The Las Vegas Economic Downturn Has Started
MGM Mirage layoffs blamed on penny-pinching vacationers:
MGM Mirage Inc., the largest casino operator on the Las Vegas Strip, told more than 400 middle management employees they would be terminated immediately in a cost-saving move, the company said.
The decision will save $75 million annually and came after the company saw weakness since August at its properties, which include Bellagio, MGM Grand, Mirage and Mandalay Bay, spokesman Alan Feldman told The Associated Press on Monday.
Budget-tight guests have shown a tendency to spend less in all major segments of the business, Feldman said.
"Instead of four days, people stay for three. Instead of a five-star experience, they are going for four stars. Instead of two shows, they're going to one," he said. "There certainly is the possibility that there are people who are also making a decision to gamble less."
The worsening housing crisis, dried up credit markets, high fuel prices, loss of consumer wealth effect and uncertain employment outlook will only lead to reduced visitor volume levels and exacerbate the already reduced discretionary spending levels of the tourists who do come.
I have written about this “Las Vegas Domino Effect” several times in the past. A couple of my posts below:
- Las Vegas House of Cards Bound fall
- Las Vegas Preforeclosures Hit Record
Nevada casino wins down nearly 4 percent in February (Note: Las Vegas makes up the majority of the casino/gaming market in Nevada)
There was no leap in the win for Nevada casinos in February despite an extra Leap Year day in the month and other seemingly positive factors. The clubs won $1.01 billion, down nearly 4 percent compared with the same month a year earlier.
The slump occurred despite a 29th day for the month, the reopening of a major Las Vegas resort that had been closed by a fire, and tourist draws including Super bowl and Chinese New Year activities and a three-day President's Day holiday.
"We were disappointed but we can't say it was unexpected," Gaming Control Board analyst Frank Streshley said in releasing the February win report on Wednesday. "It's definitely a reflection of the soft economy and people tightening up their spending habits."
Wednesday's Control Board report is the latest in a series of reports with grim economic news. In late March, other documents showed a continuing slump in sales and higher-than-average unemployment in Nevada.
The Nevada Real Estate market also made headlines today (again--for the 15th straight time): Foreclosures jump 57% in March -- Nevada once again leads the nation in defaults (Note: Las Vegas foreclosures make up the vast majority for Nevada)
NEW YORK (CNNMoney.com) -- Foreclosure filings jumped 57% in March compared with the same month last year and rose 5% versus February, as the nation's housing market continues to deteriorate.
On a year over year basis, the number of homes repossessed by banks are up 129%.
“We just hope we’re not going to be doing this again in three months,” said Ways and Means Chairman Morse Arberry.
As previously stated by this author: The Las Vegas economy lacks any real/substantial diversification from gaming/tourism and we are completely dependent on the discretionary spending of vacationers.