Negotiation time in Vegas; MGM China trounces expectations

Yes, it’s that exciting moment when the Culinary Union contract comes due and the local flexes its muscle to get results from the casinos. Frankly, we don’t expect much drama this year, given the excellent state of the Las Vegas economy (unless the casinos improbably plead poverty). This is not, however, stopping the Culinary from negotiating through the media and even the public. So many contracts are up for renewal — including all of Downtown — that it’s easier to list those where labor talks won’t be held. That includes Wynncore, Trump International (not a casino but prominent for reasons that should be obvious), The Rio, The Cosmopolitan of Las Vegas and Vdara (also a pure hotel). That also includes several timeshares. Contracts expire on June 1, but we expect a smooth negotiation that won’t push the deadline.

The Culinary’s wish list includes “protecting pension and health benefits, good wage increases that reflect increased industry profits, language regarding increased technology and the effects automation has on jobs and workers, strong protections for worker safety including safety buttons and language protecting against sexual harassment and gender discrimination, and proposals for non-union restaurant and arena workers to become union.” The last could be a sticking point. Also, wouldn’t it be interesting to be a fly on the wall when the sexual-harassment-and-gender-discrimination card is played? Wynn Resorts has to be thanking its lucky stars that it already has a collective-bargaining in place beyond 2018.

* MGM China blew comfortably past Wall Street estimates, recording $147 million in cash flow versus the Street’s expectation of $126 million. Also, allowing for a one-time expenditure from transferring MGM National Harbor to MGM Growth Properties, that resort was right on the button. On the Las Vegas Strip, expectations of room revenue (-5%) and cash flow ($348 million) were also head of what some analysts predicted. On an individual-property level, Mandalay Bay and Luxor continued to be hit hard by the 10/1 catastrophe, cash flow down 20% and 12% last quarter. Monte Carlo just barely stayed out of the red, no thanks to construction disruptions. Helping the balance sheet were strong Mississippi numbers, a positive contribution from CityCenter and tighter hold on table games, probably centered upon MGM Grand. For the balance of the year, MGM continues to set its projections ahead of Wall Street’s and we see no reason to doubt them.

* More casino CEOs could take a page from Grand Sierra Resort‘s Shannon Keel. She’s been living on-property, part of an effort to become better acquainted with her work force. “I spent my first month working with folks in housekeeping, laundry and slots. My goal is to hit up every department in February,” she told the Reno Gazette-Journal. Keel’s round-the-clock presence also helps her keep an eye on property rehabilitations ranging from the installation of smoke eaters at table games to a replacement of the casino carpet. Of the latter she says, “It’s one of those things that doesn’t sound exciting but makes a difference.”