Fortune finally has frowned on Harrah’s Cherokee Casino. Eleven years after opening, the casino has dealt its first layoffs, dropping employment from 1,800 to 1,700 after revenue slipped 8.5% last year. “When the customers aren’t here, we don’t need as many people to serve them,” spokeswoman Joyce Dugan says.
The cuts come as tourism, heavily dependent on disposable income, declines. The region’s unemployment rate jumped to 8.7% in December, nearly double the 4.6% it had been a year earlier. The Harrah’s cuts, though too late to be reflected in the December statistics, are particularly noteworthy.
The casino is the state’s largest employer west of Asheville and has pumped billions into the region’s economy since opening in 1997. It’s owned by the Eastern Band of Cherokee Indians, but more than half of the workers live off the reservation, mostly in Swain, Jackson and Haywood counties. The tribe doesn’t disclose profit, but outsiders estimate it netted about $250 million last year. That’s split between tribal government, which uses its share to cover health care, police and other services, and its 1,350 members. Principal Chief Michell Hicks says the tribe anticipated the economic slowdown last fall and pared spending. The monthly payout to each member dropped 11% to $4,473 from June to December.
But recession won’t slow the casino’s ambitious expansion plans. It’s spending $633 million to add space for gambling, stores, a 3,000-seat performance hall and a second hotel, which will boost its room total to about 1,000. “We got loans at a wonderful rate that was locked in, and we had wonderful weather for construction last summer and fall,” Dugan says.
A construction slowdown in western North Carolina — another big contributor to the rising unemployment rate — means the casino project has more contractors willing to work for less money. “People ask us why we’re going on with construction,” Dugan says. “We can’t miss this opportunity. Things will pick up again, and we can’t wait until they do to start to get ready.”
Project is out of Ginn
Unable to chip away its mountain of debt, Ginn Resorts Co. sold Laurelmor, a 6,600-acre golf-course community astride the Watauga-Wilkes county line, to Linger Longer Communities LLC of Greensboro, Ga., for $32 million. The sale was part of a settlement between the project’s chief lender and Ginn’s two Laurelmor subsidiaries, which declared Chapter 7 bankruptcy in December. Linger Longer plans to relaunch Laurelmor later this year. Ginn Resorts, based in Celebration, Fla., had sold about 200 of 2,500 lots (cover story, August). Hamstrung by recession, it couldn’t make payments on more than $600 million it owed on Laurelmor and three other projects.