Slower VIP gaming business coupled with a weaker peso dragged Philippine casino operator Travellers International Hotel Group Inc.’s net profit down by as much as 15 percent in 2016.
The Resorts World Manila operator announced in Tuesday’s regulatory filing that its annual net profit tumbled to PHP3.4 billion (US$67.83 million) last year compared to PHP4.02 billion ($80.2 million) in 2015.
The culprit behind Travellers’ net profit slip was its lackluster VIP segment, which fell 17.4 percent year-on-year. Travellers reported cornering P303.5 billion ($6.05 billion) in VIP turnover in 2016.
Traveller’s saving grace was its hotel and food/beverage operations and better cost management, which bolstered its cash flow by four percent to P6.4 billion ($127.68 million) and increased its overall net revenue by two percent to P25.09 billion ($500.54 million).
“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.”
The casino operator’s gross gaming revenues slipped by 2.3 percent to P23.65 billion last year mainly due to the decline in bets made by the high-rollers.
The non-VIP business segment, however, rose by 8.3 percent.
Overall gaming bets or “drops” for mass table games climbed 2.8 percent, to PHP23.34 billion ($465.45 million). On the other hand, slot machine handle rose by 9.3 percent, to PHP125.15 billion ($2.5 billion) while electronic table games rose 13.3 percent to PHP1.37 billion ($27.32 million).
Combining the VIP and non-VIP businesses, overall bets last year dropped by 10.4 percent from the previous year.
But aside from a weak VIP segment, Travellers’ net debt position and unrealized foreign exchange losses also contributed to a lower annual net profit.
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 ($29.11 million) last year compared to P775.4 million in 2015.