Melco Resorts saw its net revenue for the three months to 30 June 2018 decline 5% to US$1.23 billion, impacted by higher reported commissions under a new revenue recognition standard issued by the Financial Accounting Standards Board and a lower win rate at both City of Dreams and Studio City in Macau.
Group-wide revenue actually increased slightly under the old revenue recognition standard, up by 3% to US$1.34 billion compared with the US$1.30 billion in net revenue reported in 2Q17, while an improved performance at Altira Macau and City of Dreams Manila saw Adjusted EBITDA for the quarter increase 8% to US$355.5 million.
Operating income for the second quarter was US$118.1 million compared with operating income of US$127.4 million 12 months earlier, a decrease of 7%.
At flagship property City of Dreams, net revenue declined 10.4% to US$577.8 million on the back of lower rolling chip volume and bad luck in mass. Rolling chip volume fell from US$12.2 million in 2Q17 to US$10.5 billion this time around, while mass table drop increased 10.2% to US$1.19 billion only to see hold percentage fall from 32.4% to 28.4%. Gaming machine handle for the second quarter of 2018 was US$1.12 billion, compared with US$937.9 million in the second quarter of 2017.
City of Dreams generated Adjusted EBITDA of US$171.5 million in 2Q18, down from US$175.3 million in the same period last year.
Net revenue at Studio City fell slightly to US$314.1 million with Adjusted EBITDA of US$73.2 million, down from US$80.7 million year-on-year.
Rolling chip volume enjoyed a strong increase from US$4.7 billion in 2Q17 to US$6.1 billion but was impacted by win rate decreasing from 3.3% to 2.7%. Mass market table games drop also increased from US$661.4 million to US$814.3 million, with hold percentage down from 26.8% to 24.5%. Gaming machine handle grew 22.3% to US$614.9 million.
In the Philippines, City of Dreams Manila saw a slight 1.3% decrease in net revenue to US$173.9 million while Adjusted EBITDA climbed from US$62.8 million in 2Q17 to US$87.3 million.
Rolling chip volume fell slightly to US$3.0 billion, offset by a strong win rate of 3.7%. But mass market table games drop increased significantly to US$196.9 million for the second quarter compared to US$169.8 million 12 months earlier, with gaming machine handle also up to US$855.9 million.
Altira Macau booked an improved performance with net revenue up 14.4% to US$123.1 million while Mocha Clubs fell slightly to US$28.0 million.
Melco Resorts Chairman and CEO Lawrence Ho was quick to tout ongoing developments of the company’s Macau properties as key to the company’s future performance.
“The opening of Morpheus marks a new beginning for City of Dreams,” he said. “Our premium portfolio now includes the sleek, modern Morpheus; the chic, classic Chinese Nüwa; and the upcoming hotel Libertine, the funky rebel, which starts development in the second half of 2019. They all offer guests premium and luxury experiences but each has its own distinctive style and design while maintaining the same focus on quality and attention to detail.
“At Studio City, we are embarking on a series of property upgrades to refine the entertainment offerings, which include an incredible new stunt show created with our new partner Stufish, a London-based world-renowned entertainment architect, Asia’s largest Virtual Reality zone and a fantastic new street of food and beverage.”
Ho also reiterated the company’s focus on Japan following passage of the IR Implementation Bill last Friday.
“We expect development of the next generation of integrated resorts to soon commence in this incredibly exciting, yet currently underpenetrated, tourism destination,” he said. “With our focus on the Asian premium segment, high quality assets, dedication to world-class entertainment offerings, market-leading social safeguards and compliance culture, and our commitment to being an ideal partner to local governments and communities alike, we believe Melco is in a strong position to help Japan realize the vision for integrated resort development with a unique Japanese touch.”
