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Arnold M. Knightly

Hard Rock posts lowest revenues since 2004

16 March 2010

LAS VEGAS, Nevada -- The Hard Rock Hotel posted its lowest revenues since 2004 despite opening new rooms and other amenities during the year, according to a filing Monday with the Securities and Exchange Commission.

Net revenues in 2009 decreased 1.7 percent, to $161.5 million from $164.3 million in 2008.

The property trimmed its loss last year by 34 percent, but still posted a $197 million deficit largely because of a noncash impairment on assets due to the poor economy.

The revenue decline came despite last year's opening of the 492-room Paradise Tower, the 375-room HRH Tower, new meeting space, a larger concert venue and other amenities.

Hotel revenues declined 10.1 percent and casino revenues fell 18.3 percent.

The availability of more rooms and the continued poor economy drove down occupancy rates to 88.2 percent last year from 91.7 percent in 2008.

Average daily room rates declined to $134 per night from $190 per night.

Cash flow, defined as earnings before interest, taxes, depreciation and amortization, dropped to $23.4 million for 2009 from $41.1 million for 2008.

The property's long-term debt increased to $1.2 billion on Dec. 31, from $1.03 billion in 2008.

The property increased employment to help staff the $750 million expansion, which was largely completed by the end of December.

The hotel-casino employed 1,362 full-time workers and had 1,011 people on call on Dec. 31, the federal filing shows. That compares with 1,176 full-time employees and 488 on-call staff employed at the end of 2008.

The property is a joint venture between New York-based hotel company Morgans Hotel Group and private equity firm DLJ Merchant Banking Partners, an affiliate of Credit Suisse. Morgans owns 12.8 percent and manages the property.

The filing said a search for a new top executive has begun to replace Randy Kwasniewski. Kwasniewski was found dead in his Summerlin home March 9 from a self-inflicted gunshot wound to the head.

He had overseen the Hard Rock's daily operations as president and chief operating officer since Morgans bought the property in February 2007.

Morgans Chief Executive Officer Fred Kleisner is overseeing the property's daily operations.