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Infrastructure in place, Hard Rock eyes growth
March 18 2013

After spending the first two years of his tenure focused primarily on the hotel brand’s internal structure, Michael Shindler is turning his attention outward with the aim of five deals per year.

Highlights
  • Executive VP Michael Shindler spent his first two years at Hard Rock revamping the hotel division’s struggling internal platforms.
  • The group is eyeing five hotels deals per year.
  • Executives are spending a lot of energy building relationships outside the U.S.

BERLIN—The first time Michael Shindler took the stage at Hard Rock Hotels & Casino’s brand conference, the theme of his speech was “rebar”—as in the reinforcing bars that strengthen commercial structures. In the second year, he talked about the completion of infrastructure.

“Next year,” he said, “I better have something to show for it.”

Michael Shindler

Having spent the past three years strengthening the foundation of Hard Rock as the chain’s executive VP, Shindler is finally poised for the brand’s coming out party. This year marks one of aggressive expansion for the group, with some 50 deals percolating in the pipeline, plus another 10 that are in more advanced stages of discussion, Shindler said.

The majority of those are outside of the U.S., which would significantly bolster the group’s footprint outside of its home base. Currently, Hard Rock has nine hotels in operation in the U.S. and another nine outside of the states.

“It seems aggressive because we were so quiet for so long,” Shindler said during a break last week at the International Hotel Investment Forum when asked about the recent flurry of signings. “This is sort of the culmination of a few things that have been going on since I arrived.”

Call it the fruit of a year’s worth of labor, Shindler said. When he joined the company in February 2010, the hotel division’s organizational structure was in dismal shape. It lacked not only the internal systems to operate effectively and efficiently but also the outward standards and services to share with would-be franchisees.

“We’ve spent a lot of time on the inside in the infrastructure of the company in operating standards, brand standards, reservation systems, group sales—things that aren’t as visible in terms of growth that we spent the first two-plus years of my tenure trying to address,” he said.

“This is the year I hope to get some traction on the deal side.”

Shindler is already making good on that aim. Recent announcements include:

• the Hard Rock Hotel Palm Springs in California, slated to open in fall 2013;
• the imminent groundbreaking of the group’s proposed 378-room Hard Rock Hotel Abu Dhabi, United Arab Emirates; and
• the opening of the 600-room Hard Rock Hotel Cancun in Mexico.

In addition, the group is wrapping up two deals in China with golf-development firm Mission Hills Group, Shindler said.

Looking abroad
Shindler has deployed a team of development directors around the globe to assist with the growth. He oversees the Asia/Pacific region with the help of a full-time representative in China and a part-time representative in India. Josh Littman heads up development in Europe, Middle East and Africa. And in the Americas, development is overseen by Nelson Parker.

Josh Littman

The hires underscore the hotel division’s commitment to following the Hard Rock brand name around the world.

“Regionally, the reason that we have stated to spread out our development team is that we’re everywhere,” Shindler said. Hotel development likely will never match the group’s footprint of 141 café locations in 58 countries, but that’s by design. Hard Rock Hotels & Casinos will focus on prime, gateway markets such as New York, London, Hong Kong, Shanghai, Beijing, New Delhi and Mumbai, India, he said.

The U.S.-born brand, which features a distinctive rock ‘n’ roll vibe highlighted by signature memorabilia from some of the genre’s iconic legends, is striking a chord overseas. 

“We have started to make inroads in the past year and half,” Shindler said, adding the hotel division now boasts an accessible kit box—which includes turnkey reservations, call centers, website development platforms and a distribution platform—that matches the Hard Rock name.

But challenges remain. While many developers know the brand, they are not as familiar with Hard Rock’s hotel ambitions.

“The additional challenge is also because the brand awareness is much stronger in the U.S. … coming in and convincing them … letting them know that Hard Rock is here, we’re looking at opportunities,” Littman said.

“We see the same thing around the world. There’s an appeal for the freshness and differentiation for the brand, but at the same time, there’s the caution and concern that we don’t have the track record of delivering the sales,” Shindler said.

Still, the discussions have been fruitful, the executives said.

“The feedback has been amazing,” Littman said, although Hard Rock is not quite ready to announce any specific hotel projects in Europe at present.

The group has 30 solid leased properties in the Europe, Middle East and Africa region—eight to 10 of which are in “fairly advance stages,” he said.

“It’s picking up,” Littman said.

Shindler is targeting five deals a year, a goal which the team fell short of during 2012. “But I feel that this year could be a double year if all goes well. We’ve got that transaction going. You can feel it. Things are being transacted,” he said.

Executives are greasing the skids by adopting a more flexible, opportunistic approach to growth. “We’ve got flexibility. We are looking at a couple deals in Europe that would be lease deals,” Shindler said. “We’re looking at some new builds where we would have sliver equity in and manage.

“We’re pushing.”

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