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Published Monday, Aug. 10, 2009 | 3:13 p.m.
Updated Monday, Aug. 10, 2009 | 6:34 p.m.
Sun Coverage
Beyond the Sun
Second-quarter results weakened at the Hard Rock hotel-casino in Las Vegas, one of the property's joint-venture partners reported Monday.
Morgans Hotel Group Co. of New York, which has properties around the nation and in London, said that overall its quarterly revenue tumbled from $81.3 million in 2008's second quarter to $56.4 million in the 2009 quarter ending June 30.
Its quarterly loss widened from $1.06 million or 3 cents per share in the 2008 period to $10.057 million or 34 cents in the most recent quarter.
At its Hard Rock Las Vegas joint venture, hotel earnings before interest, taxes, depreciation and amortization fell from $3.927 million in 2008's second quarter to $1.423 million in the recent quarter.
Like other Las Vegas hotel-casinos, the Hard Rock had to lower rates to lure guests as the recession reduced travel to the city.
Morgans said that at the Hard Rock, 92.3 percent of its rooms were occupied during the quarter, down from 94.3 percent in the 2008 second quarter.
The average daily room rate tumbled from $217.34 to $165.14 while revenue per available room declined from $204.95 to $152.42.
In April, the Hard Rock opened the expanded Joint music venue and added approximately 65,000 square feet of meeting and convention space. The new north tower, with 490 rooms, opened in July and the casino expansion and south tower, with 374 rooms, are projected to open in late 2009 or early 2010.
Morgans' partner in the Las Vegas Hard Rock is Credit Suisse Securities' DLJ Merchant Banking Partners. Morgans operates the hotel, retail and food and beverage operations under a management contract and the joint venture runs the casino.
Morgans said that DLJ has pumped additional capital into the property, reducing Morgans' ownership stake from 19.1 percent on June 30 to 16.7 percent on Aug. 5.
Morgans reported it also has invested some $17.16 million through June 30 on plans for the Delano Las Vegas and Mondrian Las Vegas hotels in a joint venture with Boyd Gaming Corp. for Boyd's stalled Echelon resort project on the Las Vegas Strip.
Company-wide, Morgans said it sees signs of improvement.
"While the economic and operating environment remains difficult, we are beginning to see trends stabilize. We saw some returns in occupancy in the second quarter and modest, but nevertheless meaningful, pockets of promise across the business. As we move forward through this pressured economic and industry environment we remain focused on maintaining cost controls, strengthening our financial position and preserving, and ultimately growing, shareholder value. (An) amendment to our credit facility we reached with our lenders is a very positive step for the company and signifies our strong lender support and their confidence in us and our business. We are confident that we are taking all the right steps to get us through this challenging period while at the same time positioning the company for long-term growth," Chief Executive Fred Kleisner said in a statement.
"The Hard Rock hotel and casino in Las Vegas with its exciting new venues -- while down year-over-year -- is outperforming its peers on the Las Vegas Strip," Kleisner said during a conference call for investors and analysts.
During the conference call, officials said the expansion of the Hard Rock should increase Morgans' earnings from its management contract for the property by an undisclosed amount. They said the company currently earns about $7 million per year on the contract.
Morgans officials also said they expect the company's ownership stake at the Hard Rock to continue to decline to a stake of about 10-15 percent.
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Declining room rates and declining room taxes are all over the city. City center will cause these to fall farther and the tax revenues with them. harry Reid and President mouth are ruining this economy and it seems intentional. When does Reid leave office?
Yes, by all means..and let's get Senator Ensign to get us back on track.
they must be having a hard time selling $500 bottles of $30 vodka.
those rooms were never worth $217
For those that come to Vegas on a weekend, try room rates at $400 - $500 a night. I do hard rock occasionally on trips, stay a weekend some where else, and then check into the hard rock for a cheap $100 room on Sunday before I go home. On another note, I enjoyed myself and my room at the Planet Hollywood last time I came to Vegas. The room rates were very manageable, especially for that location on the strip.
As any Realtor might say: Location, Location, Location. Unfortunately for Hard Rock, people do not want to pay an expensive rate for a room so far away from the action. We went to H.R. over the weekend, had a good time, then headed back to our Strip Hotel. The construction on the roads leading to H.R. have been horrible for years. Not Hard Rock's fault, but certainly a problem. When the new Hard Rock Cafe opens on the strip, it will have a negative affect on the numbers. Many tourists who now make the trek will stop at the new Cafe and call it good. I hope they make a fortune on the cable T.V. pool parties. That seems to draw the young crowd with money.
hey they still made 1.4 million.id shur b happy if my busiuness did that 4 the yr.its a young persons hang.anybody over 30 gets laffed outta there.
it's a thirty something hangout - old dudes trying to get young ladies kinda evens out the age level
Do they have Viagra vending machines there yet?