The announced sale of the Hard Rock Hotel & Casino to Morgans Hotel Group could spell the end to one of the most distinctive and popular resorts in Las Vegas.
A pop icon with its signature neon guitar and funky rock-and-roll clientele, the Hard Rock Hotel could soon be transformed into an ultra-deluxe, high-end boutique hotel along the lines of Morgans’ Mondrian, Hudson or Delano-brand of hotel.
"The Hard Rock is the original boutique hotel in Las Vegas," said Ed Scheetz, CEO of Morgans Hotel Group in a conference call last week. "And we’re the original boutique hotel operator."
Scheetz said he intends to apply many of the upscale amenities to the Hard Rock that have proved successful in Morgan properties in Miami, Los Angeles and New York.
"We believe we can further enhance it by applying MHG’s management infrastructure, marketing approach and reservations system," Scheetz said. "There’s tremendous room for rate increases, without making capital improvements."
That’s probably not good news for Hard Rock customers, who pay an average of $169 a night, far below the $230 a night that Strip hotels average.
Scheetz said that enhancing the Hard Rock’s amenities will ultimately attract a more affluent clientele, who will spend more money on other hotel attractions, such as the restaurants, nightclubs and gaming.
The Hard Rock’s casino, however, will be operated by a separate company, possibly Boyd Gaming, whose Echelon Place development on the Stardust site will include two Morgans hotels — a 1,000-room Mondrian and 600-room Delano.
"We have a short list of possible casino partners ”¦ we’ll be able to identify them shortly," Scheetz said.
By not becoming licensed by Nevada regulators, Scheetz said the sale could close within four to six months, but by the first quarter of 2007 at the latest.
Leaving the operation of the casino to a third party leaves open questions about race and sports operations, player rewards, comp programs and so forth.
But Hard Rock Hotel customers in the past were never perceived as rabid gamblers; slot play at the Hard Rock is rated near the bottom of other Strip corridor casinos, according to experts.
Besides squeezing more revenue out of the hotel, Morgans plans to develop projects on the vacant land that was part of the purchase. This includes an adjacent 23-acre parcel that Hard Rock owner Peter Morton had already earmarked for condos and other projects.
Morgans may bring in one of more joint venture partners to share in the investment in the existing assets, as well as to develop future projects.
"The Hard Rock is already an extraordinary landmark and we are pleased to be able to acquire a property that has so much expansion potential," Scheetz said. "This hotel, along with our established and renowned Delano and Mondrian brands will allow us to dominate the Las Vegas market at multiple price points by offering the style, innovation and service with which our brands are synonymous."