Hard Rock International chairman warns economic challenges 'in front of us are real'

Jim Allen gives sneak peek into Hard Rock Hotel New York ahead of its grand opening

Jim Allen, chairman of Hard Rock International, warned on Thursday, the day after the new inflation data was released, that the economic challenges "in front of us are real." 

Speaking on "Mornings with Maria" on Thursday ahead of the grand opening of the Hard Rock Hotel New York located in midtown Manhattan, Allen noted that inflation is a cause for "concern" as travel-related costs soar.

On Wednesday it was revealed that inflation cooled on an annual basis for the first time in months in April, but rose more than expected as supply chain constraints, the Russian war in Ukraine and strong consumer demand continued to keep consumer prices running near a 40-year-high. 

The Labor Department said Wednesday that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries and rents, rose 8.3% in April from a year ago, below the 8.5% year-over-year surge recorded in March. Prices jumped 0.3% in the one-month period from March.

Those figures were both higher than the 8.1% headline figure and 0.2% monthly gain forecast by Refinitiv economists.

INFLATION SOARS 8.3% IN APRIL, HOVERING NEAR 40-YEAR HIGH

Airline fares surged as more people began to travel: Prices soared 18.6% in the one-month period and are up 33.3% over the past year. That is the steepest one-month increase since the inception of the report in 1963.

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Host Maria Bartiromo asked Allen, who is also the CEO of Seminole Gaming, if he has been able to pass on higher prices to the consumer and if he believes rising travel expenses will impact people’s plans. 

"100% we have a concern," he responded. "I think that if we look at the sectors of our business, certainly the restaurant, the hotel divisions, the retail divisions, we have the ability to raise prices."

"But no doubt, I think this is going to have an additional effect on the last quarter of this year going into the first and second quarters of next year," Allen continued. 

He went on to note that as it pertains to his casino business "there’s no ability to raise prices."

Vacant terrace seating outside a Hard Rock Cafe International Inc. bar and restaurant in Prague, Czech Republic, on Thursday, Oct. 22, 2020.  (Milan Jaros/Bloomberg via Getty Images)

"So certainly in that category we just have to, unfortunately, absorb the incremental costs of doing business," he added. 

"There’s no doubt that that is going to have an economic effect on our business globally, and certainly we’re prepared for it," Allen continued, noting that "Hard Rock’s been around for 50 years."

"We’re hopeful that we can navigate through these challenging times, but I certainly think the economic challenges that are in front of us are real," he went on to say. 

On Thursday, Allen revealed which hotels have been performing well despite the economic headwinds, noting that Hard Rock properties in Florida have been "doing absolutely tremendous." He also noted that those in other countries around the world, especially in Europe, are "certainly still challenged." 

"The war in Ukraine with Russia’s invasion has undoubtedly had an effect not just there, but throughout Europe as we see people not traveling anywhere near where they used to, frankly, based upon not just the challenges of COVID, but just the uncertainty as far as what’s going on in the region," he told Bartiromo. 

The new Hard Rock hotel is located on the edge of Times Square, near iconic landmarks including Radio City Music Hall, Rockefeller Center and the Theater District. 

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"This brand-new building in the middle of New York City is just tremendous," Allen told Bartiromo, ahead of the hotel’s grand opening on Thursday night. 

"We look at this facility as an entertainment destination," he added, noting that "we’ve really designed this hotel to be here for New Yorkers" as well as for meetings and groups.

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FOX Business’ Megan Henney contributed to this report.