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Posted At : February 27, 2009 01:53 PM | Posted By : D McKee
Related Categories:
Macau,Economy,The Strip,Steve Wynn,Labor
When Steve Wynn laid out a draconian set of wage, benefit and schedule cutbacks at Wynn Las Vegas and Encore, his rationale could only be conjectured ... until now. What was clear was that Wynn was staring into some manner of abyss, not merely flipping out because of the now-infamous Wells Fargo cancellation.
An occupancy rate a hair under 80% is a good way to motivate stringency measures, as is a 20% drop in revenue per room. And if a -43% tailspin in casino revenue doesn't make you want to man the lifeboats, nothing will. No wonder Wynn's moves were so severe -- the starkest in Vegas. Besides, those occupancy numbers don't look to strengthen appreciably now that Wynn had done an abrupt about-face, dropping "fill the rooms" in favor of chasing $399/night ADRs. So REVPAR ≥ occupany, it would seem. Of course, when you have a two-hotel megaresort to keep bustling, a sniper-rifle approach to marketing is going to have its limitations.
Pulling its weight is Wynn Macao (the sole bulwark between a bad quarter and outright calamity). Ergo, it was spared from the thrift regimen. Rival executives who swing the scythe indiscriminately when overall business is down might learn from Wynn's case-by-case example.
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