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We expected a miss but hold had a much bigger impact than we thought.



“With the growth in our mass market operations, as well as our ability to capture the ongoing strong growth in the rolling chip segment, our outlook remains positive, particularly as we focus on various cost control initiatives, improving margins and bottom line results.”

- Mr. Lawrence Ho, Co-Chairman and Chief Executive Officer of Melco Crown Entertainment


  • MPEL reported net revenues of $806.6MM and Adjusted EBITDA of $121.3MM, missing consensus estimates
  • “Our non-gaming entertainment amenities, including The House of Dancing Water and Cubic Nightclub, which opened on April 1, 2011, continue to generate incremental visitation, consistent with our objective of developing the highly profitable premium mass market operations at City of Dreams. We also continue to make headway in the development of our customer database, allowing us to strategically target profitable customers now and in the future."
  • CoD:
    • Net revenue of $500MM and Adj EBITDA $86MM
    • RC volume of $18.8BN and hold of 2.5%
    • We estimate that direct play as a % of RC volume fell to 13.7% from 18.9% in 4Q10 and 16.4% in 2010
  • Altira:
    • Net revenue of $265.5MM and Adj. EBITDA $22MM
    • RC volume of $12.7MM and hold of 2.8%


  • Believe that the opening of Galaxy Macau will have a beneficial impact on the market and will continue to shift growth from the penninsula to Cotai
  • Assuming they held at 2.85% their EBITDA would have been $174MM this quarter
    • They also held well in revenue share agreements and poorly in their RC programs which exaggerated their hold impact
  • Their refinancing and RMB note issuiance
  • 2Q11 guidance:
    • D&A: $85MM
    • Corporate: $20-22MM
    • Interest expense: $30MM
    • No meaningful pre-opening or capitalized interest expense


  • They are interested in expanding to other Asian markets
  • Their traffic has held up fine so far in the face of the Galaxy opening
  • Commission split between Revenue Share and RC: 50/50 at CoD.  At Altira is now 1/3 RevShare and 2/3 RC
  • They are still in discussions with the two shareholders at Macau Studio City... there is nothing to report yet
  • Have dusted off the plans on their excess land at CoD - ie the hotel tower.  Thinks its unlikely that the government will approve apartment hotel. They have looked at added more hotels.  They may also also add more gaming space subject to government approval
  • May is off to a good start, April was back end heavy. May is in line with the growth rate for the rest of the year so far
  • The bulk of the cost increase is around the show.
  • The 3 Cotai properties are sharing shuttles that go between the properties
  • Think that marketing expenses will remain rational
  • Why did Altira EBITDA decline QoQ despite topline growth?
    • Mix issues between hold at RC and RevShare segments. Normalized hold would have been about 9MM higher
  • CoD fixed cost ramp QoQ?
    • They were largely stable and other than a small increase from Cubic they are stable going into the 2nd quarter
  • Had high hold in the RevShare and low hold in the RC segments
    • $40MM of the EBITDA impact was from the just hold and then $12-13MM was a mix issue
  • CoD is much more contemporary and sophisticated than Galaxy - thinks that they will get a more high end customer than Galaxy Macau will attract. Thinks that Galaxy will compete more with Grand Lisboa
  • VIP vs. Mass market tables
    • 167 VIP 40 Mass at Altira
    • 227Mass at CoD. They will be hardpressed to move any more Mass tables to VIP at this point
  • Are they adding more junkets? Yes - they are planning on adding one more junket
  • Focus a lot more on the premium Mass segment. They comp about 400 rooms/day for the premium mass customers.  Almost all the VIP rooms are comped
  • Cotai now has the majority of the quality hotel rooms
  • Slot parlors rules in Macau have been in discussion for 2 years. They believe that if those rules go into effect than only one of their parlors with only 150 slots would have to close and they are exploring 2 additional sites.