As the pandemic halts travel and large gatherings, some local economies are struggling more than others. One such case is the Las Vegas Strip that typically sees crowded casinos, clubs, and performance venues. This activity is all powered by tourism, which has vanished over the last few months. As a result, the Strip is now facing massive layoffs and widespread closures.
Mass Lay-Offs from MGM
MGM Resorts announced this week it will lay off a “large majority” of its employees. Management told employees that if they are not recalled from furlough by August 31st, they should not expect to be called back.
The hospitality group, which provides both lodging and entertainment services, hoped that COVID-19 closures would be short-lived. But with cases in the U.S. still growing, it could be months or even years before Las Vegas returns to its full glamour.
Employees in the entertainment and sports departments of MGM will be most affected. In addition to losing their jobs, employees lose health benefits upon dismissal, though they can apply for emergency grants from the company until November 29th.
Following the announcement, MGM stock fell 6%. But in the days since, its stock has made back most of those losses. MGM shares are now down around 2% from the beginning of the week.
Tropicana For Sale
Tropicana, the iconic Las Vegas hotel and casino, is also taking drastic measures. The entire property is up for sale. Gaming and Leisure Properties, the management company that serves Tropicana, is open to either selling it and renting back the space, or permanently bidding it farewell. There’s no asking price at present, but five years ago its selling price was estimated around $360 million.
Chad Beynon, an investment analyst specializing in casinos, said that there’s no harm in putting feelers out there. “Anytime it feels like we’re at the bottom and it’s the end of the world,” he said, “that’s generally when buyers come out and at least have conversations with the holders of some of these assets.” He added that Tropicana “could at least explore potential buyers.”
Additionally, he seems to have an optimistic outlook on the hotel’s worth. He suggested that it has increased in value since it was last assessed, and could be worth closer to $700 million today.
Wynn Resorts May Soon Cut Staff
Meanwhile, Wynn Resorts tried to keep paying employees during Las Vegas’ extended lockdown. Over those months, the hotel group spend nearly $250 million paying furloughed workers. But the company is now conceding that the system is not sustainable in the long-run.
Michael Weaver, a spokesperson for the company, acknowledged that business volume in Las Vegas has shrunken. As a result, the company can only afford to pay staff in accordance to this “significantly reduced demand.” In other words, with fewer guests, Wynn needs fewer staff. Just how many Wynn employees will be permanently let go remains a mystery.
The latest news from the Strip spells disaster for the Las Vegas economy as a whole. Nearly 900 people have already been laid off at Tropicana and Circus Circus alone. Such mass firings are sure to have a rippling effect on the rest of the local economy. As more residents lose their jobs, retailers and property owners will likely feel the consequences. Since no one can say when tourism will resume as usual, there’s no telling how bad things can get for Vegas.