Economic Crunch Finally Hits Las Vegas
Las Vegas is feeling the economic crisis crunch more then they let on and it became very apparent when MGM Mirage, Inc., the largest parent corporation on the Strip, let go of more than 400 members of the middle management staff in effort to save money and keep the businesses open until the economy strengthened. The decision will save $75 million annually, but now the employees – whose jobs ended immediately – are now facing their own economic crisis.
The terminations affected four of the largest casinos in Las Vegas: the Bellagio; the Mirage; the Mandalay Bay; and of course the MGM Grand. These four properties have seen declines in the casino floor and room rates and the weakness has been apparent since August of 2007. This is the by far the most drastic measure taken by any casino operation across the United States during this economic emergency and people can only wonder how many more will follow suit. Considering the flooding in Mississippi has already closed two riverboat casinos, casino workers are going to be wondering if the lay offs and closings are a prediction of worse things to come.
MGM officials recognized the beginning of the problem last year and knew that the economy was going to get worse before it got better. While the step could be seen as drastic, the truth is in the pudding. Sales and spending by budget conscience guests has been down all over the board – food, amenities, shows, and gambling. People are staying for shorter periods of time, they are staying at cheaper hotels, and they are going to fewer shows. Yes, they are still gambling, but the revenue coming in has seriously decreased compared to last year. The casino’s have attempted to offset some of this by pulling back on the comps they normally offer their guests and loyalty customers, but it was not saving enough.
Las Vegas casinos were hit the hardest but MGM properties in Mississippi and Michigan also suffered middle level cutbacks. The managers that were let go were spread across the board in all divisions. MGM is not planning on making any more cutbacks unless the economy tanks even more. It will be interesting to see how the MGM CityCenter complex in Las Vegas will do with the economy’s downward spiral. This $8.1 billion venture of MGM’s is set to open late 2009.
The question for MGM now becomes: will it?
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admin :: May.02.2008 :: Gambling Info :: No Comments »
