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HARD ROCKIN’

One on one with Hard Rock International’s chairman Jim Allen

By J. Phillip Vogel

 

One of the most popular and easily recognizable brands in gaming today is that of Hard Rock International. With properties stretching across the globe, it has proven to be an enormously popular entertainment juggernaut reaching across oceans and cultures. Casino Player spoke with Jim Allen, Chairman of Hard Rock International, to uncover the secret of their success, to see what’s in store for the brand, and discover what draws players in—and keeps them coming back.

Casino Player: How did you get involved with Hard Rock International?

Jim Allen: Ironically I became involved for the first time back when I worked for the Trump organization. While working directly with Mr. Trump, we were evaluating different opportunities for the brand (potentially the old Trump Castle) including adding a Hard Rock café—which the Trump organization eventually ended up doing in the Trump Taj Mahal. That was back in the late 80s early 90s.

This particular round, I became involved in December of 2000 when the Cordish Company was looking for someone to work with them to create the Hard Rock in Hollywood and Tampa. In 2006, I (along with the tribe’s ownership) led the transaction for us to purchase the assets of Hard Rock International on a worldwide platform.

CP: What are some of the issues you faced when you first took over as chairman and what steps did you take to expand the brand?

JA: The brand has been expanding in a very positive way, not just in terms of franchises, but certainly if we look at our deal flow and the hotel and the casino space it’s as strong as it has ever been in the history of the brand. And frankly one of our challenges is the amount of interest that we have in the brand and keeping up with all of the proposals that come in and all of the opportunities that we need to evaluate. I don’t think that there’s one specific issue that I would point to when we purchased the company. I would say that one of the goals from day one was to create more synergy between Seminole Gaming—which has seven casino properties, two of them branded Seminole Hard Rock Hotels & Casinos—in conjunction with the corporate staffs of both organizations. Whether you look at things like insurance or benefits, or purchasing, a lot of those things just make sense to consolidate, and in many areas we have done that.

CP: How involved are you personally in the day-to-day operations of the Hard Rock properties?

JA: One of the good—or bad—things about my personality is that I stay very, very involved in the day-to-day operations. We should put that into several categories. At Seminole Gaming, Larry Mullin has been with us for two and a half years as our COO, and he really runs the day-to-day for us for the seven casinos in Florida.

But to give you an example, I spent all day yesterday doing a “townhall meeting” with all employees. Any employee can come, and they can ask me any questions about the business, where we’re going, etc. Those types of things to me are very important. Am I still in the middle of debating the specifics of the cafeteria menu every day? No—but I certainly did that for many years. But I think hands-on management is what can make or break the success of an organization.

CP: What are the key elements to building and sustaining this successful brand?

JA: I think that any brand needs to be relevant. Hard Rock in the late 80sand 90s went through challenges to other brands that they weren’t as relevant as they used to be. It’s very important for someone in my position or senior leadership to not be afraid of change, not be afraid to embrace technology.

We have so much information now in our smart phones or watches that we have to be thinking outside of the box, and I think that companies that don’t do that are going to have a real challenge.

CP: How has the difficult economy affected your company’s growth on a national and an international level?

JA: That’s an excellent question. Look at the strength of the dollar right now on the global economy and the impact of that—most Americans think that if the dollar is strong that’s great news for us. But frankly depending on how your business is set up, when we look at the value of the dollar compared to the Euro, the difference in currency has a direct impact on our actual profitability. So foreign exchange rates are something that we have to monitor. There’s no doubt those things can have an impact both favorable and unfavorable depending on the setting that we’re in.

CP: There was a time when casinos in the US were limited to only a few locations, such as Nevada and NJ. In the past decade we’ve seen an enormous burst in casino growth across the country. How has Hard Rock benefitted from this ongoing casino boom? Conversely what factors make this more challenging?

JA: I don’t think that Hard Rock played a big role in that boom until recent years because, frankly, the previous owner was not interested in becoming licensed in gaming jurisdictions here in the United States. We now have been pretty successful with that the past three years or so, where we’ve competed in places like New York or Massachusetts or Ohio.

I do think for this boom of local casino openings you need to be very cautious for a return on investment. I think there are some markets where there is still some attractive opportunity. But I would use the word caution because over saturation in some areas has already occurred.

CP: Each property is like a rock ‘n roll museum that takes visitors on a trip down memory lane with their favorite artists. How does Hard Rock obtain the incredible music memorabilia that is displayed at each property?

