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China – Melco Crown confirms fourth quarter dip

By - 17 February 2015

A decline in VIP players and less mass-market gaming saw net income for Macau casino operator Melco Crown Entertainment fall to US$1.12bn in the fourth quarter of 2014, dropping by 19 per cent from last year.

The operator said the decline in net revenue was ‘primarily attributable to lower group-wide rolling chip revenues and mass market table games revenues.’

Revenue for the year ended December 31, 2014, was also down. Melco Crown Entertainment reported net revenue of US$4.8bn versus US$5.1 billion in the prior year. The year-over-year decline in net revenue was primarily attributable to lower group-wide rolling chip revenues, partially offset by improved group-wide mass market table games revenues.

Lawrence Ho, Co-Chairman and Chief Executive Officer of Melco Crown Entertainment, said “While 2014 was a challenging year for Macau, I am pleased with both our relative operating performance and the meaningful advancements we have made towards realizing our significant growth pipeline, positioning us to succeed now and in the future.”

For the fourth quarter of 2014, net revenue at City of Dreams was US$895.5m compared to US$1,095.8min the fourth quarter of 2013.

Revenue at Altira Macau dropped to US$173.1m from to US$247.6m in the fourth quarter of 2013.
City of Dreams Manila started operations on December 14, 2014. It generated Adjusted EBITDA of US$0.1m in the fourth quarter of 2014. Together with pre-opening costs, depreciation and amortization and US$1.8 million payments to the Philippine parties under the cooperative arrangement and land rent to Belle Corporation, City of Dreams Manila incurred an operating loss of approximatelyUS$36.6m and a net loss of approximately US$48.6m during the fourth quarter of 2014.

Mr. Ho added: “In Macau, our world-class and unique assets, together with our market-leading premium-focused amenities and service standards enabled us to once again take share, in a disciplined manner, in the mass market table games segments in the fourth quarter of 2014. At the same time, the repositioning of our rolling chip business at both City of Dreams and Altira Macau continues to gather momentum and resulted in an increase in market share during the most recent quarter.

“Our strategy and commitment to continually enhancing our current product offering in Macau, including the ongoing development of our luxury retail precinct and the iconic fifth hotel tower at City of Dreams, which remain on track for openings in the first half of 2016 and first half of 2017, respectively, ensures all of our operating assets remain highly competitive in a constantly changing environment,” he added.

Studio City, the next standalone integrated resort to open in Macau, remains on track to meet its design and construction budget of US$2.3bn and its scheduled opening in the third quarter of 2015. This Hollywood-inspired resort will change the entertainment landscape in Macau and will be at the forefront of positioning Macau as Asia’s leisure, tourism and entertainment capital.

“Studio City will represent the most diversified entertainment resort offering ever seen in Macau and will include Asia’s highest Ferris wheel, a Warner Bros.-themed Family Entertainment Center, a fully-operational TV broadcast studio, the world’s first Batman film franchise digital ride, a 5,000 seat multi-purpose live performance arena and a live magic venue, as well as approximately 1,600 hotel rooms, a vast array of food and beverage outlets and approximately 350,000 square feet of themed and innovative retail space,” Mr. Ho explained.

“With the opening of City of Dreams Manila, Melco Crown Entertainment firmly announces its presence as a regional gaming and entertainment company. The property’s successful grand opening on February 2, 2015highlighted our Company’s commitment to providing the best of entertainment, lodging, food and beverage and gaming to the fast-growing Philippines tourism and leisure market.

“City of Dreams Manila offers leisure seekers a world-class collection of brands and attractions, including Crown Towers hotel, Nobu Hotel and Hyatt City of Dreams Manila, an approximately 50,000 square feet Family Entertainment Center in collaboration with Dreamworks, exciting nightlife, including Pangaea and Chaos nightclubs and live performances, numerous food and beverage outlets and retail offerings, as well as market-leading gaming facilities,” Mr Ho added.

“Our innovative approach to providing leading edge entertainment ensures that we are strongly positioned to cater to an ever-changing and aspirational regional clientele, whether that be in Macau, Manila or any future gaming markets that meet our strict investment criteria. With Macau at its center, we remain steadfast in our belief that Asia will continue as the fastest growing and most important leisure and tourism market in the world, supported by a rapidly expanding middle-class and strong economic growth.”

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