‘The regional casino business is still pretty good:' Hard Rock Intl. Chairman

Yahoo Finance’s Alexis Christoforous and Jim Allen, Chairman of Hard Rock International and CEO of Seminole Gaming, discuss the pandemic’s impact on the casino industry.

Video Transcript

ALEXIS CHRISTOFOROUS: Hard Rock International is handing out cash bonuses to its workers in several states to thank them for their efforts, including persevering during the coronavirus pandemic. They joined other companies, including Walmart, Target, Amazon, Best Buy, Home Depot who have extended bonuses to employees during this challenging time.

Joining us now is Jim Allen. He is chairman of Hard Rock International. Jim, good to see you. First off, why did you decide to do this? It's a nice position to be in to be able to extend this bonus to your workers. And in what states who are-- what states are being affected by this?

JIM ALLEN: Well, the decision was we certainly recognize the challenges that families are going through in this COVID environment. So we always look at the big picture. We're always looking long-term. And we truly felt that this was a chance to thank them for all their efforts and candidly recognizing, you know, many employees were very concerned about coming to work, especially in the early days of COVID.

So it really was a thank you. It's really about long-term being part of our family. And certainly more importantly, the only thing we hope for is that they'll continue to provide the amazing world-class service that we've been doing for almost 50 years at Hard Rock locations around the world.

As far as states, we're in 76 countries. It's probably a little too challenging to get into where we did do it or didn't. But in any market where we felt we could be able to do that, it was certainly something we were committed to.

ALEXIS CHRISTOFOROUS: What was the amount of the bonus? May I ask? I'm sure there was a range depending on where you sat within the company. And how many? I mean, if you can give us an idea of where, how many workers actually got a bonus?

JIM ALLEN: Sure. The lowest bonus certainly was $250 and up to $1,000 depending upon the property you were in and the position in the property itself. As far as number of employees, I'm sure we exceeded 10,000 employees, probably somewhere between 10,000 and 12,000 employees.

ALEXIS CHRISTOFOROUS: I want to talk about business conditions during this time. I know that casinos across the board were shut down for about 3 and 1/2 months. Your Atlantic City casinos, I believe, are back up and running at 25% capacity. What has demand been like? And are things starting to pick up? I know we're in the early stages of the vaccine rollout. But what are you seeing in terms of demand and foot traffic?

JIM ALLEN: It's really interesting. Each segment has its own set of circumstances. Generally, the regional casino business is still pretty good. When you ask about Atlantic City, we're very fortunate. Frankly, we've seen double-digit growth since COVID obviously has hit all of us. And certainly we never want to wish any bad luck on our competitors.

But frankly, we're the only property in town that's actually experiencing growth. And some of the other ones are actually having minus-30, minus-40, and in one case, a negative 50% gross gaming revenue reduction. So certainly here in Florida. Obviously Governor DeSantis has had a mindset since day one about allowing and being pro-business. And, candidly, we're seeing the business perform very well there. Places like Sacramento in California doing extremely well.

When we look at the Hard Rock cafes, the real challenge is so many of the locations are closed. I mean, Times Square in New York still closed. Los Angeles still closed, London, et cetera. So frankly over in Europe, I think we opened 26 or so of the locations. And unfortunately we had to go back and closed them, as COVID obviously had an additional second spike.

So a real mixed bag. We are starting to feel, in general, that there's a little bit of optimism in the air. In New Jersey, frankly, Governor Murphy certainly helped us out a little bit by extending the restaurant hours and actually increased capacity from 25% to 35%.

ALEXIS CHRISTOFOROUS: Are you looking at-- what about live performances as part of the overall package? Folks come to places like yours to see a live performance. Plans for how you're going to reopen when the time does come?

JIM ALLEN: Well, obviously Hard Rock is a brand about entertainment. And we're extremely excited or call it late summer into the fall about the entertainment lineup that we're going to be announcing. We have done some strategic events. We do have a live boxing match at Hard Rock Stadium. I believe it's February 24 give or take a day. My apology. I don't know that specifically. And candidly, we're seeing ticket sales being very, very strong.

Remember, Hard Rock Stadium has a capacity of about 64,000 people. I think we're actually selling around 14,000 tickets. So frankly, the presale was extremely strong. So we're hopeful that as we navigate through people becoming more confident, taking the vaccine, getting in the summer, and then certainly into end the summer, early fall, things starting to have some relevance of getting back to normal.

ALEXIS CHRISTOFOROUS: What's Hard Rock's exposure to online gambling which has grown exponentially during this pandemic just simply because people cannot get to the casinos? What's the status of that for you guys?

JIM ALLEN: Yeah, we're very encouraged about the business. I guess about a month or so ago, we made an announcement where we formed a new entity called Rock Digital. Our previous name was Rock Interactive. Now, that's when we controlled the business 100% ourselves. We now took on a minority partner.

The exec ex-senior team of the Stars Group-- everyone from the CEO to many of the leading decision-makers of that company-- now have partnered with us. And, candidly, our business actually was profitable prior to the merger. We certainly think that there's a business model out there that works on gaining market share. And there's some market caps that are just absolutely amazing. But we're fundamentally looking at a business based upon an EBITDA model more once again on a long-term philosophy and business mindset.

ALEXIS CHRISTOFOROUS: Jim, I read that you acquired the casino premise license from the Ritz Club in London. Can you tell us what that'll mean for the brand and what we can expect to come from that?

JIM ALLEN: Well, Hard Rock, obviously, back in 1971 was founded in London. When you think about the great international gateway cities in the world-- certainly London, New York, Tokyo-- those type of environments-- Barcelona-- we think it's very important to make sure the Hard Rock brand is there-- there in a very strong way.

Obviously the cafe started there in '71. We have a hard Rock Hotel there now on Oxford Street. And strategically if the right opportunity comes along, we would love to have a gaming component in the amazing city of London, obviously one of the great gateway cities as I stated.

ALEXIS CHRISTOFOROUS: Yeah, exciting stuff in the offing. And to do it during a pandemic is pretty impressive. Jim Allen, chairman of Hard Rock International. Thanks so much.

JIM ALLEN: Thank you.