Baha Mar, Harrah's and Starwood Finalize Joint Venture

Agree to Develop Baha Mar, a $2+ Billion Destination Resort in The Bahamas

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. October 14, 2008

JANUARY 16, 2007. Baha Mar Resorts Ltd. announced that it has signed a joint venture agreement with the world's best-known gaming and hospitality company -- a subsidiary of Harrah's Entertainment, Inc. (NYSE:HET) -- to create and develop Baha Mar, the Caribbean's largest single-phase destination resort. The joint venture partners have also signed management agreements with Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) . Establishing a new blueprint for resort development, Baha Mar represents the largest, single hospitality investment in the region and a one-of-a-kind destination resort experience with a range of top-shelf accommodations, services and amenities, and true-to-The Bahamas setting and design.

According to the joint venture agreement, Baha Mar Resorts and a subsidiary of Harrah's Entertainment will jointly own the previously announced Baha Mar -- a mixed-use project to be located in Nassau, Bahamas on a 1,000- acre site -- making it the largest destination resort in the Caribbean. Baha Mar represents a unique structure for the hospitality and gaming industries and calls for a phase one investment of more than $2 billion. The joint venture will be 57% owned by Baha Mar Resorts Ltd. and 43% by a subsidiary of Harrah's Entertainment and will become effective upon confirmation by the Bahamian Government of certain required approvals and concessions. The joint venture partners have also signed management and related agreements, in which Starwood has committed to operate hotels under its W, St. Regis, Westin and Sheraton brands at Baha Mar, and to invest $40 million in mezzanine bonds, subject to certain terms and conditions, to be issued at the time of project financing (expected in 2008). Baha Mar Resorts will serve as the developer for the resort.

"The signing of these agreements marks the beginning of a new tourism era for The Bahamas with the coming together of the most prestigious and successful companies in lodging, gaming and leisure, most notably, Harrah's, our preferred gaming partner for this endeavor from the moment the project was first conceived," said Sarkis Izmirlian, chairman and chief executive officer of Baha Mar Resorts Ltd. "With a shared vision and the combined strength of each partner's respective brands, together with what we believe is the finest location in the Caribbean -- Nassau, Bahamas, we look forward to achieving our goal to create one of the world's leading resort destinations."

"Caesars Resort Hotel at Baha Mar is an important step in our global development strategy as well as a true milestone," said Gary W. Loveman, chairman, chief executive officer and president of Harrah's Entertainment. "This one-of-a-kind, warm-weather destination resort will not only be a wonderful addition to our current collection of properties worldwide, but also give us entree into new markets, while providing our customers with a place to enjoy the Caesars experience in a truly world-class setting in the Caribbean's most desirable destination."

"A development of this scale and scope aligns perfectly with Starwood's strategy to grow its brands in premier locations around the world," said Steven J. Heyer, chief executive officer, Starwood Hotels & Resorts Worldwide, Inc. "This unprecedented project will offer travelers to the Caribbean a destination and an experience unlike any other."

Baha Mar represents a quantum leap forward in the continued tourism growth and success of The Bahamas, ushering in a new era for Nassau's Cable Beach area of New Providence Island. A recent study conducted by Global Insight, one of the world's leading companies for economic and financial analysis and forecasting, revealed that upon completion of the resort, Baha Mar is expected to directly and indirectly sustain over 7,000 jobs, generate more than $4.7 billion in incremental tax revenues, and contribute $11.2 billion to The Bahamas' Gross Domestic Product over the next 20 years.

Resort Features

In keeping with the goal to create a dynamic resort experience that captures the true spirit of The Bahamas, Baha Mar design plans call for lush, natural landscapes and waterscapes and Caribbean-inspired architectural elements that evoke the area's Colonial, European and African influences. Baha Mar will captivate guests from the moment they arrive on site as they proceed along an expansive water boulevard and 50-foot-high circular waterfall before entering the resort's grand porte-cochere.

Baha Mar will offer approximately 3,000 guest rooms, with Harrah's Entertainment operating a new Caesars Resort Hotel at Baha Mar with more than 1,000 guest rooms and a nearly 100,000-square foot casino -- the largest in the Caribbean.

The remaining guest rooms at Baha Mar will be offered at the first and only collection of four Starwood brands at a single resort, consisting of a W Baha Mar, St. Regis Baha Mar, Westin Baha Mar, and the Sheraton Cable Beach Resort. The W, St. Regis and Westin are anticipated to include residential units. All four properties will be managed by Starwood.

Under separate agreements between Baha Mar and Starwood, the Sheraton Cable Beach Resort is anticipated to open in 2007 following an $80 million property-wide renovation and re-flagging of Baha Mar Resort's existing Radisson Cable Beach & Golf Resort.

Together, the Caesars Resort and Starwood hotels will provide guests with exceptional choice and flexibility at a variety of price points.

Other planned amenities at Baha Mar include Starwood's Bliss and Remede branded luxury spas at the W and St. Regis, respectively; a third, full- service luxury spa facility -- expected to be the largest in the Caribbean; an 18-hole Jack Nicklaus Signature Golf Course -- a one-of-a-kind championship- quality course in Nassau; a distinctive show-lake experience; 200,000 square feet of meeting space; a 20-acre beach and pool experience with 3,000 feet of continuous beachfront; and a retail village with upscale shopping, chef- branded restaurants, and entertainment venues.

Baha Mar Resorts has also assembled an exceptional design team that includes some of the leading firms in the industry, including lead architectural design firm and Baha Mar Development subsidiary MHA Studio (Los Angeles, CA), led by design principal, Mike Hong (AIA); and Executive Architect, Hillier Architecture (Princeton, NJ), among numerous other notable design and landscape firms.

Construction is scheduled to begin in 2007, with an anticipated opening in early 2011. Future phases of Baha Mar will include a variety of residential offerings, and a second 18-hole championship golf course, among other attractions.

"This is a defining resort project for The Bahamas and the Caribbean," said Rt. Hon. Perry Christie, Prime Minister of The Bahamas. "Harrah's Entertainment is by far the largest gaming operator to become involved in The Bahamas and the arrangement with Starwood is unprecedented in any destination including primary resort areas like Las Vegas and Orlando. My government is very pleased to have attracted and encouraged this historic and defining development."