HARD ROCK HUDDLE

A year of caution

Jim Allen, CEO of Seminole Gaming and chairman of Hard Rock International, speaks to Tim Poole about 2020 and looking ahead as part of the GI Huddle podcast

What are your reflections on such a tumultuous and challenging year for the gaming industry? Well, I think your adjectives are certainly appropriate. Obviously, COVID-19 changed the way we look at business, in any sector. When we think about the hotel, casino and most importantly the restaurant business, they were probably the three hardest hit categories. There are also airlines and cruise ships, so it’s been a real challenge. But the good news is business is coming back from the casino side. Restaurants are still extremely challenged, but we continue to move forward, as most important is the safety of our guests, employees and members of the Seminole Tribe.

How does Seminole Gaming look ahead to 2021, given recent vaccine news, pent-up demand and upli in gaming levels? One of the tremendous assets of the Hard Rock brand is its global footprint, being in 76 countries around the world. So until we see the airline industry, tourism and travel start to rebound in a healthy way, I think we need to be very cautious. Markets like here in South Florida, where I’m based, are a little bit more regional, with Florida having 21 million people in the state. I think that business model can remain moving in the proper direction, with one trying to be somewhat optimistic. But certainly in destination locations like Times Square, New York, we’re still closed at the moment. The hotels are nearly empty, there’s not much airli and the district is closed until further notice, so we are extremely concerned about that business on a long-term basis.

But certainly in destination locations like Times Square, New York, we’re still closed at the moment. airli and the district is closed until further notice, so we are extremely concerned about that business

Focusing on your mention of caution, how do you Focusing on your mention of caution, how do you exercise that on a day-to-day basis, and when it exercise that on a day-to-day basis, and when it comes to short-term and medium-term planning? comes to short-term and medium-term planning? I think all businesses now, and some operators better I think all businesses now, and some operators better than others, are looking at margins and fixed costs than others, are looking at margins and fixed costs such as labour, rent, trying to work with our landlords; such as labour, rent, trying to work with our landlords; trying to recognize it’s a two-way street. It’s about looking at all those overhead challenges It’s about looking at all those overhead challenges and how can we be smarter. Utilizing technology, and how can we be smarter. Utilizing technology, certainly in the Cafe division, things like Uber, Grubhub and delivery are some of the tools we’re trying to utilize. On a more positive note than any pandemic-related discussions, we spoke at the Global Gaming Awards Las Vegas 2020, where you won Land-based Operator of the Year and Property of the Year with the Guitar Hotel in Florida. How hopeful are you of a strong year for the Guitar Hotel in 2021? Certainly COVID-19 has hit Florida like all other states. But from a business perspective, Governor [Ron] DeSantis is still trying to keep an open mind to allow businesses to stay open without tremendous restrictions. The hotel is meeting or actually exceeding our expectations from a profitability standpoint, though tra ic counts are certainly down from where we had hoped, based on foot tra ic and tourism into Florida and South Florida.

When it comes to other Seminole and Hard Rock properties in 2021, what are your general hopes? We think there are some bright spots starting to develop but I think 2021 will be a year of caution. We do believe 2022 has some real upsides though, as you mentioned, assuming the vaccines have proper distribution, what percentage of the population is going to take the vaccine, and what happens with the perception from the media around COVID-19. A lot of those things need to fall into place. Unfortunately for others but somewhat good for us is a lot of other restaurants are somewhat good for us is a lot of other restaurants are closing permanently. In many cases, we hear up to 60% closing permanently. In many cases, we hear up to 60% of restaurants that were open pre-COVID will not be in of restaurants that were open pre-COVID will not be in existence by the start of 2022. We know we will close existence by the start of 2022. We know we will close some of our locations permanently but the majority some of our locations permanently but the majority of them will be open. Therefore, maybe we can of them will be open. Therefore, maybe we can reap the benefits of less competition in reap the benefits of less competition in certain marketplaces. certain marketplaces.

Do you have any new developments in the pipeline and, Do you have any new developments in the pipeline and, if not, is that a result of the current climate? if not, is that a result of the current climate? Interestingly enough, that’s the one division that is extremely Interestingly enough, that’s the one division that is extremely busy. There has been zero slowdown with deals in the hotel busy. There has been zero slowdown with deals in the hotel area and zero slowdown with our casino and destination area and zero slowdown with our casino and destination resorts. I will tell you that we’re not looking to resorts. I will tell you that we’re not looking to open any new Hard Rock Cafes domestically. open any new Hard Rock Cafes domestically. But on a global basis where we would normally But on a global basis where we would normally open 15 to 25 in a high year, those numbers open 15 to 25 in a high year, those numbers have probably come down to 10 to15. have probably come down to 10 to15.