Las Vegas casinos are weighing the potentially significant cost of a labor strike that could commence as early as Friday.
Last week, members of the Culinary Workers Union Local 226 and Bartenders Union Local 165 voted 99% in favor of walking off the job if there’s no satisfactory replacement for their current labor agreements with 34 Vegas casinos that expire at midnight Thursday.
On Wednesday, union analysts claimed that casinos on the Las Vegas Strip and in the downtown district are facing a penalty in the nine-figure range in the first month alone if the strike goes forward. MGM Resorts and Caesars Entertaiment, which together operate 18 of the vulnerable casinos, could face losses of $206m and $113m, respectively.
Union reps conceded that accurate projections of losses are difficult given that the last major strike was way back in 1984, when Vegas was a very different place, both in terms of the number of hotel rooms and visitor traffic. But the unions maintain that MGM and Caesars are likely looking at a 10% daily cut in revenue.
On the flip side, Vegas properties run by non-union operators like Las Vegas Sands and Wynn Resorts could enjoy a mild boost in business by offering customers the same level of service they enjoyed prior to the as-yet theoretical strike.
The unions, which represent 50k bartenders, cocktail servers, housekeepers, cooks, porters and other staff, are seeking a new five-year contract with annual raises of 4%, while the Associated Press reported that MGM and Caesars have reportedly countered with offers of 2.7% to 2.8%.
MGM met with union negotiators on Monday and has more talks planned for this week. Both MGM and Caesars continue to express confidence that labor peace can be achieved before the Friday deadline. Other affected operators include Boyd Gaming, Golden Entertainment, Penn National Gaming and Station Casinos.
Las Vegas casino workers vote for strike action on June 1
Las Vegas casinos are bracing for a summer of strife after unionized workers voted to go out on strike on June 1.
On Tuesday, roughly 25k members of Culinary Workers Union Local 226 and Bartenders Union Local 165 voted 99% in favor of a citywide strike as early as June 1, when 50k workers’ current union contracts with 34 Vegas casino resorts are set to expire.
Culinary Union secretary-treasurer Geoconda Argüello-Kline called a strike “a last resort,” saying workers want to reach a new agreement but are prepared to hit the picket lines if there’s no agreement by June 1.
The unions, which represent everything from bartenders to porters to guest room attendants, are seeking (among other things) greater workplace safety and protection from sexual harassment (even if Steve Wynn has left the building). The unions also want a “fair share” of the casinos’ “enormous anticipated cash flows and Trump tax windfalls.”
Apart from a desire for better pay and benefits, one of the workers’ main concern is being replaced by machines. Argüello-Kline said the union supported “innovations that improve jobs, but we oppose automation when it only destroys jobs. Our industry must innovate without losing the human touch.”
MGM Resorts operates 10 of the 34 Vegas properties facing a potential strike action, while Caesars Entertainment is next on the list with eight venues. Both companies issued statements following Tuesday’s vote insisting that they expect a resolution before any strike action.
Other potentially affected Strip properties include the SLS Las Vegas, the Westgate, the Tropicana, Treasure Island and the Stratosphere, while ten downtown Vegas properties are also set to be targeted.
In 2002, casinos faced a similar strike threat but a new deal was worked out the same day workers were scheduled to walk off the job. A 1984 strike was more acrimonious and more damaging, lasting over two months before labor peace was restored.
If there’s an upside to the strike threat, it’s that it doesn’t involve frontline gaming staff (croupiers, dealers), although gamblers will likely face a much longer wait than usual to get a drink delivered to their table.
Las Vegas casino workers could walk off the job June 1
Las Vegas casinos could face a customer service nightmare this summer if unionized casino workers hit the picket lines.
This week, the Culinary Workers Union Local 226 and Bartenders Union Local 165 announced that their roughly 50,000 members will hold a vote May 22 on whether to walk off the job anytime after midnight on May 31, when their current contract with local casino operators expires.
The workers occupy a variety of frontline roles – including housekeeping staff, cooks, kitchen staff, porters, bartenders, food and beverage servers, etc. – at 34 different Vegas properties, with MGM Resorts and Caesars Entertainment among those operators that would be most affected.
Suffice it to say, these workers’ absence – or their temporary replacement by scabs unfamiliar with the nuances of their duties – would be noticed by the throngs of demanding tourists who descend on Vegas during the busy summer season.
Union reps have been in negotiations with their casino counterparts since February to work out details of a new five-year contract, with higher pay, increased benefits, workplace safety and tougher sexual harassment policies among the key issues.
The latter two issues have taken on heightened relevance over the past year, given last October’s mass shooting on the Vegas Strip and allegations of decades worth of sexual harassment by former Wynn Resorts boss Steve Wynn against his female staff.
