Resorts World operator tightens belt, nets P2.9B

Travellers International Hotel Group Inc., operator of Resorts World Manila (in photo). INQUIRER FILE PHOTO

Travellers International Hotel Group Inc., the developer and operator of Resorts World Manila, saw its first semester net profit rise by 25 percent year-on-year to P2.9 billion as its belt-tightening measures succeeded in offsetting the slowdown in gaming and non-gaming revenues.

First semester revenues declined by about a fifth from the same semester last year to P15.27 billion as gaming revenues fell by nearly 22 percent to P13.58 billion over the same period, the company reported in a regulatory filing Friday.

Betting or “drops” volume improved across segments, growing by 4.4 percent from last year. In the second quarter alone, the volume grew by about 18.4 percent year-on-year.

The growth in drops, however, was offset by a decline in the win rate, which was below historical normal rate, particularly in the high-roller or VIP (very important person) segment.

VIP rate in the first half of the year was at 2.2 percent compared to the 3.7 percent seen in the same period last year.

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.

The figures meant that, while the volume of cash VIP clients were “dropping” on the table improved, wins on those bets—or the hold rate—declined. As a ratio of total bets, the “house” won less compared to that of the previous year.

Travellers officials said that the decline in the “hold” rate would normalize and veer back to historical levels over time.

Also, revenues from hotel, food and beverage also slipped by 16.4 percent year-on-year to P1.12 billion. Travellers said all hotels registered higher occupancy rates, however, as the company “made full use of the facilities to drive gaming patronage.”

Occupancy rates for the three hotels in the first half are: For Maxims, 87 percent; Marriott, 87 percent; and Remington, 89 percent.

April Lee-Tan, head of research at online stock brokerage COL Financial, said the six-month profit eked out by Travellers accounted for only 44.7 percent of her firm’s full-year estimate and 38.1 percent of consensus forecasts.

In the second quarter alone, Travellers’ net profit eased to P1.16 billion from P1.31 billion a year ago on lower gaming and non-gaming revenues.

Six-month operating profit, however, improved to P3.89 billion from P3.37 billion in the same period last year due to the decline in general and administrative expenses.

Travellers’ net cash position stood at P7 billion at end-June.