Naga in talks with Hard Rock: sources

The Phnom Penh Post
Wednesday, 22 July 2009
Nathan Green

CEO Steve Cheng refuses to confirm casino's link to international restaurant franchise

NAGAWORLD CEO Steve Cheng said he was "not able to comment" Tuesday on information received by the Post that the firm is in discussions to open a franchised Hard Rock Cafe in its Phnom Penh casino complex.

Sources inside NagaWorld said the hotel and casino operator has been talking to Hard Rock International - owner of Hard Rock Cafe - for several months about bringing the international restaurant chain to Cambodia.

Hard Rock's PR representative did not reply to an emailed request for comment by press time Tuesday.

The company's Web site states it has more than 120 Hard Rock Cafes in 40 countries. In Southeast Asia there are three cafes and a hotel in Thailand, a cafe in Vietnam, two in Singapore, one in the Philippines and one in Malaysia.

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Sources inside NagaWorld said the hotel and casino operator has been talking to Hard Rock.
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Under the company's area development agreements, franchisees pay an up-front fee for the exclusive right to develop and operate the cafe in a certain region. The fee depends on the size of the territory, the number of locations and the duration of the agreement.

Franchise owners must also pay Hard Rock International 5 percent of gross food and beverage receipts and 10 percent of all receipts from merchandise sales.

The company says that more than 40 percent of its annual revenue comes from merchandise sales.

On its Web site, Hard Rock International estimated the total investment required to start a Hard Rock Cafe was between US$3 million and $5 million.

The first Hard Rock Cafe was opened near London's Hyde Park by Americans Isaac Tigrett and Peter Morton in 1971.

The chain began expanding globally in 1982, and Hard Rock International was bought by the Seminole tribe of Florida from then-owner Rank Group in December 2006 for $965 million.

NagaWorld is owned by Hong Kong-listed investment holding company Nagacorp. It owns and operates the only licensed casino in Phnom Penh under a 70-year licence - Asia's longest - that expires in 2065. Under the terms of its agreement with the government, it has a 40-year monopoly on casino operations within 200 kilometres of Phnom Penh.

The licence provides no restrictions as to the size of its casino complex, the number of gaming tables and machines, the types of games or the operating hours.

It pays a fixed monthly gaming tax of $180,202 which is valid until 2018 and subject to an annual increase of 12.5 percent.

Nagacorp Ltd shares opened in Hong Kong on Tuesday at HK$1.05 (US$0.14). They hit a 52-week low of HK$0.51 on March 17 and a 52-week high of HK$2.12 on September 2 last year.