Wynn layoffs are not planned

By Liz Benston (contact)

Saturday, Nov. 5, 2005 | 7:51 a.m.

Wynn Las Vegas isn't laying off workers and has no plans to do so, the property's top executive said Friday.

"There is no organized layoff," Wynn President Andrew Pascal said, calling a published report to the contrary inaccurate. "There are no staff reductions planned."

During a conference call Thursday to discuss the company's third-quarter performance, Pascal's boss, Steve Wynn, said the number of employees will go down during its first six to 12 months "to a proper level where you have a certain number of people to run the business (and) there's no waste."

In an interview Friday, Pascal said employees are leaving through the "normal course of attrition." Those workers don't necessarily need to be replaced "because the employees you retain become increasingly more productive."

Resorts typically overstaff their properties for an opening so they can be assured of making a good impression as well as providing top service, Pascal said. The process by which workers leave and remaining workers become more efficient could take up to a year, he said.

But at some point in the attrition process, workers must be replaced or service suffers, Pascal said.

"We're not going to compromise service to save some money," he said. "Service is first and foremost for us."

Wynn Las Vegas had roughly 9,700 full-time employees at the time it opened in April, Pascal said. It now employs about 8,000 full-time workers.

On Thursday, Wynn Resorts reported third-quarter revenue of $251 million and a net loss of $14.2 million, including pre-opening costs of $13.2 million. Gambling revenue was $123 million and nongaming revenue was $165 million.

The property is attempting to improve its profit margins. At 29 percent of revenues, the resort's margin is "probably the best of any major hotel in Nevada, but we are far from finished," Wynn said during the conference call.

Wynn Las Vegas reported an average daily room rate of $264 and an occupancy rate of 93 percent in the third quarter. That compares to an average rate of $203 and a 96 percent occupancy rate at the Venetian, one of Wynn's top Strip competitors.

Wynn's operating cash flow -- typically defined as earnings before deducting interest, taxes, depreciation and amortization -- was about $73 million in the third quarter.

The Venetian recently reported adjusted operating cash flow of $65 million while the Bellagio reported operating cash flow of $84 million. Companies have different ways of calculating operating cash flow, a key performance indicator and comparative benchmark. Bellagio and Venetian each have about 4,000 rooms, far more than Wynn's 2,700.

Pascal said the company was pleased by the resort's first full quarter of operations. In particular, Wynn Las Vegas' "Avenue Q" and "Le Reve" shows are experiencing "consistent growth" in attendance and ticket sales, although they both still have a way to go, he said.

"Entertainment in this town is very competitive," Pascal said. "We have two great shows we really believe in" and customers are "telling us that they love them. We're not even close to hitting our stride."

UNLV professor of public administration Bill Thompson said overstaffing at major resorts is typical and understandable because many workers may not take to the job.

"People end up quitting their jobs after one to two months," Thompson said. "They don't form friendships or they get buried in the job. Everything's wonderful when you start a new job until after a few weeks when people realize that they really have to work."

Resorts can expect to lose up to 10 percent of their work force to attrition, Thompson said.

Liz Benston can be reached at 259-4077 or at benston@lasvegassun.com.