Luxury casino operator Steve Wynn on Tuesday announced plans to cut hours, salaries, bonuses and 401(k) contributions for thousands of his Las Vegas employees in an effort to stave off layoffs.
The decision by Wynn Resorts Ltd. affects employees at Wynn Las Vegas and Encore, a $2.25 billion resort that opened just six weeks ago.
During a conference call, Wynn said the company will reduce spending on everything from energy to floral arrangements if it means preserving existing jobs and insurance benefits.
"Everybody makes a little less money but everybody keeps their jobs," Wynn said.
According to a statement, the company plans to:
• Reduce pay 15 percent for salaried employees making $150,000 or more and 10 percent for those making less effective Feb. 16.
• Reduce workweek to 32 hours for full-time, hourly employees.
• Suspend employer match to 401(k) accounts.
• Eliminate 2009 bonus accruals.
Wynn estimated the cuts, which have been planned for five to six weeks, would save the company $75 million to $100 million annually. He said cuts would apply to 9,500 full-time employees, including top management.
It comes after Wynn spent "a ton" of money to ensure a smooth opening for Encore.
"We carried huge extra staff. We also prepared a rather extravagant and far-reaching preopening advertising campaign," Wynn said.
Although Wynn says he considers the Encore a success, the reduction in the number of people visiting Las Vegas is clearly affecting his company.
Rooms in the new resort have been selling for less than $200 per night, a far cry from the boom of 2006 an 2007 when rooms at Wynn Las Vegas could fetch several hundred dollars per night.
Also, consumers aren't booking rooms until the last minute, which makes it harder for Wynn's managers to make financial projections.
"People with money are showing up at Wynn and Encore, but they are being a little more disciplined with their expenditures," Wynn said. "When there is a loss of consumer confidence like this, people behave in ways that are new to us."
The bargains at Wynn and Encore aren't helping other properties on the Strip.
Guests upgrading to Wynn's properties leave vacancies in second-tier hotels such as MGM Grand, Mandalay Bay or The Mirage.
Those properties must then poach customers from down-market properties such as Excalibur, Imperial Palace, the Rio and others.
That leaves those hotel-casinos scrambling for whatever business is left. It's a phenomenon that has led to some of the most aggressive room-rate wars in memory.
"They want us to get the rates up because right now we are pricing the Strip," Wynn said of his competitors on the Strip. "It is either my staff that is safe or somebody else's. If that's the way it goes, it is going to be my staff that is safe."
The cuts announced Tuesday won't affect workers at Wynn's properties in Macau.
Contact reporter Benjamin Spillman at firstname.lastname@example.org or 702-477-3861.