Resorts World Manila (RWM) owner and operator Travellers International Hotel Group Inc. saw a 15.4-percent decline in net profit last year to P3.4 billion on slower high-roller or VIP gaming business alongside higher US dollar bond financing costs arising from the peso depreciation.
But Travellers saw a 4-percent rise in cash flow to P6.4 billion alongside a 2-percent increase in overall net revenues to P25.09 billion on higher earnings from hotel and food/beverage operations as well as better cost management, the company said in a regulatory filing on Thursday.
Travellers’ gross gaming revenues slipped by 2.3 percent to P23.65 billion last year mainly due to the 17.4 percent decline in bets made by the high-rollers or the VIP segment. The non-VIP business segment, however, increased by 8.3 percent. Combining the VIP and non-VIP businesses, overall gaming bets or “drops” last year decreased by 10.4 percent from the previous year.
The gaming firm’s win rate, on the other hand, improved to a blended rate of 5.2 percent compared to the 4.8 percent registered in the previous year. The VIP segment win rate, likewise, improved to 3 percent from 2.8 percent in 2015. This means that while the overall volume of bets declined, Travellers earned more from each peso “dropped” by casino players compared to the previous 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.
“We are confident that the diversity of our non-gaming businesses and attractive entertainment offerings set us apart as a tourism destination,” Travellers president and chief executive officer Kingson Sian said in a press statement. “This will enable us to deliver continued growth and stable financial performance in the years to come.”
Travellers’ net profit has declined in the last two years as competition turned tougher especially with the opening of new integrated gaming resorts in Pagcor City. But it is banking on expanding non-gaming revenues as well as on improved prospects for the overall gaming industry amid higher foreign tourist arrivals. It has built additional hotel and conference facilities to support future growth.
Total room count for the three hotels in Newport City across the Ninoy Aquino International Airport – Maxims Hotel, Remington Hotel and Marriott Hotel Manila – increased to 1,454 last year with the addition of 228 premier rooms and suites from the Marriott West Wing.
“Philippine tourist arrivals have grown steadily in the past seven years with 2016 reaching six million international arrivals. Resorts World Manila is ready to accommodate the influx of tourists to the country,” said Sian. “The projected completion of RunWay Manila, the pedestrian link bridge between NAIA Terminal 3 and Newport City, in the second quarter of 2017 will make RWM an even more convenient destination for leisure and business travellers.”
The opening of the Marriott West Wing completed the phase 2 expansion of RWM. Phase 3 development, consisting of three hotels – Hilton Manila, Sheraton Manila Hotel and Maxims II – is now underway. Sheraton Manila Hotel is targeted for completion by the last quarter of 2017 while Hilton Manila is expected to open in the first quarter of 2018. Phase 3 will also include additional gaming areas, new retail space and six basement parking decks.
Meanwhile, Travellers’ net debt position ended last year at P8.6 billion as the company continued to be aggressive on its expansion projects. Finance cost surged to P1.46 billion last year compared to P775.4 million in 2015, attributed to “unrealized foreign exchange losses on the outstanding $300 million bond given the depreciation of the Philippine peso.”