In effect, everybody makes a little bit less money, but everyone keeps their job," Chairman and Chief Executive Steven Wynn said on a conference call with analysts and investors. "We don’t want anybody on unemployment here."
Competitors like MGM Mirage, Las Vegas Sands Corp and Harrah’s Entertainment have been laying off workers as recession-weary consumers and businesses cut back on extras like travel and gambling.
Wynn, which recently opened a second casino on the Las Vegas Strip, said it would eliminate 2009 bonuses and suspend its program of matching 401-K retirement plan contributions. Wynn expects to save us$ 75 million to us$ 100 million annually. In December, the company opened the us$ 2.3 billion, 2,000-room Encore, which is adjacent to Wynn Las Vegas, the company’s 3-year-old luxury casino hotel.
"We spent a ton of money in November, December and January getting this place off the ground," Wynn said. "These expenses occurred, of course, at a time when the economy of America, and Las Vegas in particular, was softening."
To fill the new resort, Wynn dropped room rates - an action which reverberated across the Strip. "Unfortunately this is a sign of the times in Las Vegas, even high-end properties are not immune," said Matthew Jacob, an analyst at Majestic Research.
Resorts like Wynn Las Vegas and Encore are designed to provide high levels of service and investors will be watching to see if the announced cutbacks affect trends further, he said. Wynn Resorts also operates a casino-hotel in the Chinese gambling enclave of Macau, but has no plans to institute similar cost savings there. "Our business in Macau is at levels that don’t dictate this sort of measure," Wynn said.
The company said it has a strong balance sheet with over us$ 1 billion of cash on hand and us$ 375 million of debt maturing over the next two years. Shares of Wynn, which fell 3 % to close at us$ 28.82 on Nasdaq, were unchanged after hours. The stock has fallen about 77 % over the past year, but shares of MGM and Sands have fared even worse. "It would be absolutely amazing to me if these stocks don’t continue to come under pressure," Wynn said. "It’s a buying opportunity at some point."