Speculation that Caesars is for sale is premature
Speculation that Starwood Hotels & Resorts is ready to sell off its year-old gaming interests, which includes Caesars Tahoe, is premature, according to a corporate spokesman.
“We have no definitive plans to sell Caesars at this time,” said Jim Gallagher, Starwood’s senior vice president of public relations. “The company’s focus is on improving stockholder value. We look at all kinds of opportunities.”
Starwood, a hotel and real estate investment company, obtained the Caesars casinos along with a package of hotels in February 1998, when it purchased ITT Corp. for $14.6 million. With the investment, Starwood became the world’s largest hotelier with 690 hotels including the Sheraton and Westin hotels and luxury properties such as New York’s St. Regis.
Despite its size, Starwood’s performance has been less than stellar.
Since the purchase of ITT Corp., Starwood shares have fallen about 48 percent. In the last year, shares have fluctuated from a high of almost $55 a share to a low of $18 3/4, regaining some ground to close yesterday at $30 1/8.
Among recent changes to improve its stock performance, the company has changed from a real estate investment trust, or REIT, with its special federal requirements and benefits, to a regular corporation.
Industry analysts speculate that divesting itself of the gaming side of its holdings could be next.
Starwood Chairman Barry Sternlicht “has been up front that this was a business he did not know,” Gallagher said. “He’s a hotel and real estate guy. That’s the business he knows.
“Barry has said he is uncomfortable with the vagaries of the gaming business. They don’t call it gambling for nothing. Unlike the hotel industry (where ups and downs are more predictable), gaming is in the hand of fate.”
But it’s too soon to cast Starwood out of gaming. At the time of acquisition, Sternlicht promised to learn the business then re-evaluate the company’s interest after 18 months, Gallagher said.
“It’s no secret that we’re disappointed with the gaming business performance in 1998. Not to say it didn’t do a good job, but it was below our expectations,” he said. “That’s not to suggest our next move is out the door (with gaming).
“We’ll continue to watch its performance and evaluate what we want to do.”
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