Published Tuesday, Feb. 3, 2009 | 3:43 p.m.
Updated Tuesday, Feb. 3, 2009 | 6:30 p.m.
Wynn Resorts today announced a cost-reduction program for its Las Vegas resorts that includes salary reductions for salaried employees, reduced work weeks for full-time hourly workers, the elimination of 2009 bonuses and a suspension of the company match to employee 401(k) plans.
The company will reduce salaried employees' paychecks by 10 to 15 percent. Corporate-level executives have already taken a pay cut.
The program is expected to save about $75 million to $100 million a year.
During a conference call, Chief Executive Steve Wynn said the initiatives are intended to fend off a worst-case scenario playing out at competitors that are laying off workers in the downturn.
“Everybody makes a little less money but everybody keeps their jobs,” Wynn said. “We don’t want anybody on unemployment here -- or without insurance.”
While some casino companies struggle to make bond payments and have little left for upkeep, Wynn reiterated that his company has money to burn while profits suffer.
The company has $1.1 billion in cash on hand and $375 million in loans coming due over the next two years, executives said. Its sister Encore resort in Macau is fully financed and is expected to open by early 2010.
The company didn’t scrimp on marketing and extra staffing leading up to the Dec. 22 opening of its $2.3 billion Encore resort at a time when competitors were slashing their budgets, Wynn said.
Opening a new resort allowed Wynn to reduce staff at Wynn Las Vegas without resorting to layoffs, as many workers were transferred to jobs at Encore. The company employs about 11,400 people in Las Vegas, about 9,500 of them full-time employees.
Amid the downturn, Wynn has repeated a mantra that includes sacrificing potential short-term profits for long-term gains – a message that isn't always embraced on Wall Street.
Wynn said his company spent a “ton of money” on special events and other marketing through the end of January related to the debut of Encore, which he called the “smoothest” opening in his 40-year career in the gaming industry. The best course of action, he said, was also more expensive.
Echoing comments made by many of his peers on the Strip, Wynn said future business and consumer behavior has become unpredictable like never before. Business during Chinese New Year and the Super Bowl was slower this year as well-heeled visitors “are being a little more disciplined in their expenditures,” he said.
Wynn said he cut hotel rates at his Las Vegas resorts in January to boost business, forcing competitors to drop their rates – a distasteful though practical move.
“Right now we are pricing the Strip,” he said.