Travellers’ profit misses forecasts after RWM attack

Travellers International Hotel Group reported a lower-than-expected profit for the first half of 2017 after a June 2 attack shut down gaming operations at Resorts World Manila.

The company reported net profit of P373 million in the first half of 2017, down 79.2 percent compared to P1.8 billion in 16H1.

Net revenues for the six months declined to P10.4 billion, compared to P12.5 billion in 16H1.

“The decline was due to the June 2, 2017 incident that led to the closure of the gaming area for 27 days and portions of the non gaming segment,” said Travellers in a filing to the Philippine Stock Exchange.

“As a result, promotional allowance also declined over the six and three month period by

31.8 percent and 45.4 percent, respectively,” it added.

Morgan Stanley analyst Alex Poon said the results were worse than he had expected.

“We cut our 2017 EBITDA and net profit estimates by 18 percent and 44 percent to P4.5 billion and P1.5 billion, respectively, due to a 2Q17 EBITDA miss by 22 percent and higher-than-expected income tax for prior years’ adjustments and losses on casualties of P159 million in 2Q,” he said in a note.  

He added that the biggest surprises from the results had been high operating expenditure despite the shutdown and a significant reduction in gaming capacity.

The number of VIP and mass tables, and slots/ETG fell by 16 percent, 46 percent and 25 percent half on half, as the company shut down premium mass operations on the second floor and will turn it into non-gaming in future.

“Some mass tables were added back in July but still 20-30 percent lower than 1Q17,” Poon said.

The closure brought down gross gaming revenue in the half year, reaching P9.2 billion in 17H1.

Non-gaming revenue, from hotel, food and beverage however still recorded year-on-year growth in revenues, reaching P1.5 billion in 17H1, up 17.2 percent.

“The effect of the June 2, 2017 incident led to the closure of Maxims Hotel for 28 days in June resulting to a drop in overall hotel occupancy rates.”

However, all three hotels registered an average occupancy of 80 percent in the half-year.