HardRock needs a bigger global footprint

Michael Shindler is not taking much time in pushing forward Hard Rock Hotels and Casino’s growth plans.

The company that currently licenses or franchises a dozen properties comprising slightly more than 4500 rooms, is looking to increase that number to between 40 and 45 properties during the next decade.

And with over 30 projects comprising approximately 5000 rooms in its development pipeline, Hard Rock appears to be well on the way to reaching its goal. Approximately 80% of the projects in the pipeline are stand-alone hotels, with the remainder being casino-hotels.

“It iss a bit of a mixed bag,” Shindler said during a telephone interview. Growing the company’s casino-hotel brand internationally is a priority, however, he said.

Shindler, who joined the company in February as executive VP of hotels and casinos, is helping to oversee the effort. He had been president and CEO of Chicago hotel consulting and advisory firm Four Corners Advisors and also served in various other positions within the industry, including chairman of the board of directors of Hyatt Gaming Management and vice president of development and asset management at Las Vegas Sands Corporation.

The position Shindler occupies was created last fall with the intent of growing Hard Rock’s brand, especially internationally and to “make us more robust,” he added.

Shindler is optimistic Hard Rock will be able to close on the deals in its pipeline.

“The only thing that tempers my optimism is we don’t have transparency, particularly on the debt side,” he said.

But Hard Rock has a plan in place to help fuel growth despite the still-tight financing market.

Getting deals done

Hard Rock is willing to consider creating a dedicated Hard Rock Hotels Fund so the company would have a ready pool of capital available to pursue deals. The company potentially could partner with a private equity firm or real estate investment trust for such a venture. In a follow-up e-mail, Shindler said this is just one of many possible plans Hard Rock is considering.

The company wants to expand its reach in the Middle East, Africa, South America and Europe. Hard Rock is looking at putting properties in gateway cities and trafficked tourist destinations, Shindler added.

Future openings are planned for Punta Cana, Mexico in 2010; Panama and Hungary in 2012; and Abu Dhabi and Dubai in 2013.

“We plan to be opportunistic,” he said. The company also is considering the east coast of the United States, including a new-build property in Atlantic City, and expansion also in Massachusetts and Maryland.

Shindler admitted that the current financing environment isn’t exactly an ideal one.

“We still haven’t seen deal flow,” he said. “Lenders need to put assets on the market. I think there is money out there and slowly but steadily (Hard Rock) is getting the word out there that we are open for business.”

Shindler was hesitant to provide a short-term prediction as to how many deals might be closed.

“We’re pursuing things on a one-off basis,” he said. “We will look to continue to do a few deals and then look ahead to see what the growth trajectory looks like. We’re not going to be out bidding on properties ourselves.”

The operating environment

As for the overall operating environment, Shindler echoed comments made by other hoteliers recently that occupancy appears to be rising at a faster clip than rate.

“What we’re seeing is much more occupancy recovery,” he said. “(Revenue per available room) is still flat. I don’t think we’ve quite seen the push on rate that occupancy (increases) would typically encourage us to do.

“There’s trepidation about pushing rate too hard because someone is not going to push as hard. That will continue several months.”