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CNN Live At Daybreak

America Recovers: Entertainment Sector Being Hit Hard

Aired September 21, 2001 - 08:09   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: America obviously trying to recover from last week's terror attacks. But there is a ripple effect drifting across the economy.

Many sectors are suffering, including the entertainment and leisure industry. And this morning, we get a glimpse of how that sector is making out from our CNN correspondents. Michael Okwu is in New York City, where a bunch of Broadway shows are talking about potential cancellations. Frank Buckley joins us from Las Vegas this morning, where 240 conventions have been cancelled so far. And John Zarrella joins us from Florida, who has been hit hard by this.

Let's start off with Michael this morning.

Tell us a little bit about occupancy rates in hotel right now.

MICHAEL OKWU, CNN CORRESPONDENT: Paula, well, I've got to tell you, the occupancy rates in the hotels have gone down. I am standing specifically in Times Square, which as you know, is the epicenter of the world, and also it's the epicenter of the Broadway industry.

But things are not looking very good on Broadway now. Last week's attack on the Times Square -- I'm sorry -- last week's attack on the World Trade Center certainly took a hit on the Broadway industry. At least four shows -- four shows have cancelled; six shows are vulnerable. We are told now that -- of course, the reason for this is the fact that Broadway is seen as a very, very festive place, and frankly, no one was feeling festive last week. Such shows long- running shows are quite vulnerable like "Les Miserables," "Kiss me, Kate." Those shows are seen as maybe going day-to-day at this point.

And the industry counts so much on tourism. Tourism was down 45 to 50 percent this week and last week. And, of course, not too many people have been traveling. Relatively speaking, even "The Producers" is suffering. Last week, ticket sales were off nearly half a million dollars from the week before, and 30 percent of all ticket orders for the fall season have been cancelled. Things are so bad that unions representing actors, stage hands and other designers essentially agreeing to take a 25 percent pay cut. They call themselves "rescue workers" -- rescue workers for the Broadway stage -- Paula.

ZAHN: All right, Michael, please stand by.

Right now, I'm going to check back in with Frank Buckley from Las Vegas, where the news isn't any better there.

Frank, what is the latest bad economic news? I know you're surrounded by it from there.

FRANK BUCKLEY, CNN CORRESPONDENT: Sadly, that is the kind of economic news we have here in Las Vegas for the operators here and for many of the employees here. We are live on the Las Vegas Strip, which at this hour of the night here, just after 5:00 in the morning, it does look as it always does -- shiny lights and inviting signs. But underneath these lights a very different story.

Joining me is Jim Murren who can give us a very good idea of what's happening. You are the president and CFO of MGM Mirage, the largest private employer in Nevada.

How bad is it?

JAMES MURREN, MGM MIRAGE: Well, we've been hit very badly since the tragedy. Business is down materially in last week and also this week, and we expect it to be weak for the next several weeks, picking up probably starting in November.

BUCKLEY: And we're hearing of unprecedented occupancy levels at around 50 percent, I've been told, and potentially layoffs into the thousands. Tell us where you are in terms of layoffs and occupancy.

MURREN: Well, sadly that's true. We should be running in the 90s right here in the city of properties even better than that in the high 90s. And we're running occupancy city-wide here in the 40s, 50s and 60s, depending on the day. But we look out over the next several weeks, and we see 70s and even in the early -- low 80s going forward.

In the near term, though, there is an enormous human toll to that, and thousands of jobs will be lost here in Las Vegas over the short term. Our job is to make sure we do that humanely and with compassion and bring those people back to work as soon as possible.

BUCKLEY: And you've been saying that in the case of some of these employees that this is not something that they can easily handle, and you are doing your best to extend health benefits. Tell us about that.

MURREN: Well, that's right. These are people that can afford it the least. These are people that need 32 hours a week to get their benefits, and they are getting cut back to 10 hours a week in some cases or temporarily losing their jobs. So we're setting up Web sites, help centers to make sure that our employees, which is our family, know what they need to know in order to get back to work, back on their feet. We're extending health benefits. We're making sure that we're doing everything humanly possible for them, because they are the best employees, and they will be coming back. And we think it's sooner than later.

