Caesars Entertainment explains franchising and licensing strategy

13 May, 2011 By: Andrew Sheivachman

Caesars Entertainment announced it will begin licensing and franchising its brands for non-gaming hotels while managing hotels and resorts around the globe.

“Licensing and franchising is certainly part of the model,” said Alex Mirza, VP for Caesars Entertainment, who is heading up the new initiative called Caesars Global Life. “We own a tremendous amount of real estate and maybe we’re not making the best use of it.”

MGM Resorts announced a similar initiative in 2009, once flagging Las Vegas revenue forced the company to seek out alternate sources of revenue. Caesars plans to export its CRM and Total Rewards customer loyalty platform to franchisees.

“The things we do with gaming are very scientific, and can be applied to the hotel business,” said Mirza. “We have the platform, technology and people to do all that whether it’s bolted on to someone else’s network, like in China, or we build something specifically for that market.”

Caesars made waves in March by announcing its partnership with Nobu Hospitality on a new boutique tower and Nobu restaurant at the Caesars Palace resort in Las Vegas. Caesars is also building a 600-room luxury Octavius Tower to compete on the Strip against Bellagio and Wynn. Caesars plans to bring Caesars, Caesars Palace, Flamingo and a yet-to-be-announced luxury brand to the Asia-Pacific and Latin America markets with its entertainment reputation as a major differentiator.

“When people think about Caesars, they think about Celine Dion or Muhammad Ali,” said Mirza. “It’s sort of like a little theme park and that’s what we bring to this. When we go head to head with a Waldorf or Ritz, they don’t bring that captivating entertainment.”

Mirza mentioned Asian resort markets as Caesars’ primary target for expansion, with Shanghai, Hainan Island, Vietnam, Singapore, the Philippines and India as potential targets. Brazil is his major target in South America.

“The strategy over five years is to produce 20 to 25 Caesars Palace properties, as a destination resort that can be urban or a traditional resort,” said Mirza. “My goal is to get 50 deals signed in that time, and hopefully 25 properties opened in five years. The majority of those would be Caesars or Caesars Palace; we’re not going for size or volume, we care to be in core markets but this is not our core business. It’s more strategic.”

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