The opening of the Hard Rock Hotel & Casino Atlantic City, N.J., in June marked a homecoming of sorts for James Allen, chairman of Hard Rock International. Not only did Allen grow up near the iconic New Jersey beachfront city, but he played a major role in opening the property that used to occupy the space: the former Trump Taj Mahal resort and casino.
Allen was introduced to hospitality through a teenage job, helping out a small restaurant on the outskirts of Atlantic City. “The owner of the restaurant was very, very successful,” he recalled. As a young man, Allen was attracted to the quality of the owner’s life and saw the industry as a ladder up. “To me, that was a way to potentially obtain things that, unfortunately, my parents couldn't afford.”
Indeed, witness the early death of his father, when Allen’s family had no money to pay for a coffin. “No house, no insurance and a pile of bills this high,” he said. He took on two or three jobs at a time to keep the family afloat, eventually founding his own catering business and saving up enough to buy some real estate. “I just kept working,” he said. At the same time, he was studying at various colleges, learning as much as he could about the industry, from hotel management to gaming and casino management, antitrust and Uniform Commercial Code and even creative writing to make sure his memos were effective. “Every course I took—I even went to dealer school—was always related to the industry or my job,” he said.
Moving On Up
While he never wound up getting a degree, his education and determination pushed him up the ladder. By 1985, he was working with Hilton on a project in Atlantic City—the most expensive casino the city had ever seen, he recalled. Before the Atlantic City Hilton Hotel could open, however, Donald Trump made a foray into the city’s tourism sector by acquiring the under-development property for $325 million. Because Trump had no experience in the casino industry at the time, Allen and several other team members remained onboard to help with the transition and opened the property as Trump's Castle Hotel Casino. In spite of an offer from Hilton, Allen opted to stay on as part of the team for the better part of the next decade.
Working with the Trump Organization on its Atlantic City resorts and casinos, Allen was involved with developing the Taj Mahal and watched the project’s cost balloon to nearly $1 billion as it prepared to open in early 1990. But the plans were dealt a serious blow on Oct. 10, 1989, when a helicopter carrying Mark Etess, the Taj Mahal's new president; Jonathan Benanav, EVP of Trump Plaza Hotel and Casino; and Stephen F. Hyde, chief executive of Trump's Atlantic City casinos, crashed, killing everyone onboard. Of the executives, only Hyde had reached his 40th birthday. “The casino hotel was opening in April of 1990, so there was no leadership,” Allen recalled. The loss of the three men created a significant challenge for the remaining team, to the point that the gaming commission came in and temporarily closed the facility. “There were some serious issues,” Allen said. “It was an absolute disaster.”
To keep things as on-track as possible, a new team quickly was assembled with leaders from Trump's other Atlantic City properties, including Allen. “We basically took over the project, and frankly, we grew it to become one of the most successful casinos in the country.” Allen credits the whole casino team for the property’s success. “I know it's a cliche to say it's a team effort, but it really is,” he said. “You're only as good as the individuals that create the vision in each of their respective areas. We certainly know that the company got itself into significant financial trouble because of too much debt—not because there wasn't a commitment to quality customer service, and not that we didn't have great employees, because we did. But unfortunately, the debt eventually strangled the company and obviously, it went into bankruptcy.”
Allen left the organization in 1993 and went to work with real estate developer Chris Hemmeter, a man he describes as “legendary” in the hospitality industry. Allen ran Hemmeter’s Colorado operations and tried to drive development in burgeoning markets. “[Hemmeter] had the rights for gaming in New Orleans, which everybody at the time thought was the most valuable market,” Allen said. “Unfortunately, it wasn't. So the company went and got itself into a little trouble.” After just two years with Hemmeter, Allen left to work with Sol Kerzner, helping to open the Mohegan Sun casino in Connecticut and Atlantis Paradise Island in the Bahamas.
From Licensee to Owner
By 2001, Allen was SVP of worldwide operations for Kerzner’s Sun International, and learned through friends that a developer affiliated with the Seminole Tribe of Florida was looking to build some Hard Rock properties. “None of them had experience in design and development and creating large casino hotels and resorts, and obviously, that's something I've done for a very long period of time,” he said. In spite of initial misgivings, Allen found himself intrigued by the opportunity, and signed on as a licensee to develop the Seminole Hard Rock Hotel and Casino Hollywood and Seminole Hard Rock Hotel and Casino Tampa.
Allen became CEO of Seminole Gaming in 2001 and as the leader of the Seminole Tribe of Florida's gaming operations, he saw three options for improving his deal with Hard Rock: “Renegotiate the contract, challenge the contract or buy the company.” He went with the third option, and in December 2006 Seminole Gaming acquired Hard Rock International for $965 million, the first acquisition of a major international company by a North American First Nations tribe.
Looking back, Allen said that he was “100 percent confident” in the deal. “I knew how we were growing our licensed business. We were already 30 percent of [Hard Rock’s] profit, so I knew where I was taking our business. I was not going to continue to pay them for very politely doing nothing. They didn't know the hotel business, they had no knowledge of the casino business. The cafés were struggling. So I felt that we could buy the company, turn it around and it take it to another level.”
At the time of the deal, said Allen, Hard Rock had a presence in 37 countries. “We're now in 75.” And while he estimates there were maybe 80 Hard Rock locations open when the contract was signed, the company now has more than 200 worldwide. “We have 25 hotels now and we're adding another 32 between now and 2021. We're certainly not Marriott, but for our group, it's significant growth. We have 37,000 people that work for us around the world. There's certainly a reward in making sure people's livelihoods are protected.”
In June, Allen returned to Atlantic City to see the former Taj Mahal, which had shuttered in 2016 after several difficult years, reopen as the Hard Rock Hotel & Casino Atlantic City—a sign of the city’s rebound after numerous high-profile casino closings. The renovation cost $500 million—half of the original cost in the 1980s, even adjusted for inflation, since the structure was already in place—and created jobs for 2,000 construction workers and nearly 4,000 permanent positions within the property. Those numbers are important to Allen. “We don't have any debt on this,” he emphasized. “We financed it ourselves, so we don't have the fear of these people losing their jobs next winter if it takes a while for the business to ramp up.” Over the years, Allen had seen the city’s unemployment reach, and then surpass, 20 percent. Investment in Atlantic City's future is the solution to this problem. “We're committed to the market,” he said. “If we can be part of that redevelopment and help people's lives get more stable, that's obviously a good thing.”
There are, of course, pros and cons in developing casino resorts as opposed to smaller-scale hotels, Allen acknowledges. “Obviously, the capital cost is certainly significantly higher, but if you get it right, the return on investment and the profitability [are] also significantly higher. If you look at the income we generate off one casino, it can be worth literally 500 hotels.”
After four decades in hospitality, with all the ups and downs that come over the years, Allen sees some key personality factors as key for long-term success. “Some people talk about it, some people have excuses and some people get it done,” he said. “I prefer the latter category. I fundamentally believe [you have to] leave your ego at the door. I fundamentally believe that an individual has to have honesty and integrity before they have anything else. I don't care how successful they are. If they do not have honesty and integrity, I don't want to work with them. I've had to do that in the past. I just don't do it anymore because I've learned that people that don't have those basic qualities of honesty and integrity and treating others with respect will not be good long-term leaders. And to me, you can't grow a company without a long-term vision.”