Wynn announces salary reductions for Encore, Wynn workers
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 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 results in preserving existing jobs and insurance benefits.
"Everybody makes a little less money but everybody keeps their jobs," Wynn said.
According to a written statement, the company plans to:
— Reduce pay for all salaried employees by 10 percent to 15 percent.
— Reduce workweek hours for full-time, hourly employees to 32 hours weekly.
— Suspend the employer match to 401(k) accounts.
— Eliminate 2009 bonus accruals.
Wynn estimated that the cuts would save the company $75 million to $100 million annually.
The plan has been in the works for five to six weeks.
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 pre-opening 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 impacting 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 more difficult 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 and Mirage.
Those properties must then poach customers from down market properties such as Excalibur, Imperial Palace, the Rio and others.
That leaves those resorts scrambling for whatever business is left.
It’s a phenomena 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 bspillman@reviewjournal.com or 702-477-3861.
