NEW YORK, United States (Reuters):

Baha Mar Resorts Limited says it has finalised deals with casino operator Harrah's Entertainment Inc and hotelier Starwood Hotels & Resorts Worldwide Inc for a US$2 billion-plus resort in the Bahamas.

The resort, called Baha Mar, will be a mixed-use project on a 1,000-acre site in Nassau and will pose a direct challenge to Kerzner International Ltd.'s Atlantis on Paradise Island.

Baha Mar Resorts, a Nassau-based owner and operator of resorts, and a Harrah's subsidiary have formed a joint venture for the project, while Starwood has signed agreements to manage four hotels at the resort.

The project calls for an initial investment of more than US$2 billion, Baha Mar said. Starwood has committed to operate hotels under its W, St. Regis, Westin and Sheraton brands.

The joint venture will be 57 per cent owned by Baha Mar Resorts and 43 per cent by the Harrah's subsidiary.

Equity partner

The cost of the project, which was first announced in November 2005, has increased from US$1.6 billion projected then. Starwood, which had earlier planned to invest 10 per cent, is no longer an equity partner.

Moreover, Harrah's, the world's largest casino company, recently agreed to be bought by two private equity firms for US$17.1 billion.

Baha Mar will have about 3,000 guest rooms, with Harrah's operating a Caesars resort with more than 1,000 rooms and a roughly 100,000-square foot casino. The W, St. Regis and Westin hotels are expected to include residential units.

Future phases of Baha Mar are expected to include more residential units and a second golf course.

The joint venture will become effective upon confirmation of certain required approvals and concessions. Construction on the project is scheduled to begin this year, with an anticipated opening in early 2011.