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March 27, 2015

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Hard Rock Hotel sees profit drop in second quarter

Earnings fell by 35 percent at the Hard Rock Hotel and Casino during the second quarter, one of the property’s joint-venture partners reported today.

The New York-based Morgans Hotel Group reported earnings before interest, taxes, depreciation and amortization fell to $920,000 from $1.42 million in the second quarter.

Occupancy at Hard Rock fell from 92.3 percent to 81.8 percent during the quarter. Average daily room rates fell 12 percent during the year-over-year period to $146 from $165.

For the first six months of the year, occupancy at the off-Strip resort dropped from 90 percent to 80 percent. Average daily room rates declined by about 13 percent to $130.

The drop in the occupancy rate could be a result of the recent addition of two new hotel towers at the Hard Rock. The resort added more than 865 rooms this year in conjunction with a $750 million expansion project.

Morgans Hotel Group reduced its ownership stake in the Hard Rock at the end of 2009 from 20 percent to 12.8 percent. Morgans' partner in the property is DLJ Merchant Banking Partners, a private equity investment affiliate of Credit Suisse.

Company-wide, Morgans reported a net loss of $21.1 million, or 75 cents per share, in the second quarter of 2010, compared to a net loss of $10.1 million, or 32 cents per share, in the same period of 2009.

"We delivered strong results for the second quarter, outperforming industry growth averages across all key performance metrics, demonstrating once again that Morgans is well positioned to come back faster and stronger than the industry as the economy improves," Morgans Hotel Group CEO Frederick Kleisner said.

Revenue grew to $60.2 million in the second quarter of this year from $54.6 million in the same period of 2009.

Morgans Hotel Group has ownership in 12 properties in New York, Miami, Los Angeles, San Francisco, Boston, London and Las Vegas.

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