his spring, the biggest Hard Rock hotel-casino yet is set to open in the Dominican Republic: a 1,790-room complex in Punta Cana, with 11 pools, 11 restaurants, a golf course, spa and other amenities.
Plans also are underway for what will be Europe's largest casino complex, a leisure venture in Hungary dubbed EuroVegas, said Jim Allen, chairman of Hard Rock International.
Hard Rock is putting almost no money into the new ventures. It typically licenses the Hard Rock name to developers and works with them on design, marketing and other basics for a fee. It may manage a Hard Rock hotel for a fee. And it usually runs the Hard Rock casino – also for a fee.
"Our goal on the hotel side is not to put in any equity," Allen said. "On the casino part, we're willing to have conversations about sliver equity."
Funding for the projects comes instead from developers. In the Dominican Republic, it's a Mexican group, Palace Resorts, that is building the megaresort at Punta Cana, a venture even bigger than the iconic 1,500-room Hard Rock complex in Las Vegas. In Hungary, it's the EuroVegas group raising at least us$ 400 million for the complex that will open in phases starting 2013, Allen said.
Analysts see promise in the resort and casino plans, given the strength of the Hard Rock name. The chain's 130 Hard Rock cafes in more than 50 countries have helped build awareness of the brand as youthful, philanthropic, hip and chock full of memorabilia from top musicians.
But the big challenge for the Seminoles is whether developers can find funding for hotels and casinos in today's tight credit market. "It's absolutely brilliant, if they can pull it off," said hotel consultant Scott Berman, who runs the US hospitality and leisure practice for PriceWaterhouseCoopers from Miami.
Hard Rock already had a half dozen hotels open when the Seminoles bought the brand, including outlets in Bali in Indonesia, Pattaya in Thailand and at Universal Studios in Orlando. The Seminoles themselves licensed the Hard Rock name for years on their casino-hotels in Hollywood and Tampa in Florida. But the big growth push came after the purchase in 2006, said Allen.
The tribe's plan calls for five to 10 casino-hotels over a decade, perhaps one a year. The most recent international addition is the 320-room Hard Rock Macau in China opened in June 2009, part of the us$ 2 billion City of Dreams complex, spearheaded by Hong Kong-listed Melco International Development Ltd. and Macau's casino billionaires, the Ho family.
The Seminoles also have identified 25 cities as potential sites for Hard Rock hotels without casinos, including such gateways as Madrid in Spain, Boston and New York. Recent additions include the 420-room hotel in San Diego opened last year.
In all, hard Rock now lists 13 casino-hotels or hotels open, with five more planned. But the global real estate slump could help speed opening of additional projects, Allen said.
In New York City, for example, a developer in talks with Hard Rock had looked at property during the real estate boom three years for $500 million and now can buy it for about $160 million. Taking the building to its studs and renovating will now run about $270 a square foot, or half the former costs, because more contractors are available and construction materials cheaper, making the venture more viable, Allen said.
For those with money to invest in hotels, it's a time "not to be retreating, but to grow," said Allen. Hard Rock hotels typically run 250 to 400 rooms and rank in the four-star or four-diamond category, Allen said. They compete with such brands as Marriott, W and some chic, boutique chains, he said.
Room rates vary by destination and season, but Allen said the 500-room Hard Rock casino-hotel in Hollywood averages more than $250 a night for paying guests. Casino-hotels tend to offer many rooms free to gamblers as well. The new Dominican Republic casino-hotel will operate as an all-inclusive resort, with food, drink and other activities included in a pre-set price per day.
The global expansion likely will mean a few more professional jobs for the development team at Hard Rock International's headquarters in Orlando, Allen said. Wordlwide, he estimates Hard Rock branded cafes, hotels and other ventures now employ about 33,000 people, with about one third in Florida.