The covid pandemic hit some industries harder than others. It was a short-term boom for streaming services, telemedicine, and company that sold connected fitness equipment.
Those booms. however, quickly went bust as it turns out people were spending more money on at-home activities because they were forced to, not because they wanted to. That does not mean that the pandemic had no lasting effects. It turns out that watching most movies at home offers better value and a more pleasant experience than making the trip to a theater.
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Covid was, of course, devastating for the hospitality industry. Restaurants, hotels, and even casinos had to close, in many cases laying off their workers. On the Las Vegas Strip, business was closed due to a mandate from the state and when it reopened it was roughly a year before you could say the city had gotten back to normal.
The pandemic, however, had a linger gift for the Las Vegas Strip that continues to impact it today. Some hospitality workers opted to not wait out the pandemic and to instead try their hand at other fields. That has left Strip giants including Caesars Entertainment (CZR) and MGM Resorts International (MGM) with higher labor costs and a shortage of workers.
That's not something that's likely to improve soon.
Image source: Denise Truscello/WireImage via Getty Images
Las Vegas Strip Hit By the Great Resignation
While Nevada has recovered all the jobs lost during the pandemic on an overall numbers basis, the leisure and hospitality sector (casino, hotel, food, restaurant, nightlife and entertainment workers) has not fully recovered, the Las Vegas Review-Journal reported.
Vicki Gasca, assistant human resources director at TLC Enterprises, operators of Binion’s and Four Queens casinos on Fremont Street in downtown Las Vegas, told the paper that those casinos were hiring for “every department imaginable.”
She noted that many potential workers were looking for remote work and not interest in in-person hospitality jobs.
“Our workforce retired, especially since the pandemic,” she said. “They decided they weren’t going to deal with people anymore. So now we’re all going to have to replace them, not to mention all the new positions there are,” she told the paper.
That's not a problem unique to Las Vegas or the Las Vegas Strip, but it's more obvious in a city driven by tourism. You can even see it as a tourist where you might see open tables in a restaurant, but they're not being seated because there aren't enough workers to operate the entire restaurant.
In addition, many Starbucks (SBUX) locations on the Strip have started opening an hour or two later. That's not uniform -- but you may have to use the chain's app to find a location open at 6 a.m. when pre-pandemic, that was the normal opening hour.
Las Vegas Strip Wages Are Going Up
Caesars CEO noted during his company's fourth-quarter earnings call, that wages are rising for a variety of reasons.
"So I'd say we have been dealing with labor cost inflation since the reopening. We've got the -- or the Nevada union contracts are up in the middle of this year. We've begun discussions with the unions and to put it plainly, we're doing well. We've been doing well. Our employees should do well," he said.
Reeg expects the new contract to push Caesars' wage expense higher.
"We expect labor cost inflation through this new union contract in the back half, starting in the back half of '23. And with what we've got going on in the business, we think we'll be able to navigate that just fine," he added.
MGM CEO Bill Hornbuckle shared during his company's most-recent earnings call, that while full-time employee (FTE) counts remain down, wages are going up.
"If you go back and you look at FTEs, particularly in Las Vegas against 2019, we're down anywhere from 12% to 15%, depending on the property. Obviously, wage inflation since '19 is correct. And just so we're all on the same page, looking forward, we have substantive labor negotiations later this year with about 28,000 of our colleagues, which we're going to have to contend with and work our way through," he said.
