Morgans kept occupancy at the Hard Rock casino-resort above 90% for the quarter at the expense of room rates, which hurt revenue and earnings. Second quarter occupancy at the hard Rock was 92.3%, down 210 basis points from the same year-earlier period, while the average daily room rate fell 24% to $165.14 from $217.34 in the same 2008 period. The resort's second quarter earnings before interest, taxes, depreciation and amortization fell 64% to $1.42 million from $3.93 million in the same 2008 period.

Through the first half of the year, average occupancy was 90.8%, down 360 basis points from 94.2% in the first half of 2008. ADR was $150.41, down 25.1% from $200.94 in the first half of 2008. EBITDA is down 69% to $1.82 million from $5.96 million in the first half of 2008.

Morgans and DLJMB acquired the Hard Rock Hotel and adjacent land in early 2007 for $770 million. Morgans funded one-third of the equity or approximately $57.5 million, and the DLJMB funded the remainder of the equity, $115.0 million. The rest of the purchase price was funded with debt, and additional debt was taken out for the expansion.

As a result of additional cash contributions by DLJMB since that time, Morgans' interest was down to 19.1% as of June and is now down to 16.7%. On a conference call with analysts, Morgans said that when the expansion is complete the total debt on the Hard Rock will be approximately $1.3 billion and its percentage interest will have fallen to somewhere between 10% and 15%.

Hard Rock opened a new and expanded Joint Music Venue and added approximately 65,000 square feet of meeting and convention space in April. Last month, the new 490-room north tower opened. A casino expansion and the new 374-room south tower are projected to open in late 2009 or early 2010.