Deutsche Bank Labor Analysis

Posted on August 14, 2008
Filed Under Gaming, Job Growth |

Deutsche Bank released a report on June 28, 2007 on Las Vegas Strip Dynamics. A major concern throughout the entire report was ‘labor supply.’ As mentioned in previous posts, DB states we will need around 124,000 new workers for new Las Vegas jobs. With the recent “hold” put on Echelon and rumors of some other major developments following suit, we will need to readjust these numbers.

I have received many questions as to how DB calculated these numbers. Here is the formula used:

Projected incremental hotel rooms 2007-20-12        49,565
Direct workers per hotel room                                        1.5
Indirect workers per room                                                1
Direct and indirect workers per room                            2.5
New direct labor demand                                                74,348
Indirect labor demand                                                      49,565
New direct & indirect labor demand                              123,913

Personally, I have always used 4 workers per room. It has been accurate in the past. However, each casino is different. Those that emphasize great customer service, such as Wynn Resorts, maintain a higher employee to room ratio. When Steve Wynn opened Wynn Las Vegas he hired approximately 8,000 FTEs for 2,700 rooms, or about 3 workers per hotel room, double that of DB’s 1.5 per room ratio.

The reason I use 4 new FTEs per room, is taking into consideration the job creation to support the new workers. So if you have 10,000 new employees - someone will need to build their homes, provide health care, teach their children, etc.

So - stay tuned. I hope to have adjusted projections soon.