Specific to Hard Rock, which is one of the largest tribal gaming entities in the US, Allen points out building materials prices “have just exploded.” That’s relevant to the operator’s Las Vegas Strip ambitions.
Last December, Florida-based Hard Rock said it’s paying US$1.075 billion for the operating rights to the Mirage. But the operator’s spend isn’t ending there. It’s planning to gut the venue’s famous volcano and redesign the property in the shape of the ubiquitous Hard Rock guitar. Amid high inflation, supply chain issues, and labor shortages, Mirage enhancements could cost more than expected, though Allen didn’t say as much in the interview.
Gas problems for regional operators
Regional casinos are among the contributors to the industry’s rebound from the coronavirus pandemic. But that strength could be tested, as gas prices remain high across the country, with no signs of near-term relief.
“We look at gasoline anywhere from US$5 to US$6 a gallon. There’s no doubt that in most regional gaming markets that customer is a day-tripper, utilizing gasoline to get to the facility. And when that’s up 30% to 40%, that’s going to be problematic,” Allen told CNCB.
The Hard Rock chief executive’s comments on gas prices affecting regional casinos carry weight, because the company’s portfolio of US casinos is largely regional properties. That includes venues in Illinois, Indiana, Iowa, Mississippi, and Ohio.
Additionally, tribal operators in Oklahoma, of which Hard Rock is one, could be affected by consumers dialing back on driving simply in the name of visiting a casino. Oklahoma casinos are heavily dependent on visitors from neighboring Texas, and the same applies to commercial regional casinos in Louisiana.
Likewise, casinos in the Reno/Lake Tahoe market could be crimped by California gas prices, the highest in the lower 48 states.
Allen said Las Vegas is proving resilient against the backdrop of higher inflation, and that Hard Rock’s Florida casinos are sturdy, “For now.”
Source: Casino.org
