New operational tune awaits next Hard Rock exec

The Hard Rock Hotel's new top executive will step into a markedly different operating atmosphere than the one that existed under the prior chief operating officer, according to the executive who has been overseeing the property since early March.

Morgans Hotel Group Chief Executive Officer Fred Kleisner told gaming regulators Wednesday that he has found a number of policies and procedures that needed greater emphasis, has hired an outside firm as an extra set of eyes in potential trouble areas at the property, as well as changed the line of executive reporting.

Kleisner said the changes are a step up in focus that will free the new top executive to concentrate on operations.

"I don't think I need to tell you that this is a facility that requires, demands, adult supervision," Kleisner told regulators. "We'll have that in place."

Kleisner, whose New York-based company owns 14.2 percent of the property and operates it day-to-day, said he has been at the hotel-casino every day except for six since Hard Rock's Chief Operating Officer Randy Kwasniewski died March 9 from a self-inflicted gunshot wound.

The property's new chief operating officer could be named within four weeks, Kleisner said.

He told the regulators that the search for a replacement has been cut from nearly two dozen candidates within and outside the company.

Under Kleisner's eight-week stay, he refocused emphasis on policies and procedures that protect the customer and the property, and keep the Hard Rock Hotel from running afoul of regulators.

Kleisner said every senior executive has to sign the policies and procedures -- which range from alcohol consumption rules, conflict of interest or conduct on the property -- and a code of conduct.

Kleisner also hired a third-party company to watch potential problem areas including conduct at the property's doors, entrances to the clubs and beach pool and casino, as well as hosted gaming and clubbing.

"(This is) to see that the interests of the company are protected, the interests of the customer are protected, and equally balanced so everyone mutually has a good time and everything goes in the right direction" Kleisner said.

Spotters and undercover shoppers had been used in the past, Kleisner said, but the outside company is "far more precise and direct in areas that should be of concern as we move from a 640-unit resort to a 1,505-room" resort.

The property completed a $770 million expansion in December that also added more club space, a larger concert venue and larger pool area.

Kleisner also changed management reporting chains to free up the new executive. All the property's executives used to report directly to the chief operating officer, who would then report to Kleisner. While the new executive will continue to report to Kleisner, other executives will report to their counterpart at Morgans Hotel Group.

"We are carefully making sure we're managing our control from a parent company standpoint," he said.

Kleisner said after the hearing the tightening of controls are not a reflection on Kwasniewski, who ran the property since Morgans took over in early 2007, or anything that happened during his tenure.

"Filling Randy's shoes is a real challenge," Kleisner said. "Randy had charisma where he could walk kings and common man and treat them all the same. And yet, he could make the tough decisions to run things under strict controls."

Kleisner said Kwasniewski worked for him for 15 years and was one of a half-dozen people Kleisner's known in life that he could hand his wallet to and turn his back.

Kleisner was before the state Gaming Control Board for licensing approval as an officer and director tied to the Hard Rock Hotel's debt load.

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