Declines in convention business and tourism took their toll on Las Vegas casino operators in the second quarter, as Wynn Resorts Ltd. (WYNN) and Las Vegas Sands Corp. (LVS) each reported worse results Thursday than they did a year earlier.
Wynn Resorts said its profit dropped 91 percent to $25.5 million, or $0.21 per share, down from $272 million, or $2.42 per share last year.
Las Vegas Sands Corp. reported a loss of $175.9 million, compared with a loss of $8.8 million a year earlier.
The two companies - with similar businesses but different philosophies in management - both faced pressures to cut room rates and their operating costs - all while maintaining an experience for guests worthy of high-end prices.
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Wynn Resorts, run by billionaire CEO Steve Wynn, has cut about $100 million in annual costs for its two casino resorts in Las Vegas, but Wynn says further cuts could hurt the morale of his employees and affect his guests.
"There is a very surreal question here: Is it intelligent to ruthlessly grind every last dime out of this place when it involves dislocating groups of your employees?" Wynn said. "Oh yes, the quarter looks better and you have one of these fancy phone calls. But is that good business? I think not."
Sheldon Adelson, the billionaire chairman and chief executive of Las Vegas Sands, said cuts that will save the company $500 million each year are an important prong of a three-part strategy that involves finishing its Marina Bay Sands casino in Singapore next year and raising additional liquidity.
"We don't feel as uncomfortable as some people might think," Adelson said.
Both companies took hits to their room rates and revenue at their hotels in Las Vegas.
Wynn Resorts' two Las Vegas casinos combined generated $188 per available room during the second quarter this year, compared with $292 last year, when Wynn operated only one casino in town.
Also, tellingly, Wynn's overall revenue in Las Vegas did not rise significantly despite the opening of an entire new casino with 82 table games, 812 slot machines, more restaurants and shopping.
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