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Hard Rock Casino CEO on taking precautions against COVID-19

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Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman speak with Hard Rock Casino CEO Jim Allen about the state of the industry and outlook amid COVID-19.

Video Transcript

MYLES UDLAND: We've talked a lot about the reopening trade this week. We've talked a lot on this program about what's happening in the cruise line space. Let's turn our attention now to venue space. We're joined now by Jim Allen. He is the chairman of Hard Rock International and the CEO at Seminole Gaming. Jim, great to have you on this morning. You're joining us from Florida. Let's talk a little bit about how you are seeing business in your properties over the last few months and what the economy looks like to you today.

JIM ALLEN: Sure. Well, first of all, thanks for having us. Florida's actually been great. You know, Governor DeSantis has had a open mindset to keep business moving in a favorable direction. And certainly, we are seeing those results and benefits at the Seminole Gaming business, obviously, which is part of the whole overall empire of the Seminole Tribe of Hard Rock International. Business is very good here in Florida. Our gross revenue business in Atlantic City is very, very strong, certainly breaking the market trends there tremendously.

We're actually growing the business anywhere from 15% to 20%, where the rest of the town is actually backwards by anywhere from 34% to 38%. Some properties actually down over 40%. Business in California and Sacramento is excellent. Now that we're reopened in Cincinnati, also very good. So, regional markets are doing very well. Certainly absorbing a lot of the cost affiliated with COVID. It is obviously now part of the business plan going forward.

JULIE HYMAN: Hey there, Jim. I'm looking at your Hollywood website right now for the Hard Rock. I don't see anything about what you guys are doing now in terms of precautions. Can you walk us through what rules you do still have in place in terms of COVID and what your various casinos look like on that front?

JIM ALLEN: Yeah, honestly, I'm not quite sure what website you're on. But there is a whole program called Safe and Sound. Actually, it's been recognized not just here in Florida, but on a national basis, right? Governor Desanto specifically called it out and what a great program. Governor Murphy did the same in New Jersey, and globally. Safe and Sound is actually the first in the industry where we deployed technology, whether it be body imaging, whether it be making sure that every employee, every guest.

We're checking temperatures. Everyone is required still to wear a mask. And now we're actually testing-- I'm sorry-- we're actually offering vaccines to all of our employees. So Safe and Sound, frankly, was a change to our standard operating procedures, well over 500 pages of very, very detailed procedures in order to maintain the safety of our guests and employees.

MYLES UDLAND: So, Jim, we were talking about the cruise industry earlier and talking about how excited hardcore cruisers were to get back on ships. In your business, are you seeing a lot of your best customers coming back? Or are you actually bringing in new folks to the property at this time as, you know, people are just-- are looking for something to do? Looking to get out of the house after a tough year.

JIM ALLEN: You know, it's a really excellent topic because I think as we look at the cruise industry, obviously, still pretty much dormant in the United States, we recognize by policy that that pent-up demand for cruise travel certainly is probably benefiting the regional and local casino markets. We have a great relationship with Mickey Arison at Carnival. We certainly only wish them the best to get those ships back in the water and start producing the amazing EBITDA that they used to do prior to COVID.

But we also recognize that it's probably going to have an impact on our business as we look at the person that cannot get on a cruise ship. It may be coming to a facility like ours, or frankly, in other regional markets. So clearly, I think that's going to have an adjustment as we look at the 2022 numbers.

JULIE HYMAN: And Jim, it's Julie again. My apologies, by the way. I was looking at the casino section, specifically the website. It is indeed, right there on the home page, all of the precautions that you guys are taking. You talked about how you guys are seeing a good comeback in a lot of your numbers. Where are you versus pre-COVID? And when do you expect, if you're not there yet, when do you expect to hopefully be able to get back to those levels?

JIM ALLEN: You know, the Florida numbers are actually exceeding in a double digit way pre-COVID. But I think we have to caution because at the end of 2019, we obviously opened the Guitar Hotel here in Hollywood, which was a $1.5 billion expansion, and then another $800 million expansion over in Tampa.

So, you know, the numbers, as we lap 2018, '19, and then now looking at '21 lapping 2020, being, you know, we closed March 20, the comparisons here can candidly be a little misleading. But we certainly overall are very, very pleased with the regional casino business, not just here in Florida, but throughout the United States.

BRIAN SOZZI: Jim, how has the shift to online gambling impacted your business?

JIM ALLEN: You know, we launched HardRock Digital in the early part of this year. So that team has just been an absolute amazing addition to the overall long-term projections and forecasts of our online business. And those numbers are literally up 100%, 200%. But as in any particular financial number, percentages can be misleading because it's obviously going off of what base. But we certainly think the sports betting, the online gaming business is the future of the sector as we look at the next 5 to 10 years.