in 1983 as an accountant. from August 1998 to January 2000. Tolosa is President of the Eastern Division of Harrah’s Entertainment. a former parent company of Harrah’s Entertainment. Tolosa rose to the position of Chief Operating Officer and Senior Vice President of Operations for Embassy Suites Hotels. Eastern Division Mr. overseeing properties in several US states. Inc. Tim Stanley Board: Senior Management Job Title: Senior Vice President and Chief Information Officer Mr. Anthony Sanfilippo Board: Senior Management Job Title: President. Mr. Tolosa began his career with the company in 1971 and held various management positions with Holiday Inns. A year later. also a former parent company of Harrah’s Entertainment. Sanfilippo has been a division President since 1997. Mr. Harrah’s Entertainment. for USWeb Corporation. He was subsequently appointed Chief Operating Officer in 2003. INC. In 1993. Sanfilippo is the President of the Central Division of Harrah’s Entertainment. He has also served as Vice President of Information Technology. an eBusiness consulting firm since acquired by marchFIRST from 1999 to 2001. a role he assumed in 1997. Carlos Tolosa Board: Senior Management Job Title: President. He has been Vice President of Information Technology and Chief Information Officer from 2003 to 2004. Mr. a division of Promus Hotels.HARRAH’S ENTERTAINMENT. National Airlines. Mr. Central Division Since: 1997 Mr. © Datamonitor Page 14 . Stanley is Senior Vice President and Chief Information Officer of Harrah’s Entertainment. he assumed the role of Division President for Harrah’s Indian Gaming. Vice President of Information Technology from 2001 to 2003 and Managing Partner of Las Vegas.

Jenkin assumed oversight of the Rio and Harrah’s Laughlin in 2001 and 2002. he was named Senior Vice President and General Manager of Harrah’s Las Vegas. Western Division Since: 2004 Mr. Inc. and five years later. © Datamonitor Page 15 . Jenkin joined the company in 1975 as a fry cook at Harrah’s Las Vegas.HARRAH’S ENTERTAINMENT. Mr. Mr. In 1993. Harrah’s Entertainment. before being named to his current position in January 2004. respectively. Key Employee Biographies Tom Jenkin Board: Senior Management Job Title: President. he was promoted to Senior Vice President and General Manager of Harrah’s Laughlin. Jenkin is President of Harrah’s Entertainment’s Western Division. INC.

Harrah’s Las Vegas Rio.HARRAH’S ENTERTAINMENT. Inc. INC. Bally’s Las Vegas Flamingo Las Vegas Reno Hilton Flamingo Laughlin Imperial Palace Eastern US Harrah’s Atlantic City Showboat Atlantic City Caesars Atlantic City Bally’s Atlantic City North Central US Harrah’s Joliet Harrah’s North Kansas City Harrah’s Council Bluffs Bluffs Run Harrah’s St. Louis Harrah’s Metropolis Horseshoe Hammond Caesars Indiana South Central US Harrah’s Lake Charles Harrah’s New Orleans Harrah’s Entertainment. It conducts its business through its wholly owned subsidiary. Harrah’s Laughlin Caesars Palace Paris. Harrah’s Operating Company and its subsidiaries. The company’s services include: Western US Harrah’s Reno Harrah’s/Harveys Lake Tahoe Bill’s. Major Products And Services MAJOR PRODUCTS AND SERVICES Harrah’s Entertainment (Harrah’s) is one of America’s leading casino firms. © Datamonitor Page 16 .

Major Products And Services Harrah’s Louisiana Downs Horseshoe Bossier City Horseshoe Tunica Grand Tunica Sheraton Tunica Grand Biloxi Grand Gulfport Managed Casinos Ak-Chin Cherokee Topeka Bluffs Run Rincon Racetracks: Turfway Park Bluegrass Downs Louisiana Downs Other businesses: Casino hotels Dockside casinos Riverboat casinos Indian gaming establishments Harrah’s Entertainment. Inc.HARRAH’S ENTERTAINMENT. © Datamonitor Page 17 . INC.

