Following its European debut with Hard Rock Hotel Ibiza last summer, Hard Rock International is ramping up its global hotel expansion. Its first hotel in India, Hard Rock Hotel Goa, is scheduled to open in the fall, and projects in Tenerife (one of Spain’s Canary Islands) and Los Cabos, Mexico, are set to open in 2016. Marco Roca, chief development officer of Hard Rock Hotels, recently spoke to Lodging about target markets for growth and what makes the company tick—aside from the rhythm of the beat.
How many projects does Hard Rock have lined up? We have about 15 hotels that are in various stages of development. We’ll be opening Dubai either late this year or early first quarter next year, depending on how the construction schedule goes. We are very active.
Has unit growth picked up recently? Yes, we’ve had a significant spike, and we’ve invested a good bit in getting the right people on the bus to grow our brand. In the past, we’ve done a very good job of setting the foundation, and getting us ready to do what we’re now in, which is our growth phase. We’ve worked very, very hard for a number of years, and some very significant time was devoted to getting our skeleton right and getting the foundations in place. We did a terrific job of that. Now, thanks to that foundation being laid, we can now launch onto a very aggressive growth pattern. Last year we got eight new deals announced. This year, we may see double digits.
Wow, that’s picking up. No question about it. We’ve been growing our team as well. We started with just me, and now I have a team of five development professionals from the business, and tremendous significant experience. We’ll be hosting some numbers that are impressive because it’s required. The panorama with 22 open hotels, it’s a huge world out there with magnificent opportunity and tremendous pent up demand for a product that is what we offer.
What are your target markets for expansion? You’ll be reading throughout this year about growth in Brazil, India, China, Caribbean, and major U.S. cities, so I wouldn’t be surprised to announce New York, Los Angeles, and Atlanta at some point in the next 12 to 18 months.
Is there a trick to getting the right market for this hotel brand? There really is. If I was Marriott, I may only target the New Yorks and L.A.s if I was growing that Marriott brand. With us, we do target those key cities, and they’re very important for us to be there, but we also target the music cities—the Austins, the Nashvilles, and the New Orleans of the world that for other people would be secondary, to us become very primary.
What model does Hard Rock operate on, in terms of management versus franchising? Our casinos are managed, not necessarily through Hard Rock but rather our ownership group, which is the Seminole tribe. Through our ownership, we do manage other properties. We have a number of managed deals already executed that are in various stages of development. For instance, Dubai and a couple of deals in China, so there are a number of deals on the books, which is why we’ve been significantly growing our management side of the business. I’d say there is a 60/40 split between management/franchise.
When you execute new deals, does Hard Rock ever have an ownership stake? We’re not a hard asset company, we’re more of an intellectual property company, so our model is management contracts and franchises for the most part. We have looked at some acquisitions, sliver equity deals, and leases, so all of those are within our bag of tricks. We’ll look at all the forms of development, but our preference is always going to be managed and franchised.
Given that the company works on a global scale, how do you ensure each property is unique? We are iconic, we want to respect the local architecture at all times, so doing what is right for the marketplace is part of who we are. We’re authentic and irreverent, if you will. This all spells out that as you go to locations, you respect the culture, the music, and the architecture, and yet you provide this great experience, which is all threaded together with music. That makes us just the right fit for many locations that wouldn’t be perfect for a brand that is very brand-centric, and it’s the same experience, whether it’s the U.S. or elsewhere. Our success is that we are very in tune with the local culture.
How do you maintain a consistent product? It’s impossible, truly, for anyone to manage a Hard Rock as well as we do. It’s our brand; we’ve created it over 40 years. We have approved a small group of folks that are allowed to manage their own, and these are very seasoned operators who will go through very intense training with us so they can create the right vibe, because that’s what makes us different—that’s our pixie dust.
There are things that we won’t give in on. We won’t be a limited-service hotel, we’re a full-service hotel, so there will be a food and beverage element in any Hard Rock. There’ll be a restaurant, there’ll be bars, and there’ll be entertainment throughout the property and live music. These are elements that are always going to be present at any Hard Rock.
With such large-scale projects, you must be dealing with a lot of elements to roll out that whole experience? Our average system line of size is 661 rooms, so we tend to be larger scale properties, but we also fit into the locations. So in Northern Goa in India, we’re doing 130 rooms, because that boutique-ish 130-room element is what is required of that particular location. If you go on the beach in Goa, you have much larger scale hotels. We’ll probably do one of those over the next few years. The first opportunity for us was to enter Goa with a smaller size hotel, and that made a lot of sense for us. Again, it’s so market-driven, it’s difficult to say who’s the client for Hard Rock. The client for Hard Rock is 8 to 80. It’s for all people: it’s for families, it’s for people who want to have fun, and those of us who love music and want that experience.
In what cases would you go after a boutique type project like Goa rather than larger resorts? Some of it, in all honesty, just like every brand, will be opportunistic. You’ll be sitting in my office any given day and the phone will ring and somebody will say, “Hey, I’m really interested in doing a Hard Rock. You want to come kick the tires and see if this works for you?” So not every single deal is strategic. There are times we get the call that perhaps Goa would not have been our first location to go to, but it was the location that came up, and it made sense. When we looked at the market, the music in Goa is terrific, and it really worked well for us. We may have looked at Mumbai or Delhi as a more important market to be at first if this was 100 percent strategic. So yes, we are very strategic in where we are putting our forces toward and the areas that we are going after directly, but in the meantime if a great deal comes along that makes sense for the brand, we certainly take a look at that. So that’s how perhaps the Goas of the world will happen.
Dubai was a very direct deal. We wanted to be in Dubai, we wanted to be in a very tall building, so we got 101 stories in Dubai. It’s just the right fit. Goa where we are 136 rooms was perfect for northern Goa and the music inflections there and all the culture of music in Goa is just ideal for us, so it was a very good fit.
How does the all-inclusive model work for Hard Rock and how many have you done? There are four open ones. We have two more that have been executed and they’re in various stages of development—one in Los Cabos in Mexico and the other in Cancun in Riviera Maya. Those two properties will open in the course of the next couple of years. It’s a terrific offering. We happened to get in business with a group that were the pioneers of the all-inclusive concept, so they do it better than most. The concept works magnificently. People love it—it’s like a cruise on land. It’s kind of nice when you take your family and you know what your all-in cost is already.
And that partner manages the all-inclusive properties? Yes. Those are franchises, and we’ve been smart enough to know what we know and do well, and know who to find that could actually do it better than us. Managing an all-inclusive has its own very specific set of challenges, so we partnered up with the people that pioneered that offering and do a better job than we could, frankly.
In general, what makes a partner a good fit for Hard Rock? When we all get together in meetings, we want the group to be cohesive, we want people that have like minds, and so the partner is a very important key element. There’s more than the cost of admittance, there’s a certain type of person we want to partner up with. That’s somebody who respects the culture and value of music and wants to offer his property and do the right thing for the brand.
We want somebody that’s more than just money and development expertise. They have to be the right fit and have the right personality. So, we want people who love music and fun and seeing their guests enjoy themselves and have a wonderful time. At the end of the day, yes we’re a business, and of course we’re about bottom line and we perform at the top of our game, and versus our concept, we are a very strong force to reckon, but we also like to have fun. It’s important that you find a partner who also knows how to enjoy himself.
