Friday, Jan. 25, 2002 | 11:06 a.m.
MGM MIRAGE has been rehiring thousands of workers laid off in the weeks following Sept. 11, as business at its Strip hotels continues rebounding, company President Jim Murren said Thursday.
While speaking at Preview Las Vegas 2002 at the Cox Pavilion at the University of Nevada, Las Vegas, Murren said MGM MIRAGE has rehired about 2,300 of the 6,400 employees that had been laid off. The company has another 711 positions it's trying to fill, most from laid-off employees who found work elsewhere or moved out of the area.
To try to fill some of these positions, Murren said the company will soon open employment centers at the MGM Grand and the Bellagio. "We're looking for people to come work for us," Murren said.
"I can't tell you how many we'll bring back in total," Murren said after Thursday's speech. "We were forced to re-engineer our business after 9/11, and we found ways to be more efficient than even we knew about. I don't know what that means long-term, but the only way we can increase employment is to increase revenues. As revenues improve, profitability will follow, and employment levels at our company will (rise) as well."
Layoffs reached across the Strip after Sept. 11, but none were more severe than MGM MIRAGE's. But Murren told attendees of Preview Las Vegas, an annual economic forecast sponsored by the Las Vegas Chamber of Commerce and the Nevada Development Authority, that the layoffs, while "very painful," were also unavoidable.
"We went from being a very profitable company, one that was the envy of the industry, to a company that was losing money," Murren said. "My payroll is $128 million a month. We could not afford to support that. We had to cut costs."
But MGM MIRAGE has returned to profitability, Murren said. And the indicators it uses to track its business have been rising strongly as well.
During the last three weeks of September, average occupancy at MGM MIRAGE's five Strip properties stood at 62.5 percent, or 35 percentage points below September 2000. Since then, the gap has been narrowing; in December, for example, MGM MIRAGE properties posted average occupancy of 81.6 percent, a difference of less than 5 percentage points over December 2000.
"Weekend occupancy is back to normal levels, and midweek is almost back to normal," Murren said.
For months, Strip hotels have been achieving these occupancies by slashing hotel rates. But that trend too appears to be reversing, Murren said.
Over the week between Christmas and New Year's, Murren said, average daily rates at MGM MIRAGE properties were down just 5 percent over last year -- "substantially better than we thought it would be." So far in January, the difference has averaged between 5 percent and 10 percent.
At the Bellagio, rates have completely recovered, Murren said. And that's good news not only for MGM MIRAGE, but other Las Vegas operators, he said.
"If the Bellagio can get those rates, other properties can get (improved) rates, because most other properties base their rates off that property," Murren said.
Business fell off drastically from the Pacific Rim after Sept. 11, Murren said, but also appears to be recovering. After a slightly better than expected performance over New Year's, Murren said MGM MIRAGE is "very optimistic" about Chinese New Year's, which falls in mid-February.
"We've been to the Pacific Rim several times since the attacks, and each time, we feel a little bit better (about visitor confidence there)," Murren said.
Back home, a key indicator MGM MIRAGE executives are watching closely is consumer confidence. Consumer confidence is rebounding strongly, Murren said -- and that bodes well not only for gambling revenues, but for hotel, restaurant and entertainment revenues as well.
"Not many of us had high hopes for January ... we felt February would be better, and March very strong," Murren said. "January is shaping up to be a better month than we originally thought, and we feel the (earlier forecast for February and March) will be the same."
Keith Schwer, director of UNLV's Center for Business and Economic Research, told Preview attendees he also predicted recovery for the broader Las Vegas economy and the nation.
"It's possible we've already passed a trough (in the recession) in Southern Nevada, particularly with unemployment," Schwer said. "By the end of 2002, we see a return to economic vitality in Southern Nevada."
Still, there are reasons to be cautious, Schwer said. While consumer confidence and consumer spending are strong, business investment has remained weak across the country. And the effects of the massive bankruptcies of recent weeks cannot be discounted, Schwer said.
"You cannot dismiss things like Enron, Kmart, Arthur Andersen and layoffs at Ford," Schwer said.
However, Schwer added, "This recession will be a modest one. And all signs point to a strong recovery in productivity when the economy recovers."
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