Travellers’ profit nearly halves in second quarter
Philippines casino developer and operator Travellers International Hotel Group Inc reported a 46.4-percent decline year-on-year in net profit for the three months to June 30. Such profit was PHP622.32 million (US$13.47 million) in the second quarter of 2015, compared to PHP1.16 billion in the prior-year period.
Travellers International, a venture between Philippine-based Alliance Global Group Inc and Genting Hong Kong Ltd, developed and operates the Resorts World Manila casino and hotel complex (pictured) next to Manila International Airport.
Revenue for the three months ended June 30 fell by 20.8 percent year-on-year to PHP5.51 billion, the company said in a filing on Friday. The firm reported adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of PHP1.1 billion, down 22 percent year-on-year.
Gross gaming revenue for the period was down 10.4 percent year-on-year to PHP5.71 billion. Promotional allowances – which include revenue share with junket operators – leapt to PHP1.07 billion in the second quarter of 2015, compared to PHP304.27 million a year earlier. Revenue share with junkets accounted for 18.7 percent of total gaming revenue in the three-month period.
“The increase was due to new revenue sharing agreements with junket operators,” the firm said in Friday’s filing.
Travellers International said its promotional allowances for the first half of 2015 reached PHP1.68 billion, accounting for 13.4 percent of total gaming revenue, up from 6.3 percent in the same period last year.
“The gaming volume decline was in line with our expectations, but EBITDA of PHP1.1 billion (-54 percent quarter-on-quarter, -22 percent year-on-year) was 31 percent below our estimate, reflecting higher promotional allowance and direct costs,” analysts at Morgan Stanley Research Asia Ltd said in a note.
Analysts Xin Jin Ling, Xiangyu Hu and Praveen Choudhary said positive signs included the sequential yield improvement in VIP tables and the decline in expenses due to “cost management initiatives started last year”.
The company reported VIP table drop of PHP174.92 billion for the first half of 2015, down 37.5 percent from the prior-year period. Mass tables drop in the same period fell by a more modest 10.1 percent year-on-year, to PHP10.99 billion
“The decline in drops was offset by an increase in the blended win rate, which is at 5.2 percent for the first six months of 2015 compared to 3.9 percent in the same period last year,” Travellers International said.
In Friday’s filing, the casino operator said that as of June 30 a total of PHP14.3 billion has been spent on the expansion plans of Resorts World Manila. The second phase of the property, which includes the enlargement of the Marriott Hotel Manila and the addition of 227 rooms, should be ready by the first quarter of 2016, it added.
The third phase of Resorts World Manila will include more gaming space and two new hotels to be managed by Hilton Hotels and Resorts and the Sheraton brand of Starwood Hotels and Resorts.
“Resorts World Manila is currently engaged in projects and developments that will offer broader entertainment facilities to our patrons,” Kingson Sian, president and chief executive of Travellers International, said in a separate statement.
“We will continue to focus on strengthening the non-VIP segment, expanding the international market and at the same time growing the non-gaming revenues,” he added.
Travellers International broke ground in October for its US$1.1-billion property called Bayshore City Resorts World at Manila Bay. The project is expected to be completed in the fourth quarter of 2018, it said in Friday’s filing.
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