9%). an increase of 96.5 million in fiscal year 2005.8% over 2004. The other division recorded revenues of $425. The food and beverage division recorded revenues of $1. the casino division recorded revenues of $6. Harrah’s Entertainment generates revenues through five revenue streams: casino (71. food and beverage (13%). © Datamonitor Page 18 .9 million in fiscal year 2005. Revenues by Division During the fiscal year 2005. an increase of 103% over 2004.7% of the total revenues during fiscal year 2005). rooms (9. Harrah’s Entertainment.9% over 2004. other (5) and management fees (0.4%). an increase of 64. an increase of 56.9% over 2004. Products And Services Analysis PRODUCTS AND SERVICES ANALYSIS The company recorded revenues of $7. an increase of 48. Inc. an increase of 24.1% over 2004.111 million during the fiscal year ended December 2005. The rooms division recorded revenues of $791.6 million in fiscal year 2005. The company generates most of its revenues from the US.3% over 2004.071.097.5 million.HARRAH’S ENTERTAINMENT.8 million in fiscal year 2005. The management fees division recorded revenues of $75. INC.

threatens to reduce the company’s market share and profitability.948. management fees and other revenue streams increased by 48. Inc. The company’s success is largely due to its focus on Harrah’s Entertainment. SWOT Analysis SWOT ANALYSIS Harrah’s Entertainment (Harrah’s) is a casino-entertainment provider.111 million in fiscal 2005. food and beverage. however.8% and 96. 103%. Harrah’s Entertainment is one of the most recognized names in the casino entertainment industry and it is the world’s third largest gaming company. Harrah’s Operating Company. INC. rooms. Intense competition.9%. 64. Harrah’s strong brand name have helped it become one of the largest and most diversified casino networks in the US. © Datamonitor Page 19 . The company is one of the biggest gaming companies in the world. which through a wholly owned subsidiary.1% respectively from fiscal 2004 to fiscal 2005.9 million in fiscal 2003 to $7. Revenues from the company’s casino.9%. 24. A steady increase in revenues across all of the company’s business streams indicates that it has been able to strengthen its market position. Strong brand name Harrah’s strong brand name has enabled it to become one of the largest and most diversified casino networks in the US.HARRAH’S ENTERTAINMENT. Its total revenues increased from $3. Strengths Strong revenue growth Strong brand name Successful distribution strategy Weaknesses Reduction in margins Presence restricted to North America Overdependence on casino business Opportunities High entry barriers Entry in to ’racino’ market Expansion plans Threats Intense competition Legal and regulatory environment Online gaming Strengths Strong revenue growth The company’s revenues have been increasing consistently in the last few years.

which in itself is highly regulated and competitive. Inc. INC.7%. can prove to be a significant competitive disadvantage of the company. This has also helped the company to create and profitably use its nationwide customer database. most of the company’s operations are within the US. which has been shielding the company against any volatility in any single market. © Datamonitor Page 20 . Weaknesses Reduction in margins Despite a strong revenue growth. Successful distribution strategy Harrah’s Entertainment derives strength from its well-distributed business operations across markets. Uruguay. Any volatility in the US market could have an adverse impact on its business. The company has 26 properties across 13 states in the US. In 2005. the contribution of the casino business has consistently generated more than 70% of its total revenues.HARRAH’S ENTERTAINMENT. customer relationship management. Opportunities High entry barriers Harrah’s Entertainment.1%. The company’s strong brand increases its bargaining leverage and gives it a competitive advantage.8% in fiscal 2005.4% and 74. Reducing operating margins indicate increasing costs and can adversely affect the long term financial position of the company. significantly lower than the industry average of 19. SWOT Analysis enhancing financial strength. 75. Dependence on the casino business.9% in fiscal 2002 to 13. and adaptability to changing regulations. Apart from the Conrad Resort and Casino located in Punta Del Este.3% of the company’s total revenues respectively. the company’s operating margins have reduced from 18. The company’s operating margin for the period 2001-2005 was 16.4% for the same period. 2004 and 2003. Presence restricted to North America Harrah’s Entertainment has its presence highly centered on the US market. Overdependence on casino business Though the company is into casino entertainment and an accompanying hotel business. the casino business generated 71.

