Las Vegas casinos 'will come back': Hard Rock International chairman
Las Vegas market will come back: Hard Rock International chairman
Hard Rock International Chairman Jim Allen on the impact of COVID-19 on the casino industry.
Demand for Las Vegas casinos “will come back” in the long term, Hard Rock International Chairman Jim Allen told “Mornings with Maria” on Tuesday.
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Allen, who is also the chief executive officer of Seminole Gaming, offered the perspective one day after MGM Resorts International announced that it has initiated layoffs for thousands of employees as the casino industry’s recovery continues to be stalled by the ongoing coronavirus pandemic.
On Monday, the entertainment giant behind Las Vegas hotels, including the Bellagio and MGM Grand, cut 18,000 employees nationwide, amounting to about a quarter of its pre-pandemic U.S. staff.
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When asked what he is noticing and if he worries that “this will have a ripple effect across the gaming industry,” Allen said, “I think Las Vegas is kind of in a unique category right now.”
“We certainly believe long-term that market will come back as … people feel more comfortable with traveling,” he continued. “Certainly if we look at regional gaming markets, actually they’re performing very well so it’s really based upon geographic area at this particular point in the gaming industry.”
Allen noted on Tuesday that “business in Florida in both July and August was extremely strong” and that “our business in Ohio is OK.”
He added that in other markets, such as Atlantic City, business is “slowly coming back.” Allen attributed part of that comeback to New Jersey Gov. Phil Murphy “finally” announcing that indoor dining will resume at a limited capacity on Sept. 4.
Allen also pointed out that, in Florida, Hard Rock International is “exceeding last year’s numbers,” but added that $2.2 billion was spent “in the expansion for the Tampa property and the guitar-shaped hotel here in South Florida.”
“So from a return on investment we’re not where we thought we would be, but certainly year over year numbers are up,” he explained.
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Allen acknowledged that currently, business in Las Vegas mid-week is “still very soft” and that weekends are “starting to ramp up” and are moving in “a positive direction.”
Nevada gaming revenue has decreased by 26.2% in July 2020 compared to July 2019, according to data released by the Nevada Gaming Control Board.
“We certainly think, and frankly we purchased our rights back about two, three months ago, right in the middle of the pandemic because we are a believer in the Las Vegas market on a long-term basis,” Allen said on Tuesday.
He also pointed to MGM Resorts International's announcement and CEO Bill Hornbuckle reassuring employees Friday that they will be rehired when possible. MGM has said that federal law requires the company to send layoff notices to furloughed employees that have not been brought back after six months in compliance with the Worker Adjustment and Retraining Notification Act, or the WARN Act.
According to the WARN Act, certain employees are eligible to receive advance notice of a potential layoff from their employer and could be entitled to assistance from their workplace to help them get back on their feet.
“Certainly all companies need to follow the federal guidelines associated with the WARN Act and I think that’s what obviously triggered a lot of this conversation,” Allen said.
He went on to say that he thinks “that the business model of the casino floor in Las Vegas is going to change and, frankly, everywhere in the country.”
“We as human beings like to interact with other human beings so, therefore, I think people going out looking for entertainment will always be part of a business model,” Allen explained.
“There’s no doubt that what has occurred in the regional markets, where by state law many facilities are operating with 50% capacity but frankly doing the same or in some cases more revenue on an individual per unit basis,” he continued.
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He added that “as far as the overall aspect of entertainment, live music, shows, sporting events, I do believe that once we see some type of cure or vaccine for the pandemic that people will slowly graduate back into wanting to come out.”
He acknowledged that meeting for conferences and conventions, however, is “a different answer.”
“Candidly we saw Vegas a few years back when President Obama said that it wasn’t a good thing to be having meetings in groups, specifically in business markets and actually named Las Vegas, it took a few years for that business to come back, but it did come back,” Allen explained.
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“I think now that frankly, we’re obviously doing interviews like this through Skype and Webex, roadshows financially are now being done online, I definitely think that business model is changing and to have two, three, 400,000 square feet of meeting space, that may be something that needs to be revisited in the future.”
FOX Business’ Daniella Genovese, Lucas Manfredi and The Associated Press contributed to this report.
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