Caesars had been mulling new safety protocols that would allow security staff to enter all hotel rooms once every 24 hours, even if a guest had hung out a ‘do not disturb’ sign, but Caesars backtracked on that proposal last week, according to Culinary Union reps who’d attempted to include such language in the new contract.
The last major strike to hit Vegas was way back in 2002, and it lasted all of one day before a new deal was struck. However, a 1984 strike lasted over two months and dealt a serious blow to operator revenue, workers’ bank accounts and the gaming hub’s reputation.
An MGM spokesperson told the Associated Press that the company was “confident we will find mutually beneficial solutions to all our contract issues.” A Caesars rep offered similar confidence that the parties would “achieve a good settlement before the current contract expires.”
The union ranks swelled last month when around 900 workers at the Palms Casino Resort voted to join the Culinary Union. The Palms was acquired by Red Rock Resorts (aka Station Casinos) in 2016, and a company spokesperson expressed disappointment with the vote and with “the manner in which the union conducted the election campaign.”
A Vegas casino strike could cost $10 million a day
LAS VEGAS – The union representing thousands of Las Vegas casino workers estimated Wednesday that the two largest resort operators would lose more than $10 million a day combined if housekeepers, cooks and others go on strike at any time starting Friday.
The Culinary Union released documents explaining how it thinks a one-month strike would hit MGM Resorts International (MGM) and Caesars Entertainment (CZR), which operate more than half of the properties that would be affected if 50,000 workers walk off the job.
Workers last week voted to authorize a strike as disputes over workplace training, wages and other issues have kept the union and casino operators from agreeing on new contracts.
The union conceded that it’s difficult to estimate how the strike at more than 30 hotels would affect Las Vegas overall, since the last citywide labor action took place in 1984, when Vegas had 90,000 fewer hotel rooms and only about 12.8 million annual visitors. But it says MGM and Caesars would see a 10 percent reduction in revenue because of the loss of group and independent travelers.
Using the companies’ earnings reports for the first three months of the year, the union’s estimates show the one-month strike could reduce MGM’s earnings before interest, taxes and other items by more than $206 million and Caesars’ by over $113 million.
The workers’ contracts expire at midnight Thursday. They’re bartenders, housekeepers, cocktail and food servers, porters, bellmen, cooks and other kitchen workers at properties on the Las Vegas Strip and downtown Las Vegas, including Caesars Palace, Bellagio, Stratosphere, Treasure Island, The D and El Cortez.
Dealers aren’t part of the Culinary Union. Casino-resorts that wouldn’t be affected include Wynn Las Vegas, Encore, The Venetian and Palazzo.
MGM, which employees 24,000 of the workers, on Wednesday said it met with union negotiators Monday and has more talks scheduled this week. The company said it remains confident that it “can resolve the outstanding contract issues and come to an agreement that works for all sides.”
Caesars said it “expects to agree to a new five-year contract with the Culinary Union on or about June 1 when the current contract expires.” About 12,000 of its workers are part of the negotiations.
The union said it’s asking both companies for new-skill training and job opportunities as the operators continue to adopt new technology that can displace workers. It also wants an independent study to analyze the workload of housekeepers and contract language that would protect the workers if properties are sold.
“What is going to happen to my position?” Fernando Fernandez, a guest runner at Caesars Palace, said. “I think they are going to be disappearing it because robots are going to be available to deliver everything.”
He said he wants training to fix or program the robots that he believes could eventually replace him.
The union said it has asked MGM for average wage increases of 4 percent a year for the new five-year contract. A document states the company has countered with an approximate 2.7 percent increase for each of the five years.
Caesars workers are asking for an increase of 4.2 percent and annual increases of about 4 percent thereafter. Another document shows the company has offered an approximate 2.8 percent increase for each of the five years.
The average hourly wage of union workers is $23, including benefits such as premium-free health care, a pension and a 401(k) retirement savings plan, and $25,000 down-payment assistance for first-time homebuyers.
All bets off? Vegas casino workers to vote on strike
LAS VEGAS — The union representing 50,000 Las Vegas casino employees whose contracts will expire at the end of the month announced Wednesday the workers are set to vote on whether to strike, a move that could cripple the city.
The Culinary Union will hold the strike vote May 22 at a university arena near the Las Vegas Strip. A majority of yes votes would allow the union’s negotiators to call for a strike at any time starting June 1.
“On May 22, thousands of union members will show casino employers that workers are going to fight for security and that they are not going to be left behind as companies are making record profits and getting windfall tax breaks,” Geoconda Arguello-Kline, the union’s secretary-treasurer, said in a statement.
A strike would empty 34 casino-hotels on the Strip and in downtown Las Vegas of kitchen employees, food and cocktail servers, housekeepers and other workers key to running a resort.
The workers’ existing contracts will expire at midnight May 31. Negotiations for new five-year contracts began in February.
