Reuters: Economy affecting entertainment biz

With prices across the board rising and fears of a consumer spending slowdown, entertainment, restaurant and casino businesses are hurting, according to a Reuters analysis published today.

The article included Hard Rock Park and other similar businesses. The article said:

Profit margins for these "bread and circus" industries are getting squeezed as food prices soar and consumers spend less on travel and entertainment. The health of sectors that rely on discretionary spending may offer insights into the behavior of consumers, a crucial factor in determining the severity of the U.S. and global economic slowdown.

HRP Myrtle Beach Holdings, for example, relied on debt to build Hard Rock Park, America's newest $400 million theme park, including a "Led Zeppelin" rock 'n' roll coaster. Hard Rock bonds, like those of Six Flags and Perkins, are among bonds now trading at the most distressed levels. A bond is considered distressed if it yields at least 10 percentage points more than Treasuries. When demand for a bond drops, its yield rises, indicating a higher perception of risk compared with investing in ultra-safe government bonds.

Hard Rock Park officials were unavailable for comment.

Comments

[Nick]

Not a good sign. But this is new. People are attracted to new things. And of course there will be debt, probably for a couple of years. I'm more alarmed about Six Flags though.

[Captain]

It will not last 10 years in good times. If it goes now they can save themselves and taxpayers money.

[Stephen]

Well didnt we know this from the start that the foriegn investor did this. Wait a while and i bet you who will be there with the money to pay it off???? hummmmm B&C???? YEA
There was a reason the Pav is no longer there my friends.

[Randal Wallace]

Doom and Gloom....Let's remember we are not at the heart of "Kid's at the Beach " Season yet. I admit that it is not good news BUT the park is not even out of the crib walking yet. I think the summer will be good and even if the economy continues to sag and people cut back, my guess, those that are here will spend money on the New stuff they find here..IE Hard Rock Park , Market Commons. So I think they will have a good start.

However, this is a long term issue. So it will be interesting to see if the park really catches on with people. I hope so because I am pulling for them.

[DanielC]

Well I'm wishing HRP a BOOMING success myself.

Any business has a few burps the 1st couple of years. I suspect (pray) things will turn around with the market, gas, housing, food, energy, international tourism, and such for this to be a Grand Opening for the park!!

Rock on Dude(s)!

DanielC

[beachguy(original)]

Hard Rock Park will do just fine and should have a "Gangbuster" Season.

After all....there are many tourists that will "cut back" and come to Myrtle Beach for the savings..those that have never been here, or those that haven't been here in a long time.

[Jim]

Everything right now is speculation. I do know one thing for sure. And that is the fact that new businesses generally take between 3-5 years to get to the break-even point, or out of infancy as they say. Those are the major concerns of any new business. Especially, ones that incur large debt from their beginning stages due to construction, land purchases, etc.

Let's give it a year and see exactly if Reuters is right in their prediction.

[Mary Lane]

Why was the original article entitled, "Reuters: Hard Rock Park Financial Future Shaky" taken off the online news? Sounds a little strange to me.

[DanielC]

Mary,

Um it appears to be a total re-write with our comments still here. *wink*

DSC

[Charlie]

Interesting change in headlines wasn't it? The paper probably succumbed to a phone call from the HRP to change the story. The first headline was appropriate based on story content. The change in the headline implies some arm twisting.

[Calib]

Sounds eerily familiar to the fate Fantasy Harbour suffered....how many shows ran through their before it became a ghost town? Remember it is still sitting behind the dump facade of the former Waccamaw Malls.

[Calib]

Yes, isn't it funny how the articles headline suddenly changed titles?

[Doug]

You are all reading way to much into this. This is normal for the news paper, they post a quick article on the blog and then as the day progresses the editorial team will review the copy before deciding what gets printed in the actual newspaper. It is normal to then see editors re-write headlines and articles, especially if the initial report was incorrect. In this case the headline appears to have been grossly overstating what the reuters report said. It did not say Hard Rock was on shaky ground, it said the entire restaurant/leisure industry may have challenges and referenced the fact that bonds issued in this industry are trading below normal. This is like shares in a microsoft trading down (as they do every day) when there is bad news but it doesn't mean the company has a problem.

The real question is why a few people here seem to actually want it to fail.

[Doug]

Sorry that was meant to say "This is like shares in a microsoft trading down (as they do every day) when there is bad news ABOUT THE ECONOMY/OIL/WAR but it doesn't mean the company has a problem."

[Patty]

It's interesting that the locals are the ones who are spreading 'bad' news.
Everyone who has been interviewed from out of the area is happy with park.
We all know it takes a year or more for a new company to get going.
I'm an invester in Six Flags and have lost lots of money there. but it seems to be coming back too.
Hard Rock Park is quite nice...been there, done that!
Just needs time for the visitors to know it's here and to come.
Should be good for someone who has been to Disney one too many times. Something new is always welcome.

[Ken]

Yes Hard Rock Park is a nice park and like all other parks that started out small will grow in time- they recently revised thier operating schedule to do some work on the park such as fine tuning and maintanaince.
Sure it may take years to get some of the Big ticket rides/attractions that other parks have but they also want to provide a good balance for all People,10 years ago I never thought Myrtle Beach would ever see anything like HRP,Well anything thats larger then the Pavilion & Family Kingdom.
Let's support it NOT talk it down.