Casino operator Melco Crown Entertainment (MCE) revenue rose more than one-fifth in Q3 thanks to contributions from its new Studio City property in Macau and a strong performance by its City of Dreams Manila casino.
Figures released Thursday showed MCE revenue rising 22% to $1.15b in the three months ending September 30, while operating income shot up 220% to $108.9m and net income nearly doubled to $62m.
MCE’s original flagship Macau property City of Dreams saw revenue fall 7% to $621m while adjusted earnings dipped 11% to $170.4m. VIP turnover showed a rare sign of health as turnover shot up 14%, although this was spoiled by a falling VIP win rate. Worse, mass market table drop fell 8% and slots handle fell 17%.
Altira Macau revenue fell 8% to $129m thanks to across the board declines in VIP, mass tables and slots activity, while the Mocha Clubs slots business reported revenue down 12% to $31.8m.
Studio City, which launched on October 27, 2015, reported revenue of $229.5m (up from $184m in Q2) and earnings of $52.7m (up from $24.6m). The property won’t launch its first VIP tables until this weekend, but its mass tables reported table drop of $657.6m (+11%) and slots handle hit $588m (+21%).
In the Philippines, City of Dreams Manila revenue surged nearly 43% to $131m while earnings nearly doubled to $45m. VIP turnover rose one-third to $1.6b while VIP win hit a stellar 4%, well above the expected range of 2.7% to 3%. Mass table drop rose one-quarter to $147m while slots handle gained 17.4% to $597m.
LAWRENCE HO SAYS DON’T CALL IT A COMEBACK … AT LEAST, NOT YET
Sounding a little weary on the analyst call, MCE CEO Lawrence Ho acknowledged off the bat that Studio City had failed to live up to the company’s expectations, but Ho claimed there was still “a lot of ramp to go” in the property’s ramping up operations, including this weekend’s launch of VIP gaming. MCE confirmed that Studio City’s VIP tables would be transferred from City of Dreams and Altira.
Ho said he was “cautiously optimistic” that three months of Macau revenue gains meant that the market had “stabilized” but Ho said it was still “too early to call it a recovery.” Ho noted that the gains had come amidst the launch of two major integrated resorts, and he wasn’t entirely sure the momentum would last.
Studio City is adjacent to Sands China’s new Parisian Macao and Ho noted that the replica Eiffel Tower had generated impressive foot traffic, some of which spills over to Studio City. But Ho expressed doubt that “the customer mix is exactly identical” between the two properties, and thus it’s unclear how much of a tangible benefit this proximity offers Studio City.
Asked by analysts about the potential fallout from China’s recent arrests of several Crown Resorts execs, Ho said MCE had become “even more mindful” of its mainland marketing activities to ensure it didn’t incur similar wrath. In the short-term, Ho expects “hesitation” from some of MCE’s mainland clients regarding “traveling and gaming” but believes it’s still too early to judge the long-term impact.
