Southeast Asian casino operator Donaco International Ltd saw its revenue and EBITDA decline significantly in the three months to 31 December 2019, hindered by increased competition in Poipet and a horrible run of luck at its Aristo International Hotel in Vietnam during December.
Releasing its first revenue update since the dramatic boardroom coup that saw three directors ousted and CEO Paul Arbuckle resign in late November, Donaco said the company’s business “deteriorated following the AGM” with a “solid November month followed by a very weak December.”
Group-wide, Donaco’s net revenue fell 26.1% year-on-year to AU$16.7 million (US$11.2 million) with Property Level EBITDA down 52.4% to AU$5.1 million (US$3.4 million).
Star Vegas in Poipet was a major contributor to the decline, with VIP turnover falling by almost half to just THB9.59 billion (US$308 million) and net revenue by 33.0% to THB282.4 million (US$9.1 million). Property Level EBITDA was down 49.9% to THB97.3 million (US$3.1 million).
“The Star Vegas business is feeling the impact of increased competition in the Poipet area, particularly from the new Galaxy casino, which opened in May 2019,” Donaco said. “In addition, illegal casinos in Bangkok were active in December, causing a decline in visitation to the whole Poipet strip in that month.”
In Vietnam, VIP turnover increased considerably to US$249.3 million compared to 4Q18, but Aristo “suffered a remarkable run of losses to big VIP players in the month of December, resulting in a gross VIP win rate of only 0.12% for the month.”
As a result, net revenue fell 37.7% to US$2.2 million and Property Level EBITDA by 82.4% to just US$300,000.
Donaco did, however, point to more positive signs through January, stating that the Star Vegas slots business has shown particular improvement due to management initiatives to deploy new slot machines on the floor, from new suppliers and on better terms and conditions.
It added that Aristo’s VIP gross win rate improved to a more normal level in January with turnover levels strong.
“The Board and management continues to work on a detailed plan to improve the operations of both businesses,” Donaco said.
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