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Zona de Azar USA – Virgin Hotels Says it Must Protect its Financial Health

USA.- December 4, 2024 www.zonadeazar.com Officials at Virgin Hotels Las Vegas have stated that the recently renovated off-Strip property is unable to handle any additional financial strain.

Sweetening its contract offer to striking workers would add more economic strain, especially since similar contracts at other local resorts have produced layoffs, they say. Dismal casino earnings over the past two years illustrate Virgin’s precarious spot, they say.

But Ted Pappageorge, the secretary-treasurer of Culinary Union Local 226 and Bartenders Union Local 165, isn’t buying the tale of a property in distress because of the money backing it.

The resort’s ownership team includes a multibillion-dollar Canadian pension fund, an investment management firm and Virgin Group, which is owned by the British billionaire, Sir Richard Branson.

The strike, which started Nov. 15, is the longest open-ended demonstration in decades along the Resort Corridor. While the 2002 picket outside the Golden Gate on Fremont Street was a comparatively clean 10-day operation, Culinary’s current dispute with Virgin Hotels has no end in sight.

Hundreds are now out of work and living on strike pay, $500 a week. The situation will remain until the union and resort reach a deal.

“In Las Vegas, we fight these hedge funds and big private equity companies that bring billions, like they’ve done here, and they bring no money for workers,” Pappageorge said. “We’re going to fight until they pay these workers a fair contract.”

Shortly before the strike started, Virgin proposed a contract that amounted to a yearly 30-cent increase to hourly wages over five years, Pappageorge said.

The union is still unhappy with that deal, but it’s a better offer than the resort’s earlier proposal, which included no raises for the first three years of the pact. The union’s first contract with Virgin, from 2019 to 2023, had at least a 30% pay raise, according to the resort.

“Virgin is very worried about this strike, and they need to come to their senses and negotiate a fair contract. Sixteen months, they offer no raises for years, and it’s a slap in the face to these workers who have been loyal to this company,” Pappageorge said on the picket line last week.

Throughout the strike, the union has reiterated that it’s only asking from Virgin the same as dozens of other Las Vegas resorts have agreed to already, including the Strat and the Westgate Las Vegas, resorts in similar situations to Virgin. The resort told the Sun that the union’s contracts with other properties have led to layoffs, which Pappageorge denied.

“The Culinary Union’s current demand is not financially sustainable for Virgin Hotels Las Vegas,” management wrote in a statement to the Sun. “As an off-Strip property, we do not have the same levels of revenue of the larger on-Strip properties and therefore cannot accept the same financial terms as they have.”

Still, Pappageorge believes property ownership has the money.

The property is partially owned by the pension fund for a Canadian branch of the Laborers’ International Union of North America, or LIUNA. The decades-old fund is one of the largest in Canada, having over $7 billion in assets.

The Culinary Union has started directly targeting fellow unionists north of the border. Last week, it published a video of Victor Del Toro, a porter at Virgin Hotels, speaking directly to “LIUNA brothers and sisters.”

“I have family members in the LIUNA — both sides of the family for many years,” Del Toro said. Speaking directly to the organization, he added that, “They should support us because we’re a brotherhood, and we’re all union.”

Pappageorge also points to another property owner: Fengate, a Canadian company with a $14 billion portfolio managing LIUNA’s investment.

“They’re out to wreck our standards,” he said. “And if they don’t agree to our standards, they should leave Las Vegas and go back to Canada.”

Negotiations haven’t been helped by accusations of bad-faith bargaining and shots across the negotiating table.

The resort’s owner filed multiple complaints against the union alleging a “refusal to bargain” and “coercion” including “statements and violence” with the National Labor Relations Board before the current strike started.

Resort management told the Sun that the union hasn’t engaged in “meaningful negotiations” since January and that when Culinary responds, it’s with “unreasonable counterdemands.”

Culinary dismissed the labor relations board complaints, calling them stunts.

Throughout the strike, the resort has repeated the phrase “let them vote,” referring to its most recent offer. While not a vote, over 600 Culinary Union members signed a petition saying they didn’t agree to the deal.

“You wanted our vote, and here it is — NO!” the petition reads. “We have the right to a wage increase that covers our needs. Many of us must work two jobs, and the company proposal is not enough to cover basic needs like food, rent and gas.”

A union strike authorization vote also garnered 99% approval while the bargaining committee unanimously voted against the contract. Virgin contests that enthusiasm, writing to the Sun that around 60% of its union staff are currently working and that union leadership is “out of step with members.”

Pappageorge called the number a “company lie.”

“A company that is refusing to sign the same contracts, even with concessions that those other companies didn’t get, is bargaining in bad faith,” Pappageorge said.

One concession the union did make was leaving “nonunion venues” at the resort off the table for unionization. While Virgin acknowledged the change in the union’s offer, management added that that request wasn’t made for other properties.

“We have shown the Culinary Union how our current financial position cannot sustain their demands, but they have chosen to ignore that fact,” management wrote. “Virgin Hotels Las Vegas remains focused on reaching a reasonable agreement that secures a brighter future for all our team members and their families.

Who’s running the show?

After a $200 million renovation to what was the Hard Rock Hotel, Virgin Hotels Las Vegas opened in early 2021. Since then, the resort’s hodgepodge of operators have run into setbacks.

For the first couple of years, the Mohegan Tribal Gaming Authority fully ran the resort’s casino. It’s consistently hemorrhaged money.

During its 2022 and 2023 financial years, Mohegan lost over $12 million at the off-Strip property, $4.7 million of which came over three months last year. Before taxes, interest and depreciation chip into profit, the casino made under $700,000 during the first half of this year.

In May, Mohegan and the resort jointly announced a plan to transition casino operations to Virgin Hotels. With the transition, the resort told the Sun that it couldn’t comment on the casino’s recent performance.

Hilton Hotels and AEG Presents, which runs the property’s entertainment offerings, have had a strong past two years, though. In the United States last year, Hilton brought in nearly $8 billion in revenue. After losing nearly $6 million in 2021, AEG Presents bounced back to bring in over $20 million between 2022 and 2023.

Even with lackluster gaming revenue, it’s difficult to get a full sense of the resort’s health since so many of the companies operating on the property are private and don’t publish financial data for each of their locations.

Since the $200 million renovation, ownership has also continued to invest in the property. In August, Virgin Hotels Las Vegas finalized $190 million in low-cost financing for green energy upgrades at the resort.

“Investors in the property provided additional capital post-renovation to cover losses that were in part driven by Culinary wages increasing between 2019 and 2023 as a result of the voluntary recognition of that union,” the resort wrote to the Sun.

The property also highlighted its work to support staff during its renovation. People who worked at Hard Rock until the end were offered large bonuses, and Virgin gave people the ability to return to their jobs once it reopened, according to the resort.

“We’re very happy that they’re investing in the property,” Pappageorge said. “This property is going to do very well, but every company knows that if they come to Vegas, they have to bring money to invest in the workers.”

Edited by: @MaiaDigital www.zonadeazar.com

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