Between a Rock and a good place

At first glance, getting in and out of the Hard Rock Hotel might appear to be a daunting task.

Water and sewage work on Harmon Avenue makes turning into the property difficult.

A large construction wall along Paradise Road now stands where a parking lot used to be, forcing drivers to head to the north end of the property to park.

However, in the midst of a $760 million renovation and expansion, the 13-year-old casino was able to achieve its largest-ever wager on table-games, $32 million in May.

Revenues for Rehab, a weekend pool party, have increased 40 percent.

"Once you're in the facility you don't notice (the construction). You really don't notice it at all," Hard Rock President and Chief Operating Officer Randy Kwasniewski explains.

Construction of a new concert facility to house The Joint, which will expand the venue's capacity to 4,000 people, wiped out nearly 300 parking spaces at the front of the building, but a temporary 800-car employee parking garage was built to alleviate possible congestion.

Kwasniewski said the property always had more parking space than it needed, even on large concert nights, because many of the property's customers arrive by third-party transportation.

"We are told by the limo drivers and taxi drivers that we are the busiest porte-cochère in town," he said. "We're an importer of customers because we're not that large. Since we've started this construction we've never been under capacity for parking."

The 41-acre property is a joint venture between New York-based boutique hotel operator Morgans Hotel Group and private equity firm DLJ Merchant Banking Partners.

Kwasniewski, who took over the property's operations in February 2007, said the owners are continually surprised by the property's ability to operate despite all the construction work going on inside and outside the property.

"Even with the guys who come here from New York all the time, they are just astounded with all the work we're doing," Kwasniewski said.

In these hard economic times, the Hard Rock Hotel has pulled off two impressive feats: It secured financing for a large expansion and then prevented sharp revenue decreases during construction.

The property's expansion project is expected to be completed in September 2009, according to a June 4 filing with the Securities and Exchange Commission.

The project will add 875 guest rooms to its current 646 rooms. The expansion includes adding approximately 60,000 square feet of meeting and convention space, and nearly doubling the current 30,000 square feet of casino space.

The hotel's pool will be renovated and several food-and-beverage outlets will be added, along with a new spa and exercise facility and more retail space. The new Joint is slated to open in July or August of 2009. The current 2,500-capacity Joint will be used for the casino expansion.

Much of the construction work ends at about 12:30 p.m. every day, cutting down on traffic congestion, said Kwasniewski, who previously ran the property's operations from January 2004 to May 2005.

Workers begin their day at 4 a.m. on the new north hotel tower, which has reached the fourth floor.

A $4 million redesign of the hotel's north pool was recently completed so it wouldn't be disrupted by the hotel tower's construction.

The hotel-casino has gone so far as to frost windows at the property so customers walking from the north parking garage to the casino area won't see construction equipment and steel.

And Hard Rock officials have already started rolling out the property's improvements.

The casino recently opened a new casino party pit, complete with dancing poles called Helles Bells. A new Italian restaurant called AGO opened in February.

Wasted Space, a new rock club and bar developed by extreme-sports star Carey Hart, is scheduled to open in July.

Other improvements will come later this summer, including the property's first poker room, which is scheduled to open in August. The new convention space is set to open in May.

"We have construction going on, but there is always something new opening," Kwasniewski said. "Fortunately for us, any effort that we've made to mitigate any negative effects on the operations has worked out very well."

Gross revenues for the first quarter ended March 31 remained flat at $45.4 million compared with the same time last year. More impressively, casino revenues crept upward $50,000 in the quarter to $13.7 million while gaming revenues across the state decreased.

On March 1, the Hard Rock Hotel took over operations of its casino, which had been run by Golden Gaming, after the new owners obtained gaming licenses.

Kwasniewski said the property expanded the casino staff and introduced a player loyalty card.

The Rock Star Club, introduced six months ago, is the first loyalty card in the property's 13-year history and is connected to a recently installed $1.5 million player tracking system from International Game Technology.

The property is also beginning to market to locals. Hard Rock increased its promotional expenses for the first quarter 33.4 percent to $4.7 million and marketing costs increased 12.9 percent to $1.1 million from last year, federal filings show.

In 2007, the property spent $14.7 million on promotions and $5 million on marketing.

Kwasniewski said, despite the slowing economy, now is a good time to try to attract customers who have never been to the property.

"For us, it is actually a really good time," he said. "Yes, the economy is difficult, the economy is tough. But anytime you're in a competitive circumstance like this, and you're doing creative things you've never done before, you're reaching out to people you've never talked to, it is certainly going to improve your business."

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.