Hard Rock results not hurt much by terror

Wednesday, Oct. 24, 2001 | 9:46 a.m.

The Hard Rock hotel-casino reported only a marginal dip in cash flow for the quarter ending Sept. 30, an encouraging outcome in a quarter affected by the post-Sept. 11 tourism downtown in Las Vegas.

The Hard Rock, located on Paradise Road just east of the Strip, reported cash flow of $6.1 million, a decline of 2 percent from the year-ago quarter. Revenues fell 2 percent to $28.8 million, and the company reported a loss of $700,000, compared to a loss of $1 million taken in the third quarter of 2000.

The Hard Rock said the lower loss came as a result of reduced interest expenses.

"They're very strong results," said Andrew Zarnett, gaming analyst with Deutsche Banc Alex. Brown. "The Hard Rock benefited from an increase in drive-in traffic from Los Angeles, and I believe they also benefitted because their clientele are young, single people without the increased responsibilities of being with their families after Sept. 11."

Prior to Sept. 11, Zarnett had projected the Hard Rock would see a 10 percent increase in cash flow for the quarter.

"They definitely had some impact from the events of Sept. 11, but clearly not to the degree of very large Strip hotels or the older (Strip) properties," Zarnett said.

Casino, hotel, food and beverage and retail revenues all declined for the quarter. Casino revenues were off 5 percent to $11.4 million, while hotel revenue fell 4.4 percent to $6.4 million.

The company said casino volume and room rates have been rebounding since Sept. 11, but remain below the levels seen before that time.

But so far this month, the Hard Rock has been running ahead of last year's results in both revenues and cash flow, Hard Rock Chairman and Chief Executive Peter Morton said.

"Our occupancy rate is over 90 percent for the month," Morton said.

Zarnett believes it's difficult to draw too many parallels between the Hard Rock and major Strip properties, as the Hard Rock occupies a specific niche that relies little on business travel. MGM MIRAGE and Park Place Entertainment Corp., two of the Strip's largest casino operators, will report their earnings next week.

But the Hard Rock's relative success during this difficult period bodes well for the $265 million Palms hotel-casino, which will be opened by the Maloof family just west of the Strip on Nov. 15. The Palms, like the Hard Rock, is targeting a younger, upscale clientele.

"You can probably draw a parallel to the success of (the Hard Rock's) business and the Palms," Zarnett said. "I would say it is (a good signal)."