A few minutes into Wednesday’s MGM Resorts third-quarter earnings call, President and CEO Bill Hornbuckle dropped news that much of Las Vegas has been waiting for. Noting that Caesars Entertainment had reached a deal with the labor union representing hospitality workers, Hornbuckle said he expected MGM to soon come to an agreement with Culinary Workers Local 226.
“We’re literally in session as we speak,” Hornbuckle said. “I believe we will come to a deal today. We know from listening to our employees that they’re looking for a pay increase that combats inflation, as well as reduced workloads, among other concerns. This deal, when announced, will do just that and will result in the largest pay increase in the history of our negotiations with the Culinary Union.”
MGM Resorts reported revenue of $4.0 billion for the third quarter of 2023, a 16% increase compared to same time period in 2023.
Reaching a deal with the union would be welcome news for the city, which is hosting the Las Vegas Grand Prix and associated events Nov. 16-18. A deal would also solidify a remarkable comeback by MGM Resorts after it was victimized by a Sept. 12 cyberattack that partially shut down its operations.
Financial effects of the cyberattack will be felt next year, even though Hornbuckle stated that insurance is expected to cover losses incurred, with reimbursements coming in upcoming quarters.
“We’re probably looking at some time into next year a $30 million to $40 million capitalization in terms of IT hardware and the (capital expenditure) that goes into it,” Hornbuckle said. “In terms of (operating expenditures), I don’t know if it will be meaningful. A lot of them will be captured by capex, but it’s in the $10-$20 (million range) in terms of operating capital. We’ll find it in the general fund, which we generally go around $800 million a year to keep this place fresh.”
The upcoming Formula 1 race has already been a boon for MGM, according to Hornbuckle, with the operator selling more than 10,000 tickets to the race and associated events. Hornbuckle said the company anticipates doing over $60 million in incremental hotel revenue for the weekend, “which is 50 percent above any other event we’ve had in terms of theoretical win.
“We all know what could happen with theoretical win, knock on wood,” Hornbuckle said. “But there’s been nothing quite like (the race) and to have it placed on the weekend that it is, we think it’s going to be an incredible opportunity for the company and ultimately for the city long term.
“It hasn’t been without its challenges. Believe me, I’m a local and I get the traffic (issues). I understand it and I understand what our employees are going through. But I think long term it’s going to be a big winner. We will figure it all out.”