BUCKLEY: And a great part of the Las Vegas story, in terms of getting people here, is that 50 percent of your business flies in.

MURREN: Right.

BUCKLEY: And I suspect that that's where a great number of your people are not coming in.

MURREN: Well, that's right. Half fly, half drive. And our job as managers is to make sure we maximize the drive-in business, and as our company take a lot of share in that business. And we'll do that, and we'll fill up our buildings in the drive-in market. But right now, the fly-in market is very depressed. We should get 900 flights a day out of our airport here. We're getting 700, and the load factors are 50 percent.

So when people get back on their feet, get back out and are traveling again and stop watching CNN quite as much as they are right now -- they're doing the right thing right now -- but they'll be back on their feet. They're going to want to go out to an affordable vacation, and Las Vegas is obviously a vacation of choice. And we'll get them back here, get them back on the planes and back in Las Vegas.

BUCKLEY: Great. Jim Murren, president and CFO of MGM Mirage -- thanks very much for joining us at the early hour.

A tough economic story here out of Las Vegas -- Paula.

ZAHN: Thanks so much, Frank. Unfortunately, Orlando, Florida is also one of those places whose many, many attractions are very dependent on a flying public.

Let's go down there now to catch up with John Zarrella, who has some new information for us this morning on the economic front -- good morning.

JOHN ZARRELLA, CNN CORRESPONDENT: Good morning, Paula.

Well, I can tell you it's not a really good morning here in Orlando, anymore than it is in Las Vegas or in New York. The situation is pretty bleak down here. You can see we're standing in a parking lot. No matter where you go, parking lots are fairly empty in the Orlando area.

I have to preface it, though, by saying that September, the fall months are usually slow here, but not this slow. Reports of occupancies at hotels down in some cases into the single digits. We drove into the Magic Kingdom yesterday, the parking lot over at Disney -- empty just like this. No cars in most areas of the parking lot over there.

The roads are very quiet. The streets are very quiet. The restaurants in and around the town are very quiet. What we are finding, though, from a lot of the restaurant owners and a lot of the dinner theater owners, and even some of the theme park and attraction people, is that what they're looking to do is to start to attract a lot of the local traffic, people who can drive here, because people are simply not flying here in great numbers.

On the upside, they're saying that they think the convention business will start to rebound in October. They're seeing a little bit of strength there. They have lost 250 conventions or meetings in the month of September here that have been cancelled; more than 32,000 attendees. That's a big hit.

At the theme parks, they're talking about furloughing employees. Some are talking layoffs. Some are still saying, let's wait and see. But clearly, this is a city, particularly a city with more than 40 million visitors a year who come here, who are really dependent on the tourism industry, and right now in September, Paula, it's very shaky.

ZAHN: Now, John, you were saying they are hopeful that things will pick up in a month or two with more convention business. But let's put this number into perspective this morning. You're talking about single digits occupation of hotel rooms in that area? I mean, normally this time of the year, what would those rates be at?

ZARRELLA: Well, they would expect them to be at about 70 percent. Now, the Visitors and Convention Bureau can't really get a handle on exactly what the occupancy rate is overall. But some individual hotels are saying they're down in the single digits -- some big hotels. Some are at 10 percent, some 7 percent, some at 50 percent. But overall, it's hard to get an exact handle on that overall picture.

But, yes, very low occupancy rates. And they say on the bright side, if you were thinking of vacationing here in the Orlando area -- we talked to tourists yesterday -- there is not a better time to do it, because there are no lines on the theme -- at the theme parks, at the rides, and as I know you know, that's unheard of.

ZAHN: Well, that's an unusual way of looking at it. Nevertheless, I think most of America is very frightened by what you're reporting this morning. John Zarrella, thank you so much for that update.

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