Also. it has purchased Louisiana Downs. Entry in to ’racino’ market Harrah’s entry into the ’racino’ market (combination of horse racing tracks and traditional casinos) is likely to offer high growth prospects for the company. laws. Consequently. This opens up significant possibilities for major players like Harrah’s Entertainment who are well positioned to take advantage of any further legalization of casino gaming. Any change in regulations.HARRAH’S ENTERTAINMENT. a mixed-use property in Nassau. and is set to acquire more such properties. The company has also planned to open an integrated resort in the Republic of Singapore. supply has surpassed demand leading to increased competition. Slovenia on the border of Italy. Legal and regulatory environment Harrah Entertainment’s primary threat is the legal and regulatory environment. © Datamonitor Page 21 . Its expansion plans involve joint ventures with different companies to open a Caesars casino resort in Ciudad Real. any entry into this market would require high capital investment. if successful. would provide Harrah’s with considerable opportunities to expand outside the US. only a limited number of licenses are issued. Threats Intense competition Given the restricted number of markets. SWOT Analysis Legal gambling is permitted only in certain states of the US. major players in the casino industry are constantly reinvesting in their existing markets in order to strengthen their market position. INC. Furthermore. a racetrack located outside Shreveport. In this regard. Competition in the industry is also driven by the growth of other entertainment options (substitutes) such as racing and non-gaming resorts. The combination will enable Harrah’s to earn additional revenues and expand its brand recognition. Inc. The casino industry represents a significant source of tax income for the various jurisdictions in which casinos operate. Harrah’s Entertainment. Spain. This makes it difficult for any new player to meet the requirements to get a license. Expansion plans Harrah’s has made plans for geographical expansion. and procedure with regard to casino operations can have adverse effects on the company’s business. where it currently has limited presence. Bahamas which would include a Caesars Resort Hotel and Casino and a casino resort and hotel in Nova Gorica. These expansion plans.

Harrah’s Entertainment. The popularity and growth in demand for online gaming can be a significant threat to the company going forward. nearly doubled to reach more than $30 billion in fiscal 2005. With the increasing popularity and penetration of the internet. which accounted for $15 billion in fiscal 2001. Inc. this market. Online gaming The market for online gaming is growing rapidly.HARRAH’S ENTERTAINMENT. SWOT Analysis Any changes in tax laws or tax rates can significantly affect the company’s financial position. In the US. © Datamonitor Page 22 . INC. online gaming has grown at a CAGR of 21% from 2001 to 2005. The US is the biggest market for online gaming.

Top Competitors TOP COMPETITORS The following companies are the major competitors of Harrah’s Entertainment.: American Skiing Company Bally Technologies. Inc Penn National Gaming. Magnum Corporation Bhd Harrah’s Entertainment. Berjaya Sports Toto Berhad Ameristar Casinos. Inc. Inc. Inc. Inc. Churchill Downs Incorporated Isle of Capri Casinos. Inc. INC. Six Flags Inc. Inc. Inc. © Datamonitor Page 23 . MTR Gaming Group Lakes Entertainment. TABCORP HOLDINGS LTD President Casinos. Inc. Aztar Corporation Pinnacle Entertainment. Inc MGM MIRAGE Trump Entertainment Resorts.HARRAH’S ENTERTAINMENT.

