City of Dreams Manila boosts gaming revenue

Integrated casino-resort City of Dreams (CoD) Manila saw a big surge in gaming revenue in the quarter ending December 2016, riding on the influx of foreign travellers.

Net revenue in the last quarter of 2016 rose by 78.9 percent year-on-year to $144.7 million, the resort’s developer and operator Melco Crown (Philippines) Corp. reported to the Philippine Stock Exchange on Friday.

Due to higher casino revenues, CoD Manila generated a cash flow of $50.2 million for the fourth quarter, more than tripling the $15.5 million cash flow seen in the same quarter in 2015.

Asked whether CoD had benefited from the influx of more tourists from mainland China, Willy Ocier, vice chair of Belle Corp. – Melco Crown’s partner in this integrated resort project – said the big increase in net revenue was due to the surge in “various tourists from all over.”

About 5.39 million foreign tourists visited the Philippines from January to November last year, 12 percent higher than the level a year ago, mostly from Korea (1.33 million), USA (771,849), China (630,327) and Japan (491,261). This 11-month figure also exceeded the full-year 2015 tourist arrivals of 5.36 million. This year, the Department of Tourism expects tourist arrivals to break the seven-million milestone.

The Philippines is also seen to attract more Chinese visitors as a result of Pres. Rodrigo Duterte’s visit to China in October last year, during which the Chinese government lifted negative travel advisories.

In the case of CoD Manila, the strong growth of gaming revenue was attributed to both higher volume and high “win” rate.

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. While it’s said that the house always wins, sometimes it wins more and sometimes less than the statistical probability.

Rolling chip volume surged to $2.1 billion in the fourth quarter from only $1.3 billion in the previous year.

CoD’s “win rate” also improved to 3.5 percent compared to 2.1 percent year-on-year. This stood much better than the expected rolling chip win rate range of 2.7 to 3 percent.

Mass market table games “drop” or bets increased to $149 million for the quarter versus $106.3 million in the same period last year. CoD’s win rate in the mass market table games stood at 27.8 percent in the fourth quarter versus 27.5 percent year-on-year.

Gaming machine handle – referring to “coin in” or the amount of money played through electronic gaming devices – likewise expanded to $671.3 million for the fourth quarter compared to $420.9 million year-on-year. The win rate in this segment, however, was lower at 5.9 percent compared to 6.2 percent in the fourth quarter of 2015.

Meanwhile, CoD Manila generated non-gaming revenue amounting to $28.1 million, improving from $25 million in the same quarter in 2015. Non-gaming revenue included earnings from food and beverage, hotel room and other retail and entertainment areas.

Net revenue refers to gross sales less the cost of sales.