Casino operator Melco Crown Entertainment (MCE) saw its Q1 profit fall 75% as Macau’s ongoing revenue slump continued to weigh heavy on the city’s casino concessionaires.
For the three months ending March 31, MCE reported revenue down 22% to $1.05b, adjusted earnings down 35% to $253.3m and net income down by three-quarters to $60.6m. MCE CEO Lawrence Ho blamed the decline on Macau’s “challenging” environment, which had resulted in decreased action at both VIP and mass market gaming tables.
MCE’s flagship property City of Dreams reported revenue down 25% to $806m, while earnings fell 31% to $235.8m. VIP turnover was down 44% but win percentage improved 0.2 points to 3%. Mass market table drop was down a far more reasonable 7.5% but win slipped 1.6 points to 35.9%. Gaming machine handle was down 15% and non-gaming revenue fell 5.6% to $66.7m.
Altira Macau revenue fell nearly 35% to $148.7m and earnings swooned 80% to $6.8m. VIP turnover was down over one-quarter and win rate fell 0.4 points to 2.5%. Mass market turnover fell 22% but win improved nearly four points to 17.2%.
Revenue from the Mocha Clubs slots operation was off over 11% to $34.9m as the number of machines in operation dropped by 200 to around 1,200. Net win per machine per day was flat year-on-year.
The new City of Dreams Manila, which had its soft launch in December and the official opening in the first week of February, reported revenue of $52.7m and earnings of $2.9m. VIP turnover was $185.5m while win rate was a negative 0.8%. Mass market table drop came to $101.8m, gaming machine handle hit $385.7m and non-gaming amenities contributed $20.2m.
MCE’s new Studio City project (pictured) in Macau remains on track to open in Q3. MCE recently announced that major nightclub brand Pacha would open a new venue in Studio City. Ho said the partnership with “the biggest nightclub brand in the world” reflected MCE’s “commitment to diversify the leisure destination appeal of Macau.”
MCE’s share of Macau’s overall market fell 1.1 points to 12.9% in April. Sands China was the market leader at 24.1%, easily edging out SJM Holdings at 21.7%. Galaxy Entertainment Group placed third with 20%, followed by Wynn Resorts (11.8%) and MGM China (9.6%).
TABLE UNCERTAINTY CLOUDS OUTLOOK
MCE still doesn’t know how many gaming tables Studio City will be allocated by Macau’s government. Last month, MCE warned that it would technically be in default of a $1.4b loan if the property didn’t receive at least 400 tables.
Last week, two different analysts projected that Phase 2 of Galaxy Entertainment’s Galaxy Macau, which opens May 27, would be allocated 150 new tables, well below the property’s original expectations. But Macau officials announced this week that no decision had yet been made as to Galaxy’s new table allotment.
On the analyst call, MCE execs were cagey about how many tables they expect. The property has capacity for over 500 tables and Ho said it needs at least 400 to ensure the gaming floor is “happening and busy.” Fewer than 400 tables would be “less than optimal” and Ho believes MCE deserves more tables given its commitment to non-gaming amenities on a “pound for pound basis” with its Macau rivals.
