As coronavirus cases in the United States surpass 100,000 new cases a day, industries across the country are having to face reality that things aren’t getting better quickly. One industry most severely affected by the pandemic is the travel industry. Hoteliers and entertainment venue owners across the US are watching rooms and buildings sit empty as people stay home. Now, in Las Vegas, Park MGM is closing its doors temporarily mid-week to plug one financial hole through which the business is hemorrhaging money, in attempt to mitigate the toll the pandemic continues to take.
Hotel Industry Takes a Hit
As CELEB explored last month, the luxury hotel industry is feeling the squeeze from the pandemic.
“According to statistics tracked by the American Hotel and Lodging Association, the hospitality industry is suffering greatly. With nine times the loss in travel revenue that was suffered after the terrorist attacks on 9/11, the suffering is not just immense, it’s historic. The AHLA shares these sobering statistics on the travel industry:
- ‘Nearly 50% revenue decline in 2020, $124B lost off $270B total.
- 8 in 10 hotel rooms are empty.
- 2020 is projected to be the worst year on record for hotel occupancy.
- Forecasted occupancy rate for 2020 worse than 1933 during Great Depression.
- 70% of hotel employees have been laid off or furloughed.
- Nearly 1.6 million hotel employees out of work and $2.4 billion in weekly lost wages due to the crisis.
- Nearly 3.9 million total hotel-supported jobs have been lost since the crisis began.'”
With hotels losing 20-30% of their value this year from the pandemic alone, and staffing cut forcing fewer people to work longer hours, hotel owners are looking desperately for ways to balance the budget to keep from closing their doors for good.
To Pause Financial Loss, MGM Resorts is Pausing Overhead
One of the ways to slow the financial loss is to cut overhead being wasted on days the hotel is empty or nearly empty. Park MGM in Vegas is exploring ways to do exactly that. Fox Newsreports, “The hotel will close from noon Mondays to noon Thursdays, the Review-Journal reported, citing a letter to staff from MGM Resorts International’s Las Vegas portfolio president and chief operating officer, Anton Nikodemus. The closures likely won’t go past December, he wrote.
‘Know that all of us on MGM’s leadership team are laser-focused on doing all that we can to bring business back,’ Nikodemus wrote, per the Review-Journal. ‘Progress is being made, and we are optimistic that we are headed in the right direction. There are bright spots on the horizon.’”
Other Hotels Join the Closures
The MGM isn’t alone in this tactic. Wynn Resort’s Encore is also closing Monday through Thursdays. And Fox shares, “Two Caesars Entertainment properties, the LINQ Hotel and Experience and Planet Hollywood Resort and Casino, are only accepting weekend hotel reservations also, according to Casino.org.“
Bad News for the MGM
Although the temporary closures may be helpful over the short term, news is bleak for the Park MGM and other hotels. Per Fox, “The pandemic has dramatically slowed the number of tourists visiting Las Vegas this year. In 2019, more than 42.5 million people visited the city, according to the Las Vegas Convention and Visitors Authority Research Center. Through the end of September this year, fewer than 15 million people have visited Las Vegas.”
MGM already laid off 18,000 workers in August, hoping to save the business. Now that they’re forced to make these ever more desperate choices to keep their doors open, what’s the future for hotels, specifically in destinations like Vegas? There’s no easy answer for that. Travelers seem less likely to hit the road for holidays this year, dashing hopes that the holiday season would provide a boon for struggling travel industry businesses. The pandemic isn’t going anywhere, any time soon. Unless the United States takes drastic action and finds a way to get the coronavirus spread under control, this slow bleeding to death is likely to continue.