Better lucky than good: Melco’s VIP turnover falls, VIP win rises


melco-resorts-casino-vip-gambling-luckyCasino operator Melco Resorts & Entertainment (MRE) eked out a modest revenue gain in Q1 thanks to a serious run of VIP gaming luck.

Unaudited figures released Tuesday show MRE’s revenue hitting $1.36b in the three months ending March 31, around 4% higher than the same period last year. However, operating income fell 15% to $188m and net income tumbled by one-quarter to $117.4m.

MRE CEO Lawrence Ho credited the company’s performance as “solid” given the ongoing “volatility” in Macau’s VIP gambling market. Macau’s VIP market slipped to below 49% of Macau casino gaming revenue in Q1, the first time the VIP segment has taken a back seat to its mass market rival.

Oddly enough, MRE’s Macau properties all reported VIP turnover declines while posting improved VIP win rates, all of which were above the expected range. City of Dreams saw VIP turnover fall 8% to $10.2m in Q1, but win rate rose 0.4 points to an above-average 3.4%. Altira Macau’s VIP turnover was off nearly 11% to $5b while win shot up 0.8 points to 3.8%.

Studio City suffered the biggest VIP plunge, falling 59% to just $2.7b, which the company blamed on the overall market weakness and “increasing competition in and around Cotai.” However, here again, VIP win was up 0.6 points to 3.3%.

Conversely, mass market table drop was up 11% at City of Dreams, up 3% at Studio City and essentially flat at Altira. Gaming machine handle suffered small dips at City of Dreams and Studio City but more than doubled at Altira after it boosted its average number of machines by one-third year-on-year.

Interestingly, non-gaming revenue was basically flat at Studio City and Altira but City of Dreams saw its non-gaming revenue jump nearly one-third to $96.2m, in part due to the grand opening of the iconic Morpheus hotel in June 2018.

In the Philippines, City of Dreams Manila reported flat revenue of $142.4m while earnings inched up 3% to $60.5m. VIP turnover fell $500m to $2.3b but, as with the Macau properties, VIP win improved 0.3 points to 3.2%. Mass table drop suffered a modest dip but gaming machine handle rose 10.5% to $907.5m. However, CEO Ho said he was “more cautious about 2019 and beyond” regarding the property’s capacity to grow given “increased competition in and around Manila.”

MRE suffered a bit of a PR hiccup this week with the Chapter 11 bankruptcy filing of New Cotai Holdings, a minority partner in the Studio City joint venture. It’s been suggested that MRE might buy up the Studio City stake of its troubled partner but the company said in its Q1 report only that it doesn’t expect the filing to have any material impact on Studio City’s operations.