Travellers International Hotel Group Inc, operator of the Resorts World Manila casino resort (pictured) in the Philippines capital, on Monday reported net revenue of PHP6.33 billion (US$127.4 million) for the first quarter of 2017, down by 1.8 percent from the prior-year period.
The company said it recorded a 5.6-percent year-on-year decrease in gaming revenue, to PHP5.26 billion. “The decrease was due to a lower VIP win rate which offset the increase in revenues from the non-VIP segment,” the firm said in a filing to the Philippine Stock Exchange.
Non-gaming revenues however increased by 9.0 percent as compared to the first quarter of 2016, to PHP1.07 billion.
The decrease in revenues in the first three months of 2017 was offset by an 18.2-percent decrease in promotional allowance, said the firm. Promotional allowances – which include revenue share with junket operators – reached PHP513.1 million in the three months to March 31, compared to PHP627.2 million for the same period in 2016.
Promotional allowances as a percentage of gaming revenue declined to 9.8 percent in the first quarter, compared to 11.3 percent in the prior-year period.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) for the three months to March 31 increased by 1.4 percent year-on-year, to approximately PHP1.42 billion.
Travellers International – a venture between Philippine-based Alliance Global Group Inc and Genting Hong Kong Ltd – saw its net profit fall 40.9 percent year-on-year to about PHP686 million in the first quarter of 2017, compared to PHP1.16 billion in the prior-year period.
“EBITDA has been flattish at an average of PHP1.4 billion in the past eight quarters,” said analysts Alex Poon and Praveen K Choudhary of Morgan Stanley Asia Ltd.
“Phase 3 adding 60 percent more hotel rooms in 2018 is positive, but market share risk remains before the opening as Entertainment City grows stronger,” they added in a note on Monday.
The company said the expansion of Resorts World Manila via construction of Phase 3 is progressing.
“Resorts World Manila’s continued expansion projects will further enhance the existing diversified offerings aimed to provide a holistic customer experience,” Kingson Sian, president and chief executive of Travellers International, said in a statement.
“We remain confident that the Philippine economy and the tourism industry will continue to grow and we look forward to launching our Phase 3 development by 2018,” he added.
The opening of the Marriott West Wing last year completed the Phase 2 expansion of Resorts World Manila. Phase 3, consisting of three hotels – Hilton Manila, Sheraton Manila Hotel and Maxims II – is targeted for completion in 2018. Phase 3 will also include additional gaming areas, new retail spaces and six basement parking decks, said the release.
Travellers International last week announced the payment of a final dividend for 2016 worth PHP630.2 million, or PHP0.04 per share.
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”Continued negative coverage of the Abe administration, coupled with political losses for the Liberal Democratic Party ... may reduce support for the gaming agenda, which already has only limited public support”
Analyst at brokerage Sanford C. Bernstein