MGM Mirage Dismisses 440 Managers in Unwise Accounting Move
Now even MGM Mirage has become Columbia Sussex.
MGM Mirage dismissed over 400 managers nationwide Monday in a cost-cutting move. Although the majority of the released employees were located in Las Vegas, Michigan and Mississippi were also among the areas affected.
The company estimated the move would save MGM roughly $75 million. The layoffs were effective immediately, and are by far the largest move by a casino operation to reduce labor costs during the current economic downturn.
Alan Feldman, spokesman for MGM Mirage, said the soft market at some of the biggest properties, such as Bellagio and Mandalay Bay, since August had forced the layoffs.
Feldman noted that visitors to Las Vegas have been more budget-conscious of late. "Instead of four days, people stay for three. Instead of a five-star experience, they are going for four stars. Instead of two shows, they're going to one."
The dismissals took place across all sectors, from casino supervisors to marketing and corporate levels.
Despite the company's insistence of the necessity to save a measly $75 million after MGM Mirage grossed $8 billion in revenue last year, construction of the new $8.1 billion CityCenter project on the Las Vegas Strip continues unabated. The new MGM Grand Macau just opened in December, as well.
The decision reflects a common fatal flaw in the reasoning of corporate America, where properties are consistently overrated and people (employees) underrated. In making a typical beancounter decision, MGM sacrifices experience and customer service, choosing to overinvest in structures which then run poorly due to the loss of both quantity and quality of experienced employees.
The casino industry used to be an area that disdained costcutting, instead preferring to alter its bottom line via expanded revenues. It was one segment that always understood, even in tough times one must spend money to make money. Now even MGM Mirage has become Columbia Sussex.
Wall Street definitely took the layoffs as a sign of foreboding, as the MGM stock continued its six month decline, which has become an April spiral downward. Perhaps a gesture of confidence and willingness to withstand the economic troubles would have lifted the stock.