Hard Rock opts out of tribal deal to focus on LV project

Friday, July 29, 2005 | 11:10 a.m.

The Hard Rock hotel and casino has severed ties with a California Indian tribe in order to focus its energies on building its $1 billion-plus condominium project and casino expansion in Las Vegas.

Early this year, Hard Rock Hotel and Casino Inc. obtained its first tribal management contract when it struck a deal with the Pauma Band of Luiseno Mission Indians near San Diego to develop and run a casino resort for the tribe.

Hard Rock President Kevin Kelley said the property has decided to scrap the deal "in fairness to this property and in fairness to the Pauma tribe, who really wants to advance their gaming growth."

"We have a very big project we're doing here that is moving at light speed and it really needed to have our complete and undivided attention," Kelley said.

The property is expected to begin construction before the end of the year, or about 45 to 60 days after buyers are presented with sales contracts in September, Kelley said.

About 4,100 people sent checks to reserve 1,200 available units, leaving close to 3,000 people on a waiting list, he said. The Hard Rock is now taking deposits from buyers as a second step before asking for a significant portion of the down payment.

"We've got the premium in demand and the ability to build this in one phase," Kelley said. Some competitors "have to wait while demand catches up to their needed sales pace."

The Hard Rock hasn't advertised prices for units but Kelley said they are expected to cost upwards of $900 per square foot -- in line with other luxury condo towers.

Bungalows and single-family units that will be integrated into a new pool area under development will cost "substantially" more than that, he said.

Like the Palms resort across town, the Hard Rock has cultivated a list of celebrity buyers that include rock stars, professional athletes and actors.

"The buyer is buying what we think is one heck of a product," Kelley said. "All the new amenities they're getting along with that is the real value."

The Hard Rock units will come fully furnished and will be integrated into a pool and resort area including a spa and fitness center.

In conjunction with the condo units, the Hard Rock will be adding four new restaurants, meeting space and an entertainment hall that will replace the Hard Rock's current venue, the Joint, which will become a new casino extension. The project will add about 20,000 square feet of casino space with 500 new slots and about 30 additional table games.

Thursday, the Hard Rock reported its highest revenue-generating quarter in history and attributed much of the gains to its Body English nightclub as well as higher room rates and banquet business.

Food and beverage revenue was up 34 percent in the second quarter, in part related to alcohol consumption at Body English.

Business is booming at the club in spite of competition from rivals such as Pure, a large and expensive nightclub that recently opened at Caesars Palace, executives said.

On the casino side, revenue fell 2 percent primarily because of a decline in table-game revenue as gamblers won more from the casino than a year ago.

Slot revenue was up 16 percent, attributed to a more concentrated direct mail campaign to locals and efforts to attract out-of-town gamblers.

The casino no longer courts the richest of high-rollers and instead is attracting younger gamblers who are lured by other activities at the resort, executives said.

Hard Rock's exit from the Pauma deal marks the second time a casino company has abandoned the tribal project.

The tribe originally chose Caesars Entertainment Inc. to develop and build a resort to replace its small Casino Pauma. But those plans fell through when Harrah's Entertainment Inc., which already runs a tribal casino nearby, bought Caesars last month. The tribe sued Harrah's, saying it was led to believe that the acquisition wouldn't affect the management contract.