Lower ‘win rate’ crimped Travellers’ 2013 earnings

Travellers International Hotel Group Inc., developer and operator of integrated gaming and tourism estate Resorts World Manila, posted a 59-percent decline in net profit last year to P2.74 billion on financing costs and a lower “win rate” for its casino.

Travellers—led by a partnership between the group of tycoon Andrew Tan and the Genting group of Malaysia—reported to the Philippine Stock Exchange on Thursday that net revenues increased by 5 percent primarily from an improvement in gross gaming revenues (GGR).

Full-year GGR went up by 6.9 percent to P30 billion as volume of bets placed or dropped by gamers grew by an average of 22 percent. In particular, the VIP (high-roller very important person) segment grew by 27 percent.

In its report, Travellers said its performance would have shown a healthy growth rate over 2012 had the normal “win rate” been achieved. The company instead posted relatively low “win rates” particularly in the third and fourth quarters of 2013. As such, cash flow as measured by Traveller’s earnings before interest, taxes, depreciation or amortization (Ebitda) declined by 26.7 percent to P6.72 billion.

VIP win or hold rate for full year 2013 was at 2.6 percent or below the historical average. In 2012, the VIP win rate was at 3 percent.

A casino’s “win” or “hold” rate is based on the element of luck but is also affected by the spread of table limits, a player’s skill and resources and amount of time spent in the casino.

“They are basically saying that the win rate is now as good in the VIP segment, that’s why Ebitda is lower although VIPs traded more,” said Jose Mari Lacson, head of research at local stock brokerage Campos Lanuza and Co.