2005. to be sure. taxes. The statement has been taken from the company’s 2005 annual report. © Datamonitor Page 24 . capped our transformation into the world’s largest gamingentertainment company. For fiscal 2005.6 percent. a growing network of international relationships.6 million. Harrah’s Entertainment’s $9. 2005. the Caesars acquisition marked the outset of a new era. revenues climbed to $7. It should be noted that our results for 2005 included contributions from the Caesars business only after the June 13. Loveman. For the full year. For us.000 employees. initiate master-planning efforts for our concentration of properties in both Las Vegas and Atlantic City. a 56. though not a Generally Accepted Accounting Principles measurement increased to $1. acquisition date.HARRAH’S ENTERTAINMENT. one in which we will harness the power of several unique assets to redefine the nature and scope of what a gaming-entertainment company can be. Those assets include peerless brand and property portfolios. The new era began auspiciously. while adjusted income from continuing operations grew 50. Between June and December.9 billion. property earnings before interest. on June 13.1 million a year earlier. and begin establishing Harrah’s as a truly global entertainment concern through a series of major international-development announcements.2 billion in 2004. from $343. we were able to sustain healthy revenue and earnings growth. INC. or EBITDA a common performance gauge in our industry. Harrah’s was focused far less on the transaction’s historic aspect than on its implications for the future. Company View COMPANY VIEW An excerpt of a statement by Gary W. Inc. who deserve credit for all of the foregoing. Harrah’s Entertainment. The year’s operating results offered solid proof of our ability to manage these many undertakings for investors’ benefit.3 percent increase over the previous year’s total. up 59. It was a significant milestone. depreciation and amortization. Chairman. but as you might expect from an organization in constant forward motion. Inc. and the estimable talents of more than 85.7 percent from $1. financial strength built through consistently high-performing operations. to $516.3 billion acquisition of Caesars Entertainment. our company made substantial progress toward fusing two corporate cultures and extending Harrah’s internationally recognized business-intelligence systems to former Caesars locations.1 billion. At the same time. Chief Executive Officer and President of Harrah’s Entertainment is given below.

FORGING AHEAD IN THE GULF COAST In the weeks and months following the hurricanes. Even before the hurricanes made landfall. seeded with a $1 million grant from the Harrah’s Foundation in September. And while the results reported above are the ones investors rightly focus on when assessing our value. following several months of rehabilitation. Harrah’s New Orleans reopened with 1. customers and an additional $500. 17. Employees were immediately informed that their pay and benefits would continue for 90 days. The Harrah’s Employee Recovery Fund. Inc. 20. © Datamonitor Page 25 . our company was repeatedly asked whether Harrah’s would maintain its presence in New Orleans and Mississippi. meanwhile. More than 700 of our nearly 9. whose success is apparent in our performance on two key measures: same-store sales growth and cross-market play. vendors. INC. and we are determined to be part of its economic revival.000 displaced employees took advantage of the opportunity to remain within the Harrah’s system.8 percent and 18. And on Feb. Company View The strong stockholder returns Harrah’s has delivered since 1998 are largely attributable to our customer loyalty strategy. 2006. RISING TO THE OCCASION Though their impact on our overall financial picture was manageable. We believe the Gulf Coast’s viability as a tourist destination is beyond dispute. We quickly established makeshift emergency shelters at several of our properties and launched regional aid centers delivering everything from primary health-care services to housing and transportation assistance. had amassed more than $4 million in donations within four months thanks to the overwhelming generosity of our employees. But our commitment was never in doubt. respectively.1 million to the pool of aid available to employees hardest-hit by the storms.000 gift from the Foundation. To that end. Elton John and Jerry Seinfeld magnanimously staged a benefit concert at the Colosseum at Caesars Palace that added $2. three legendary performers we are proud to call members of our extended Harrah’s family Celine Dion. which rose 8. 2006. and that Harrah’s would offer priority processing status and relocation assistance to those who wished to transfer to other company properties. and both Harrah’s Entertainment.HARRAH’S ENTERTAINMENT.500 employees on Feb. the losses Harrah’s has sustained as a result of Hurricanes Katrina and Rita were not merely monetary. the measure of Harrah’s worth as a company was more fully illustrated by the massive relief and recovery effort spearheaded by our employees after the storms left thousands of their coworkers homeless.0 percent in 2005. business partners. our organization had vaulted headlong into recovery mode.

