Singapore’s Resorts World Sentosa reported a 21 percent drop in revenue year on year in the third quarter as high rollers from China have been staying away.
The decline caused parent Genting Singapore’s profit to plummet 43 percent to its lowest level in four years. Net income for the SGX-listed operator totaled S$127.1 million (US$98 million) for the July-September period. Only the three months ended I December 2010, when the company reported a S$150.3 million loss, were worse.
Adjusted EBITDA was down 27% to $253.9 million—well below the $315.6 million average forecasted by analysts polled by Reuters—on total revenue that was down 17% to $644.8 million.
Bad luck was a big factor—VIP win rate was only 2 percent, well below the 3 percent average—but not the only one.
“Growth in Singapore gaming revenue has stalled … with macroeconomic and political factors in China being the principal cause,” Fitch Ratings wrote in a recent report.
VIP accounts for about half of the combined annual gaming revenues of Sentosa and rival Marina Bay Sands, and around half of that play comes from China, which is in the midst of an economic slowdown and an aggressive crackdown on high-level corruption that is discouraging conspicuous consumption and making it harder for wealthy Chinese to take money out of the country. Visitors from China were down 30% in the first half, according to the Singapore Tourism Board.
Last month, MBS owner Las Vegas Sands reported a 34% decline in VIP volume at the resort in the July-September quarter. Sentosa’s VIP volume was down 12% in the same period.
On a brighter note, revenue from Sentosa’s mass-market tables and slots was up 10 percent to $450 million, and analysts expect the planned addition of 550 hotel rooms, which will bring the resort up to 2,150, to generate more lift on the mass side. The hotel ran at 95% occupancy during the quarter, with an average daily room rate of S$408. Genting said also that daily visits to Sentosa’s non-gaming attractions are up 10% on average.
