$600M Expansion Planned for Atlantis Resort

PARADISE ISLAND, BAHAMAS-Publicly traded Kerzner International Limited says it has reached agreement with the government of The Bahamas for a $600-million expansion of its flagship resort, Atlantis, Paradise Island. Leveraging its investment in infrastructure during the project’s second phase, completed in 1998, phase three will add a 1,200-room hotel and many other amenities, according to Kerzner, which has already invested more than $1 billion in the 2,300-room resort.

In addition to new hotel at Pirate’s Cove, the project calls for: a new dolphin encounter; four new restaurants around the Atlantis Marina; three new villas at the One&Only Ocean Club; 120 new two-bedroom suites at the timeshare project Harborside at Atlantis; at least 50,000 sf of new convention and meeting space; and the right to develop a new 18-hole golf course in partnership with the government on Athol Island, which lies just east of Paradise Island.

“This is an ambitious project and we are convinced that to remain successful we must continue to add new and exciting attractions,” said Sol Kerzner, Chairman and Chief Executive Officer of Kerzner International, which develops and operates premier destination casino resorts and luxury hotels. “We believe that success is built upon keeping our product at the leading edge of the resort industry.”

This investment will take place in two stages. The first stage of approximately $100 million will start during the second half of 2003 and be completed by the end of 2005. The second stage, which will include the new hotel and an expansion of the resort’s water-themed attractions, is expected to commence by the end of 2004 and be completed by Christmas 2006.

Kerzner says demand patterns have been strong for Atlantis, which has maintained its first quarter 2003 RevPAR compared to last year despite a weaker travel market. RevPar for the first quarter was $239 as compared to $240 in the same period last year. For all of 2002, Atlantis achieved a RevPAR of $198 as compared to $194 and $201 in 2001 and 2000, respectively.

Kerzner President Butch Kerzner said the company’s Paradise Island operations achieved record EBITDA in 2002, posting increases of 11% and 20% ahead of levels achieved during 2000 and 2001, respectively. “Booking patterns have now returned to normal levels following the end of this war,” said Kerzner, who anticipates the company maintaining a flat RevPAR in the second quarter of 2003.

The news, announced Tuesday morning, had a positive effect on the company’s share price. In afternoon trading, the company’s share price was up $1.17 or 4.45% to $27.49, less than a dollar off its 52-week high of $28.15, which dates back to June 3, 2002.