The furloughs of almost 63,000 MGM Resorts International employees soon could turn into layoffs. A legal notice sent to many employees Tuesday, obtained by the Review-Journal, is another indication that Las Vegas resort operators are preparing for a significant drop in tourism once the state allows them to reopen. All Nevada casinos have been closed for more than a month because of the coronavirus pandemic. The notice, which also announced the extension of affected MGM employees’ health benefits from June 30 to Aug. 31, said layoffs may last more than six months or become permanent.
An accompanying letter signed by President and Acting CEO Bill Hornbuckle said executives “just don’t know how many employees will return to work within the coming months” as travel demand is expected to be “significantly decreased” for the remainder of the year. During earnings call last week, Hornbuckle said the company has furloughed nearly 63,000 workers.
According to company regulatory filings, MGM had roughly 70,000 full-time and part-time domestic employees as of Dec. 31.
“The temporary closure in March of our U.S. properties and the painful decision to furlough thousands of colleagues has made this the most challenging period ever faced by our Company and industry,” Hornbuckle said in the letter. “I know how difficult this period has been for so many of you and your families. Please know we are hard at work on plans to reopen our properties and bring back as many employees as possible.”
Spokeswoman Debra DeShong said the company is hopeful the industry will recover quickly but that MGM believes it “may take some time for business to return to pre-pandemic levels.” Recent reports back this up. An ongoing study from the University of Florida shows roughly 37 percent of those surveyed in mid-April said they don’t want to rebook canceled trips until two to six months after the virus is contained. Only 6 percent would be comfortable rebooking within a week after the virus is contained.
“It continues to be apparent that volumes are going to return slowly. It’s not going to be a V-shaped recovery,” said Josh Swissman, founding partner of Las Vegas gaming and hospitality consulting firm The Strategy Organization.
Todd Horwitz Chief Strategist BubbaTrading.com
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