Arguello-Kline previously told The Associated Press the group planned to negotiate with companies to protect existing benefits, increase wages, protect job security against the increasing adoption of technology at hotel-casinos, and to strengthen language against sexual harassment. The union has asked casino operators to give every housekeeper a so-called “panic button,” a wireless device that can alert managers if they are in a threatening situation.
MGM Resorts International and Caesars Entertainment operate more than half of the properties that would be affected by a strike.
“MGM Resorts and the Culinary and Bartenders Unions have always been great partners,” MGM said in a statement Wednesday. “We have issues to address, but we’re confident we will find mutually beneficial solutions to all our contract issues.”
Richard Broome, executive vice-president of communications and government relations for Caesars, said the company will continue to negotiate in good faith with the union and is optimistic that it “will achieve a good settlement before the current contract expires at the end of this month.”
Both companies previously said they would work with the union to equip housekeepers at their Las Vegas casino-resorts with the panic buttons.
The last citywide strike vote took place in 2002, when the overwhelming majority of 25,000 workers voted in favour of authorizing a strike. A deal was reached before a strike was called.
Carlos Martinez, a pantry worker at the MGM-operated Mirage casino-resort, said he plans to vote in favour of a strike because workers won’t allow companies to outsource their “jobs to robots.”
“Technology can be assistive in the workplace, but workers should have a voice in that and additional job training,” he said in a statement. “The company needs to invest in human capital and treat us with dignity.”
A citywide strike last happened in 1984 and lasted 67 days. Union members lost an estimated $75 million in wages and benefits, while the city lost a like amount in lifeblood tourism revenue. Millions more were lost in gambling income.
MGM Resorts loving Trump after $1.4b tax break buoys Q4 result
Casino operator MGM Resorts is singing Donald Trump’s praises after a $1.4b tax break allowed the company to mask a year-on-year profit decline.
On Tuesday, MGM released its Q4 earnings report, which showed overall revenue rising 5.7% to $2.6b in the three months ending December 31. Operating income declined over one-fifth to $223m while net income hit $1.4b versus just $24.7m in the same period one year earlier.
However, that profit gain came courtesy of the Washington tax reforms approved last year, which gave MGM a $1.43b non-cash income tax benefit, boosting earnings per share to $2.42. Without that windfall, the earnings gain would have less than a penny per share.
Domestic resorts revenue improved 5% year-on-year to $1.9m in Q4. However, excluding contributions from the new MGM National Harbor venue in Maryland, domestic revenue was down 3% as overall slots handle, table drop and revenue-per-available-room all declined.
National Harbor booked revenue of $186.9m in Q4, good enough for fourth on the domestic resorts revenue chart, behind only the Bellagio and MGM Grand in Las Vegas and the Borgata in Atlantic City. The Mandalay Bay resort ranked fifth, but its Q4 was dealing with issues that National Harbor didn’t face.
The overall Q4 numbers were affected by the mass shooting on the Vegas Strip in early October, during which the shooter held up in Mandalay Bay. Occupancy rates at MGM’s Vegas properties fell four points to 85% during Q4, reflecting the upheaval MGM has been forced to contend with since the shooting.
Speaking to analysts, MGM CEO Jim Murren said the Q4 results were undoubtedly affected by the “clear challenges” presented by the shooting’s aftermath, but said the overall results had been “a touch better” than the company had anticipated.
MGM China had a more positive outcome, with revenue in Macau up 10% to $549m. However, a deferred tax liability pushed operating income down to $43m from $72m one year earlier.
The mass market was largely responsible for MGM China’s revenue gains, as VIP gaming revenue fell 5%. The VIP decline came despite table turnover rising nearly one-quarter, thanks to VIP win rate falling 0.6 points from Q4 2016’s outsized 3.7%.
The new MGM Cotai property opened last week, just in time for the Lunar New Year celebrations, and while MGM China CEO Grant Bowie called it “a challenging time to make any judgments,” he was encouraged by the new venue’s mass table win per unit per day.
Bowie noted that the property was enjoying a lot of lookie-loos from New Year’s revelers, leaving him to wonder “how do I monetize people taking photographs.” However, Bowie said he expects many of those photos to end up on social media, thereby increasing the new venue’s exposure.
MGM Cotai opened with only direct VIP gaming activity but Bowie said the plan was to launch junket-based VIP action by June or July. The Mansion, the new venue’s high-end accommodation, is expected to open by September in what Murren called the “last piece of the puzzle for us to lock in.”
Murren also referenced the imminent sports betting ruling by the US Supreme Court, an opportunity for which he claimed MGM was “really poised to immediately take advantage of.” Murren said sports would be “a significant avenue of growth” for MGM in the future, in part due to the new Las Vegas Golden Knights franchise, which appears set to make the NHL playoffs this spring.