Hard Rock International CEO Jim Allen Gives Grim Outlook for Casino and Hospitality Business
Posted on: April 23, 2020, 11:25h.
Last updated on: April 23, 2020, 11:38h.
Hard Rock International CEO Jim Allen says it will take a least a year for the company’s businesses to recover once they’re allowed to reopen.
Appearing on CNBC Wednesday, the chairman of the corporation owned by the Seminole Tribe of Florida said there will be no quick rebound for casinos, hotels, and restaurants.
There’s going to be a real challenge, especially here in the United States, as far as ramping the business back up,” Allen said. “We’re planning on that taking a year.”
Hard Rock owns and operates casinos in its home state of Florida, as well as in Atlantic City, Mississippi, Nevada, California, Iowa, Oklahoma, Canada, and Punta Cana. All of the properties are currently closed by the coronavirus pandemic. Hard Rock is also preparing to bid for one of Japan’s three forthcoming integrated resort licenses.
Prior to joining Hard Rock, Allen served as vice president of operations at The Trump Organization and Sol Kerzner’s Sun International hotel and casino company.
Allen says his forecast of Hard Rock’s businesses taking a year or more to return to full health is based on evidence that the company is seeing overseas. Internationally, Hard Rock has hotels and/or restaurants in Central & South America, the Caribbean, Europe, Middle East, Africa, and throughout Asia.
Hard Rock opened its first hotel in China in 2017. Allen said Hard Rock Hotel Shenzhen reopened about a month ago after being temporarily closed because of COVID-19. But the Hard Rock chairman says of the 258 guestrooms, only about 12 percent have been occupied.
The property is located less than 20 miles north of Hong Kong. A room for this weekend can be booked for less than $100 inclusive of all taxes and fees.
Allen added that Hard Rock’s businesses almost entirely rely on tourism. “If you look at the Hard Rock Cafe in Times Square, a restaurant that does $50 million in actual sales, that’s all tourism.”
Approximately 95 percent of US residents were under stay-at-home orders at some point this month. Currently, 42 states, plus DC and Puerto Rico, are urging people to avoid all nonessential travel.
Atlantic City Concerns
One of the most volatile markets, Allen says, is Atlantic City. Hard Rock pumped $562 million into turning the shuttered Trump Taj Mahal into the rock ‘n’ roll-themed Boardwalk casino, which opened in June of 2018.
We’re very concerned about that business as we try to navigate through the summer, which is traditionally the time of year when they have their most profitable months,” Allen explained.
All nine Atlantic City casinos have been closed since New Jersey Gov. Phil Murphy (D) ordered nonessential businesses to close on March 16. With 99,989 positive coronavirus cases, New Jersey trails only New York in the number of COVID-19 patients.
On the upside, Allen says Hard Rock generates the majority of its revenue from its Florida casinos, which he says are more regional enterprises where customers and gamblers predominantly arrive by car.