however. a measurement that correlates positively with customer revenue growth. While offering customers more places to play lends Harrah’s a decisive advantage over our competition. We intend to share details about our plans for the Biloxi development by mid-2006. which will extend the program to all former Caesars Entertainment properties. © Datamonitor Page 26 . and nearly 8 million active members. Caesars and Horseshoe casino brands among the industry’s best-recognized and mostrespected. was the 20th straight in which Harrah’s posted year-over-year improvements in customer satisfaction survey scores. the pioneering tieredcard program Harrah’s developed in the 1990s. The massive destruction at our Gulfport and Biloxi properties. which today comprises nearly 40 casino properties in three countries. giving those customers more and better reasons to consolidate their play with us is what set the stage for the remarkable growth we have undergone since the late 1990s. By establishing our core Harrah’s. The wisdom of that strategy was never more evident than in the aftermath of the hurricanes. INC. Harrah’s will be rolling out the next generation of Total Rewards. incidentally. In the end. The foundation of our loyalty-building efforts is Total Rewards. where the Mississippi state legislature’s decision to permit shore-based gaming has given us the opportunity to build an entertainment showplace whose amenities will surpass anything currently offered on the Gulf Coast. and to spend a greater percentage of their allotted gaming-entertainment budget at Harrah’s when they visit. The fourth quarter of 2005. Company View the local show of support and initial customer traffic gave us every reason to anticipate that the city will ultimately regain its status as one of the nation’s most unique and dynamic tourism centers. we elected to sell our remaining assets in Gulfport and concentrate our efforts in Biloxi. MORE PLACES TO PLAY. At about the time this report reaches your mailbox. even with an entire region’s properties out of commission. We expect this initiative to play a pivotal role in Harrah’s Entertainment. MORE (AND BETTER) REASONS TO PLAY THERE Choosing to rebuild selectively along the Gulf Coast is consistent with one of Harrah’s defining business strategies: maintaining and expanding our industry’s most geographically diverse distribution network. when we were able to continue posting strong operating results companywide. we have created powerful incentives for customers to patronize our casinos rather than others’. Inc. left Harrah’s with a more difficult choice to make.HARRAH’S ENTERTAINMENT. The relationship-marketing and other business-intelligence capabilities fueled by Total Rewards are constantly bringing us closer to our customers so we better understand their preferences. and by supporting that branding effort with peerless customer service. and from that understanding we are able to improve the entertainment experiences we offer accordingly. which today boasts nearly 40 million members.

000 colleagues greeted both the best and worst of times with the same unflagging determination to triumph. I believe that the combination of focus. Speaking of great promise. For Harrah’s. But that figure pales next to the long-term revenue-building implications of making Total Rewards a mainstay at all our properties. which racked up sales of nearly 500. talent and great assets will prove to be powerful and sustainable for many years to come. © Datamonitor Page 27 . up from five in 2004-05.HARRAH’S ENTERTAINMENT. offer just a taste of what our company will accomplish during this new phase in our evolution. Ultimately. Because for all the changes Harrah’s has undergone over the course of the past year. continued to gather steam in 2005. With this move. high quality gaming entertainment to millions of guests around the world while maintaining our company’s longstanding reputation for responsibility and integrity. and I am profoundly grateful for their efforts. Harrah’s Entertainment. we will be able to provide our customers with an unprecedented degree of freedom to visit Harrah’s-owned casinos anywhere in the country. the World Series of Poker has spawned numerous merchandising tie-ins. Inc. this amounts to an embarrassment of riches. My 85. INC. and to enjoy the same personal. resounding though they were. the World Series of Poker. and media coverage. to collect and use their Reward Credits wherever and whenever they choose. we believe the WSOP holds the potential to make significant contributions to the company’s bottom-line in the not-too distant future. number of entrants and prize money all have doubled since Harrah’s acquired the brand in 2004. then you have some sense of exactly how hard Harrah’s employees were charging throughout 2005. For gaming enthusiasts. the 2005-2006 circuit schedule now comprises 12 events. which is due to arrive later in 2006. another of the jewels in our brand portfolio. I believe that 2005’s successes.5 million units of the second-generation edition. from an exclusive alliance with AOL to Activision’s WSOP-branded video game. highquality service they customarily receive at their hometown casino. Given the brand’s high visibility and rampant popularity. At the same time. A FINAL WORD OF THANKS If the range and volume of activity I have described here sounds like a heavy load for any company to shoulder. The WSOP is the world’s richest and most prestigious poker event. the possibilities are no less promising. Their performance this past year gives me great confidence in our ability to chart bold new territory in the gaming entertainment business.000 units during this past holiday season. we have never lost sight of what truly matters: bringing innovative. Moreover. Company View enabling Harrah’s to reach the first-year synergy target we had projected prior to the acquisition’s close. Retailers have already placed orders for 1.

