If you’d like to spend time playing casino games in solitude, you might try the Hard Rock Hotel & Casino. For instance, while S&G does not condone this sort of thing, you could have fired off a blunderbuss in either the new or old casino areas last night, secure in the knowledge that you wouldn’t hit anybody. I counted four tables in play in the new casino area and it wasn’t much better, if at all, on the original gaming floor. While we’re not getting $24/midweek-night offers anymore, rooms at the HRH remain one of the better bargain plays in town, if you know where to look.
At a cursory glance, the casino’s 1Q10 report seemed a head-scratcher, full of contrariwise indicators. ADRs up on lower occupancy? Wider losses on higher revenues?
The one-sentence explanation is that 56% higher revenues aren’t sufficient to keep pace with 71% higher expenses. Or, to put it another way, the Hard Rock has outgrown its ability to support itself. Oh, and then there’s the small matter of $1.2 billion in long-term debt (on a $770 million acquisition) and $19 million in quarterly debt servicing, sustainable numbers for a megaresort … provided you’re not several blocks off the Las Vegas Strip.
On the bright side, the vast bulk of construction expenses are now in the rear-view mirror. The new version of The Joint is driving a 205% increase in the “Other” revenue category and F&B revs were not only up 78% year over year, they now exceed gambling dollars as the Hard Rock’s leading source of income: 36% to 32%. Growth in casino revenue is roughly equivalent to the increase in the number of gaming positions. However, the hotel doubled its room inventory at the price of an exponential increase in upkeep costs and but a 70% boost in room revenues — in an extremely challenging market, it must be noted. Promotional allowances are way up, unsurprisingly, as are administrative costs.
Even without that $19 billion interest albatross around its neck, the Hard Rock would have lost $7.5 million last quarter. Which again raises the question of why Morgans Hotel Group and partner/hostage DLJ Merchant Bank plowed ahead with a ginormous expansion program long after the economic handwriting was on the wall for Las Vegas. Since Morgans’ fatal attraction to the HRH was the first in a succession of falling dominos that toppled Echelon (followed by a wave of other project shutdowns), it owns a unique and unenviable distinction in Vegas history.
One place that wasn’t quiet at the Hard Rock last night was new eatery Johnny Smalls (which I must confess I refer to for mnemonic purposes as “Smelly Balls,” partly because it specializes in myriad little spheres of food). In fact, the “house” music was pumped out so loud that we couldn’t hear our waiters and vice versa. If this trend continues, we’d all better become proficient in ISL.
Keeping with the spirit of the Great Recession, Johnny Smalls‘ management tried to hold its media night concurrent with regular dinner business. The result was predictable: a “fustercluck.” At least the paying customers were given priority over us media freeloaders, in a rare Vegas victory for the Average Joe. However, “small” is the operative word for the portion sizes and your drink is served in a thimble.
Media attendees included a rare sighting of Sin City’s leading food critic, John Curtas, who almost never patronizes such soirées — not that I blame him. Las Vegas Review-Journal columnist Doug Elfman, incidentally, has taken to affecting a porkpie hat at all times, presumably because somebody told him it made him look like A) Matt Goss or B) a celebrity. They lied, Doug.
