Apr. 23--In the aftermath of the Sept. 11 terror attacks Park Place Chief Executive Officer Tom Gallagher postponed construction of a 1,500-room hotel tower at Caesars Palace. 

The former Hilton Hotels general counsel and Merv Griffin gaming executive, who assumed control of the company in late 2000, privately told his executive team that Park Place must first add major attractions to its Strip megaresort before a new tower could be built. 

Otherwise, he feared, the one-time stage for Frank Sinatra, Evel Knievel and heavyweight championship bouts would simply serve as an up-market dormitory for the competing Bellagio, which sits across Flamingo Road. 

On Monday, Park Place and Indianapolis retail mall owner Simon Property Group announced plans for one of those attractions -- a 40 percent expansion of the Forum Shops at Caesars. 

The announcement came during a conference call to discuss Park Place's first-quarter earnings. 

For the quarter ended March 31, Park Place reported operational profits of $40 million, or 13 cents, before a one-time accounting charge of $979 million, which was chiefly tied to the 1996 acquisition of Bally's by Park Place forerunner Hilton Hotels. 

The result: The company reported a loss of $939 million, or $3.09. 

The accounting change for assessing corporate goodwill, a difficult to measure gauge of a business' value among customers and investors, was recently mandated by the Securities and Exchange Commission for all publicly traded companies that have made acquisitions in recent years. 

Plans for the on-again, off-again Forum Shops project, which was first announced in 2000, call for the 200,000-square-foot addition to bump up against the Strip. 

It would open in 2004, or about a year after the unveiling of a 4,000-seat Caesars Palace showroom that is expected to feature Canadian singer Celine Dion. 

Park Place also plans to add a new Caesars Palace entrance at Flamingo Road and the Strip, which will sit atop an underground parking garage. 

The extension of the 36-year-old megaresort toward Las Vegas Boulevard is designed to make it easier for customers to walk into Caesars Palace with the potential for additional casino, retail and restaurant space generating more revenue for Park Place. 

"Our greatest challenges and greatest opportunities for improvement are at Caesars Palace," Gallagher said in Monday's conference call with investors and analysts. "We know it's going to take work to get it right. 

"Some of its facilities are 35 years old. Some of its business practices haven't changed in 20 years." 

In its earnings report, Park Place reported its revenue fell to $1.158 billion during the first quarter from $1.161 billion in the first quarter of last year. 

Earnings before interest, taxes, depreciation and amortization were down to $279 million from $315 million last year when the company reported profits of $45 million, or 15 cents a share. 

The company's Eastern region, which includes three Atlantic City casinos, and its mid-South region, which includes gaming properties in Indiana and Mississippi generated cash flow increases as Americans apparently continued to stay closer to home after the airplane attacks on the World Trade Center and Pentagon. It was the Western region of Las Vegas, Reno, South Lake Tahoe and Laughlin that saw first-quarter cash flow plummet by 31 percent. 

Yet, recent trends -- especially Park Place executives' assessment of an improved March and April tourism picture in Las Vegas -- left at least one Wall Street analyst feeling upbeat about the company's full-year prospects. 

"Las Vegas is going to enjoy a rebound more than many other destinations because it's domestic, and it's relatively inexpensive and also has a fair number of drive-in customers," J.P. Morgan securities analyst Harry Curtis said. 

Park Place shares fell 39 cents Monday, or 3.17 percent, with trading of more than twice the stock's daily volume, to close at $11.90. 

Park Place executives and a new Caesars Palace management team headed by longtime casino executive John Groom have hired a new team of casino marketers while downplaying the property's reliance on risky high-end gamblers, Gallagher noted. 

"We're not looking to reposition Caesars Palace as much as to reorganize the way ... we market and run the floor and frankly get the best bang for the buck," Gallagher said. 

That does not mean, he noted, that Caesars is exiting the high-end business in which gamblers bet as much as $100,000-a-hand on blackjack and baccarat. It simply means the company will not compete for risky customers by heavily discounting gambler losses -- a popular technique long-used by Las Vegas casino operators. 

"We're not really making major changes in the profile of the business we're going after at Caesars Palace," Gallagher said. "We are definitely not getting out of any part of the market. Caesars is and will continue to be a significant factor in the premium-play side." 

But for now, the hotel expansion remains on hold. 

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