Melco Resorts & Entertainment Limited saw its net revenue decline 11% to US$1.22 billion in the three months to 30 September 2018, its earnings impacted by bad luck in both the VIP and mass market segments at its flagship integrated resort, City of Dreams Macau.
Melco’s revenue fall wasn’t quite as stark as it appears, with new revenue recognition standards affecting how results are reported: under the previous standard revenue would have declined just 5% to US$1.31 billion.
However, it was the company’s poor run at City of Dreams that had the greatest impact with revenue under new standards down 16.1% to US$600.9 million and Adjusted EBITDA falling 40.3% to US$147.1 million.
Rolling chip volume at City of Dreams increased from US$11.2 billion in 3Q17 to US$12.3 billion, but rolling chip win rate was just 2.4% compared with 3.5% in the same period last year. Likewise, mass market table drop grew 16.8% to US$1.34 billion but saw hold fall from 32.3% to 27.8%.
Gaming machine handle was also up from US$981.7 million to US$1,122.2 million in the quarter.
At Studio City, revenue was down 10.2% to US$345.2 million with Adjusted EBITDA also slightly down to US$89.4 million.
Rolling chip volume was flat at US$5.1 billion but luck again ran against Melco with a win rate of 3.1% compared with 4.0% in 3Q17. Mass market table games drop grew 8.1% to US$807.9 million with hold up slightly to 27.2%. Gaming machine handle also increased to US$641.6 million.
Melco’s original Macau property Altira Macau saw net revenue relatively stable at US$90.2 million, with rolling chip volume up from US$4.2 billion to US$5.5 billion and mass table drop from US$112.4 million to US$130.8 million in 3Q18.
In the Philippines, net revenue was slightly down to US$141.7 million at City of Dreams Manila, where Adjusted EBITDA fell from US$57.3 million to US$55.2 million.
Rolling chip volume held steady at US$3.0 billion while mass table drop enjoyed a 17.7% increase to US$204.9 million. Gaming machine handle for the third quarter was US$935.0 million, up from US$757.3 million.
Melco Chairman and CEO Lawrence Ho noted ongoing upgrades at City of Dreams in Macau as having impacted results with the company looking forward to bringing new VIP space online in early 2019.
“The opening of Morpheus only marks the beginning of the relaunch of City of Dreams,” he said. “On top of that, we are upgrading our VIP gaming spaces that are expected to open over the next six months. We will also commence the rolling refurbishment of the Nüwa after Chinese New Year 2019 and the redevelopment of the Count:Down in the second half of 2019 into a new, luxurious, ultra-cool hotel – Libertine.”
On Japan, Ho stated, “We expect development of the next generation of integrated resorts to soon commence in this incredibly exciting, yet currently underpenetrated, tourism destination. 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.”
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