pacomartin
pacomartin
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May 8th, 2010 at 10:48:57 AM permalink
The massive changes in Hard Rock with the new hotel towers and the expanded casino and concert spaces has increased gross revenue this quarter dramatically over the same quarter in 2009.

Department - 2010 -2009
Casino $19,019 - $12,311
Lodging $11,921 - $7,039
Food and beverage $21,725 - $12,207

Unfortunately costs and expenses grew faster than revenue so the hotel is still bleeding money like crazy. Comprehensive loss of $26.5 million this quarter. That figure is an impressive loss on gross revenue of $54 million.
FleaStiff
FleaStiff
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May 8th, 2010 at 12:24:54 PM permalink
I've never been there and probably never will be there but it sure seems like they must be doing something wrong.
gambler
gambler
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May 8th, 2010 at 1:54:58 PM permalink
Here's a question. Whenever a casino/resort is doing poorly, are they more or less likely to offer comps to gamblers?

On one hand, they want to fill their property and get any revenue that they can. On the other hand, why give things to players for free?

Do you think the Hard Rock Hotel, or other resorts in the same situation, will be more generous or less generous over the next few months?
Nareed
Nareed
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May 8th, 2010 at 4:01:00 PM permalink
Quote: gambler

Here's a question. Whenever a casino/resort is doing poorly, are they more or less likely to offer comps to gamblers?



I think it depends ont he management.

There are many reasons why a casino, like any other business, might be doing poorly. In a recession, as is the case now, the right move is to draw in more customers and to cut costs. But how much to do of each and to what extent, depends a lot on the specific business model (clientele, location and such) and the particular shirtfalls experienced by the casino.

Maybe increasing comps would draw in more cusotmers, but enough that it's worth doing? How much does it raise costs? And what other means are available for drawing in more customers?
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Wizard
Administrator
Wizard
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May 8th, 2010 at 4:54:48 PM permalink
Quote: gambler

Here's a question. Whenever a casino/resort is doing poorly, are they more or less likely to offer comps to gamblers?



Somebody asked that before. My answer is still, in general, that they will offer more comps. I think they want to fill the rooms at any price, so they know they have to try harder to get and keep players.
It's not whether you win or lose; it's whether or not you had a good bet.
pacomartin
pacomartin
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May 9th, 2010 at 12:10:00 AM permalink
Hard Rock is probably a little different case. They are in the middle of an expansion and are trying to attract a more upscale , older, and more Asian customers. The property was a reliable moneymaker prior to 2007 but often only 1.5% income.

They property was sold on 1 Feb 2007 and Morgan Group is expending a huge amount of money. While revenue is increasing, costs are increasing faster. While many properties are losing money because they can't cover their interest expenses, not that many have an operational loss. Circus Circus and Hooters have an operational loss.

Hard Rock is one of the few upscale places that has an operational loss. They may give away good comps, but only for a certain class of client.
pacomartin
pacomartin
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May 10th, 2010 at 9:23:38 AM permalink
Media Discussion of Hard Rock
I am quoted on the bottom

May. 10, 2010
Copyright é Las Vegas Review-Journal

Hard Rock posts $26.5 million loss in first quarter

By ARNOLD M. KNIGHTLY
LAS VEGAS REVIEW-JOURNAL

The Hard Rock Hotel posted a first quarter loss of $26.5 million largely due to higher operational expenses and interest payments on the money used to pay for the large expansion finished in March.

Unless the niche property is able to sharply improve casino revenues, reduce costs or reduce its debt load, posting quarterly losses will be the way the property will operate for the foreseeable future.

The loss is a slight increase from the $24.3 million loss posted the same time in 2009, a filing with the Securities and Exchange Commission shows.

The property had an operational loss of $9.1 million and paid $19 million in interest expense in the quarter ended March 31.

The $770 million expansion, largely completed in December except for the pool, added 74,000 square feet of additional meeting space, a larger concert venue, a larger night club and additional amenities such as new restaurants, a spa and new poker lounge, two hotel towers totally 865 rooms and 30,000 square feet of new casino space.

The property now has 1,500 hotel rooms and 60,000 square feet of casino floor.

Expenses to operate the larger property increased 71.1 percent while revenue jumped 80.6 percent to $54.2 million in the quarter, an increase from $30 million posted the same time prior year.

Casino revenues increased 54.5 percent, hotel revenues increased 69.3 percent and food and beverage 78 percent.

Independent gaming analyst Frank Martin said that the property slot machine average per day was much less than half of the Strip casino average. Table revenue, which improved by 9.8 percent per table per day was also less than half the Strip average.

"Many casino properties have a comprehensive loss, after impairment charges and interest payments," Martin said this morning. "The Hard Rock Casino is still relatively unusual in that it also has an operational loss which has been increasing for the last three years. In upcoming quarters gaming revenue must match the improvements in revenue from food and beverage."
rudeboyoi
rudeboyoi
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May 10th, 2010 at 9:29:22 AM permalink
does anyone actually gamble at Circus Circus?

usually what i hear is that people stay there because of the cheap rooms and go to gamble elsewhere.

ive gambled more at Slots of Fun outside Circus Circus than inside the actual casino itself because of the cheap table minimums and the dealers frequently make mistakes.
pacomartin
pacomartin
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May 10th, 2010 at 9:51:45 AM permalink
Quote: rudeboyoi

does anyone actually gamble at Circus Circus?



Gambling revenue for CC dropped below $72 million for Fiscal year 2009 (ended June 30, 2009). That's a very small amount for a casino that size. Since at least June 2009 the property is running at an operational loss since the room rates and the Adventure Dome casino attendance have dropped. Additionally every quarter gets worse.

My personal opinion is that the property has gone beyond saving. They should implode the property now, and fashion an RV campground around the SLOTS-A-FUN casino with a handful of fast food places. The property must still generate some revenue as property taxes are not going to vanish.

An e-mail campaign could attract some of the customers to the Excalibur. But write now I think there are a lot of people who think it is a convenient place to stay while going to strip clubs.

That said, the property has an operational loss of a little over a $1 million per month. ARIA is losing several million per day (with writedowns), but is still losing several million per month without writedowns. MGM MIRAGE may not want the bad publicity at this time.
rudeboyoi
rudeboyoi
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May 10th, 2010 at 10:00:01 AM permalink
i agree that would be a reasonable strategy. slots of fun operating costs must be very little and MGM Mirage can still use the place to break in new dealers. the RV park idea would be a great idea for tourists who want to stay close to the strip and may bring more traffic into the area. the fast food places would also have low operating costs.

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