JA: We have a team of individuals that go to auctions, look at different websites—there are many different ways. Certainly a lot of the memorabilia that we collected has to do with us working with philanthropic efforts, trying to help others. So a lot of charity work and a lot of artists who recognize that part of our business model is to help others.

I think the most important thing is being authentic. We certainly recognize the importance of an artist that either donates, or we purchase, or work together on a charitable event, that they understand that their music memorabilia is going to be treated with museum-quality conditions, and never to be sold to anyone else.

CP: What is the most unique piece in the collection? Do you have a favorite?

JA: When it comes to the 77,000 pieces that we have now, I don’t think there is one that I would say “That’s it”. Hard Rock is not a brand about rock ‘n roll—it’s a brand about music, and music is in all of our DNA. I think that what I like the most is that we are truly the world renowned and recognized custodian where artists of all backgrounds, all age groups, recognize Hard Rock’s memorabilia collection as something that is incredibly unique and special.

CP: Players rely on the club cards, especially if they have a favorite property. How is Hard Rock’s players card structured, and can points be earned and redeemed at any Hard Rock property?

JA: It’s not a one size fits all. We do have a Hard Rock card specifically related to the restaurants that has a global footprint. We have taken that to also be introduced at the gaming properties. However, it is not yet in sync where you earn points at one casino and those points are redeemable at all casinos. And the reason for that is because we have different ownership structures and licensing agreements. Hard Rock in Macau is certainly different from the Hard Rock in Tampa and the Hard Rock in Ohio. Over 100 million people visited Hard Rock locations last year, and they certainly can go to HardRock.com and see the benefits that apply to their rewards and the players clubs. But it’s not unilaterally the same across the world.

CP: Poker is a big part of gambling. How has Hard Rock embraced the poker culture, and why should poker players choose Hard Rock?

JA: Poker certainly creates a lot of media, but when you look at its actual profitability, there’s another question about how it’s perceived versus what is reality. But on the positive side of that, poker creates a lot of additional non-gaming revenue, such as food and beverage and hotel rooms. So we certainly embrace the concept that the poker customer is somebody who is very valuable to us. Nothing demonstrates that more than the Seminole Hard Rock Poker Open, which we’ve done now for two years in a row, and is a $10 million guaranteed price, which nobody in the history of gaming has ever done previously.

CP: Casino Player’s audience is largely the gambling consumer—knowledgeable, active players—and Hard Rock remains a favorite among them. What makes Hard Rock stand out in such a competitive market?

JA: People like the brand. I think we’re very detail orientated about building a product that’s about entertainment, not just about the old slots in the box. We like to create a story that looks at the people—not just the size of their wallet, but also their time and what are they going to do if they’re gambling for a period. Where are they going to eat? What show are they going to see? How much time are they going to spend evaluating the memorabilia’s? How much time will they spend becoming involved in our promotions or our philanthropic efforts? So we kind of create a marketing plan because of the different tools of the brand. People travel the world to go to a Hard Rock café to buy some of the retail pieces and obviously enjoy our food, or see our entertainment. So we build that into our plans and we’re very, very fortunate.

CP: There’s a broad spectrum of the casino player from the low bankroll, penny player who walks in with $40 all the way up to the high rollers. How do you cater to the needs of these varying groups?

JA: I think when we talk specifically about the casino, Larry Mullin has been a tremendous addition to our organization. And one of his major focuses is making sure that we deliver on service and deliver on expectations to that upper-tier customer. That doesn’t mean that we’re forgetting about customers in the lower tiers. But just to see what we need to do to continue to enhance and create special amenities and service to people who have a theoretical value in some of the upper segments of the database. No doubt we are focused more on a higher quality customer, not somebody that’s just riding a bus and coming in with $10 or $20 in their pocket.

CP: What do you see as the future for Hard Rock?

JA: I think that it is a brand that we are fortunate to own and it certainly allows us to be part of the conversation in virtually any market. Hard Rock is one of the most recognized brands in the world. And what’s truly amazing is when you think about only 200 locations—the penetration into the global footprint, to me, is just fascinating.

People just really enjoy this brand. One of the reasons, I think, is that everybody associates with music and I think that we will continue to focus making sure the Hard Rock is not just about the music of the 60s, 70s, and the 80s. It’s about today’s culture whether we’re in Japan or China or India—wherever we are in the world, we reach out for local artists. We reach out for the culture, and we tie that back into our marketing. And when you think about that from a casino standpoint, that truly allows us to receive the opportunities for people to be interested in us as an entertainment brand, not just a casino.

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