Boyd Gaming lays off thousands

Boyd Gaming employees who were still on furlough and not called back to work when its properties reopened around the country are being permanently laid off, effective Tuesday.

That won’t be the last in the gaming industry as demand remains down amid the coronavirus pandemic and casinos have state-mandated restrictions on their capacities.

Boyd issued a statement late Monday that it was acting on a WARN Act letter sent to employees notifying them of potential layoffs in July. The move was not a surprise.

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It did not provide an amount but said it was on the lower end of the WARN letter that cited a range of 25 to 60% at its 29 properties around the nation, 26 of which are open. Since Boyd had about 24,300 workers nationwide in its last annual report. It has about 10,000 employees in Las Vegas where nine of its 12 properties have reopened, that would be at least 6,000 nationwide.

“While we have been able to reopen most of our properties since that time, we are still facing significant restrictions on our business, and visitation levels remain well below pre-pandemic levels,” according to the statement from David Strow, vice president of corporate communications with Boyd. “Given these ongoing challenges and continued uncertainty, we are moving forward with permanent layoffs of team members who were still on furlough and had not been recalled to work.

The statement referenced that the layoffs are at the lower end of the range outlined in the WARN Act letters issued in May and that Boyd “is notifying affected team members as expeditiously as we can. “This was an extremely difficult decision for our company, and one we had hoped would not be necessary. To assist impacted team members during this difficult time, we will be providing financial assistance to those who are affected.”

Main Street Station in downtown Las Vegas, Eldorado in Henderson and the Eastside Cannery on the Boulder Strip are among Boyd properties that haven’t reopened in Southern Nevada.

Gaming consultant Josh Swissman, founder of The Strategy Organization in Las Vegas, said this move is simply a continuation of what was sent out two months ago.

“This is the just operating model of the future, and you have to get more efficient in every part of the business, including the workforce,” Swissman said. “The near-term demand isn’t what it was before. You can’t have half of the gaming positions open (with casino gaming floors limited by the state to 50% capacity) and expect to maintain the full complement of employees. Part of it is reduction in volume because of restrictions the Governor has put in place and part of it is there’s going to be a slow path to recovery.”

A lot of the economic models predict Las Vegas bounces back to 70 to 75 percent by the end of the year in terms of volume compared to 2019, Swissman said.

“You can’t have a 25% or 30% reduction in volume and revenue and not have some sort of impact on staffing levels,” Swissman said. “That is what this is.”

Swissman said it’s hard to tell what is next. But he added “Boyd wasn’t the only outfit that issued those WARN notices in Vegas and around the country. There may potentially be similar situations happening with other operators.”

Swissman said it would take a vaccine, a broader economic recovery and people feeling comfortable enough and go to casinos in greater numbers for those Boyd positions to be brought back. While Las Vegas has benefited from pent-up demand and strong gambling revenue despite having fewer people, the next wave of visitors are expecting greater amenities to return before they do, he said.

A report last week from Deutsche Bank warned of the potential impact on Las Vegas tourism from rising COVID-19 cases in the Southwest after Fourth of July weekend saw foot traffic down 64 percent over last year.

The report said the Strip has seen a steady uptick in foot traffic since it reopened June 4, but traffic levels remain below the Las Vegas locals’ market and regional markets across the country.

“The Las Vegas Strip, as expected, has experienced a reasonably steady uptick in foot traffic from the levels immediately experienced post opening as more assets have come online,” said the report, which was prepared by research analyst Carlo Santarelli. “Nonetheless, traffic levels remain well below the year-over-year declines experienced in regional markets and the Las Vegas locals market.”

The report said during the most recent Fourth of July holiday weekend traffic was down 64% year-over-year — an improvement from previous weeks — but added that traffic “remains subdued.” It told people to watch the impact of rising coronavirus cases for the rest of July.

“Given the significant increases in positive case rates in both California and Arizona, as well as Nevada being added to quarantine lists in several densely populated northeast states, we expect the next few weeks to be of note for investors tracking the re-ramp on the Strip,” the report said. “Recent commentary from airlines regarding booking trends has been cautious post the quarantines being put in place. Nonetheless, bookings from the Northeast accounted for a very limited piece of the current demand but was growing as a percentage of bookings for future periods.”

The report said that while multiple hotels are accepting reservations beginning in mid-July, people should expect only a few of these properties to “actually come back online in mid-July, as we believe these are largely being used to track demand at present.”

Over the June 4-5 period, about 47,000 rooms opened on the Strip, representing about 54% of the Strip’s supply. The report said that during that initial phase, many properties capped occupancy levels “well below their full room footprints.”

“Since hotels representing incremental rooms have come online, roughly 78% of the Strip rooms are open, with occupancy levels still capped below the full room footprint at present,” the report said. “We believe the actual room supply available is likely about 20,000 below the opened property based supply estimate.”

The report said while early demand was soft on the Las Vegas Strip, the limited capacity was helpful in dealing with that. As marketing operations have ramped up and flight schedules have improved, “demand has slowly improved while still remaining considerably below year-ago weekly traffic levels.”

As for locals’ properties, which includes Boyd, 80% of the capacity is open and operators are gauging demand prior to expanding capacity further.

“Based on locals’ market checks, which are akin to domestic regional markets, we believe gaming spend per patron has been nicely higher,” the report said. “However, as with the situation for regional assets, we expect the drive-to locals market spend-per-patron metrics to eventually taper off and better align with local macro dynamics over the medium term.”

Based on its data from June 8 through July 5, Las Vegas locals’ traffic is down 52% year-over-year. Locals’ trends have remained steady in the four weeks since opening despite the uptick in COVID-19 cases in Nevada, the report said.

Las Vegas has been relying on locals and drive-in traffic from neighboring states rather than passenger flights. California visitors traditionally make up 20% of visitors, but with fewer people flying some suggest it could approach 40%. Vehicle traffic has picked up since the June 4 reopenings and has improved though still down in the teens on most days.

A report Monday from the Nevada Department of Transportation showed that traffic at the I-15 border going both ways was down 4% on July 2 compared to a year ago but up 15% from July 3, 2019. It was down 42% on the Fourth of July and down 16% on Sunday July 5 with a count of 64,000 vehicles, down from 76,000.

About the Author

Buck Wargo

Buck Wargo is a former journalist with the Los Angeles Times and has been based in Las Vegas as a business, real estate and gaming reporter since 2005.

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