Travellers International Hotel Group Inc, owner and operator of the Resorts World Manila casino property, on Friday said its net profit nearly doubled for the year ended December 31. That was despite a 5.4 percent fall in gross gaming revenue (GGR).
Annual profit was approximately PHP5.46 billion (US$121.4 million) compared to PHP2.74 billion in 2013, a rise of 98.8 percent.
Travellers International is a venture between Philippine-based Alliance Global Group Inc and Genting Hong Kong Ltd.
The latter company said in a filing to the Hong Kong Stock Exchange that Travellers International’s GGR for the full year was just under PHP28.38 billion, compared to PHP30.00 billion in 2013.
“The decline in gaming revenue is a function of the decline in volume, particularly in the VIP segment as there was a deliberate move in holding less [sic] tournaments and focus on growing the core customer base,” said Genting HK of the joint venture’s results.
Direct costs for Travellers International – those associated with gaming, hotel, food and beverage operations but excluding amortisation and depreciation – fell 11.2 percent to approximately PHP10.76 billion from nearly PHP12.11 billion in 2013.
“The improvement in direct costs came primarily from lower gaming licence fee as a result of lower gross gaming revenue and the operating efficiency gains from the various cost management initiatives instituted by the company since the second half of 2013,” stated Genting HK.
The firm said that Travellers International’s gaming licence fee for 2014 was 4.7 percent down year-on-year at PHP6.20 billion, compared to PHP6.51 billion in 2013.
It added that under the terms of the “provisional” gaming licence granted by the local regulator the Philippine Amusement and Gaming Corp (Pagcor), the annual licence fee was “25 percent or 15 percent” of annual GGR.
Genting HK also gave a commentary on the dispute between the local tax agency, the Bureau of Internal Revenue (BIR) and Pagcor on what income tax could be levied on private sector gaming operations in the country.
Management said a December 2014 decision of the country’s Supreme Court had “unequivocally” confirmed that “income from gaming operations is subject only to 5 percent franchise tax, in lieu of all other taxes”. The BIR had been seeking to impose a 10 percent income tax on gaming operations.
Travellers International was set up to invest in private sector casino developments in the Philippines. Resorts World Manila, its first effort, had a first phase opening in 2009.
Travellers International said on Friday in its own filing to the Philippine Stock Exchange (PSE) that it had spent PHP5.90 billion in 2014 for its ongoing phase 2 and 3 projects at Resorts World Manila.
“The Marriott Grand Ballroom is set to formally open in July of this year, while the Marriott West Wing, which will add 227 room keys, is due for delivery by the end of 2015. Phase 3 complex is slated for turnover by the end of 2017 as planned,” said the firm.
In a filing in January, the joint venture said phase 3 of Resorts World Manila would have extra gaming space.
Travellers International would continue to “focus on delivering quality of earnings to its shareholders through the top line growth in revenues and expense management leading to continued expansion in its EBITDA and net income,” said Kingson Sian, the firm’s president, in a statement accompanying the 2014 results filing to the PSE.
The joint venture’s second scheme – the US$1.1 billion Bayshore City Resorts World – broke ground in the autumn and is due to open in the final quarter of 2018, according to a Travellers International statement on October 1.
In September 2014, Travellers International subscribed to 95 percent of the increased authorised capital stock of Resorts World Bayshore City Inc, the company that owns and is to operate Bayshore City Resorts World, which will be part of Pagcor’s Entertainment City casino zone in Manila.
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”China has been strengthening the control over capital flow, and the impact of that has already been reflected [on Macau’s gaming revenue trend]. There should not be any bigger impact from the new… legislation [on the mainland] … on the gaming revenue trend here”
Wilfred Wong Ying Wai
President of Macau casino operator Sands China