harrahs. Inc. Inc. Box 8 Stateline NV 89449 United States P: 1 775 588 2455 Harrah´s Metropolis 203 Ferry Street Metropolis IL 62960 United States P: 1 618 524 2628 Harrah’s Entertainment.com Other Locations and Subsidiaries Rio Hotel & Casino. Inc.HARRAH’S ENTERTAINMENT.com Harrah´s Joliet 151 N.O. Flamingo Road Las Vegas NV 89103 United States P: 1 702-252-7777 F: 1 702-252-7633 www. © Datamonitor Page 28 .playrio. 3700 W. Joliet Street Joliet IL 60432 United States P: 1 815 740 7800 Harrah´s Laughlin 2900 South Casino Drive Laughlin NV 89029 United States P: 1 702 298 4600 Showboat The Mardi Gras Casino 801 Boardwalk Atlantic City NJ 08401 United States P: 1 609 343 4000 Harrah´s Tunica 1100 Casino Strip Blvd Robersonville MS 38664 United States P: 1 662 363 7777 Harrah´s Prairie Band 12305 150th Road Mayetta KS 66509 United States P: 1 785 966 7777 Bill’s Lake Tahoe P. Locations and Subsidiaries LOCATIONS AND SUBSIDIARIES Head Office Harrah’s Entertainment. 1 Harrah’s Court Las Vegas NV 89119 United States P: 1 702 407 6000 F: 1 702 407 6037 www. INC.

© Datamonitor Page 29 . Flamingo Road Las Vegas NV 89103 United States P: 1 702 252 7777 Harveys Lake Tahoe P.HARRAH’S ENTERTAINMENT. Lakeshore Drive Lake Charles LA 70601 United States P: 1 337 437 1500 Harrah´s East Chicago 777 Harrah´s Blvd East Chicago IN 46312 United States P: 1 219 378 3000 Rio All Suite Casino Hotel 3700 W. Box 128 Stateline NV 89449 United States P: 1 775 588 2411 Harrah´s Reno 219 North Center Street Reno NV 89501 United States P: 1 775 786 3232 Harrah´s Shreveport 401 Market Street Shreveport LA 71101 United States P: 1 318 424 7777 Bluffs Run Casino 2701 23rd Avenue Council Bluffs Iowa 51501 United States P: 1 712 323 2500 Harrah´s Rincon Casino & Resort 777 Harrah´s Rincon Way Valley Center CA 92082 United States Harrah´s Council Bluffs One Harveys Blvd Council Bluffs IA 51501 United States P: 1 712 329 6000 Harrah’s Entertainment. INC. Inc.O. Locations and Subsidiaries Harrahs´ Louisiana Downs 8000 East Texas Street Bossier City LA 71111 United States P: 1 318 742 5555 Harrah´s Vicksburg 1310 Mulbery Street Vicksburg MS 39180 United States P: 1 601 636 3423 Harrah´s Las Vegas 3475 Las Vegas Blvd South Las Vegas NV 89109 United States P: 1 702 369 5000 Harrah´s Ak Chin 15406 Maricopa Road Maricopa AZ 85239 United States P: 1 480 802 5000 Harrah´s Atlantic City 777 Harrah´s Blvd Atlantic City NJ 08401 United States P: 1 609 441 5000 Harrah´s Lake Charles 505 N.

HARRAH’S ENTERTAINMENT. INC.O. Locations and Subsidiaries Harrah´s Lake Tahoe P. © Datamonitor Page 30 . Inc. Box 8 Highway 50 Stateline NV 89449 United States P: 1 775 588 6611 Harrah’s Entertainment.

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