Brian George, president and chief executive officer of Supreme Ventures Limited. - File

Supreme Ventures Limited (SVL) is expecting between $15 to $20 million in annualised savings from the October 15 closure of its gaming lounge, Villagio, at the Hilton Kingston hotel.

But the move - which follows a recent restructuring of its Coral Cliff property - should not be seen as a shift away from that business segment, says Chief Executive Officer Brian George.

He acknowledged, however, that Villagio has been racking up losses.

SVL, a lottery and gaming company, in a stock market filing last week, advised it would not be renewing a lease agreement with the hotel for the space occupied by the gaming lounge.

"We are 10,000 per cent committed to gaming but part of the challenge is that you have to look at it in terms of profitability," George told Wednesday Business.

"The Villagio was losing a substantial amount and the assessment of the loss suggested that we had to cut back; and given the structure of the deal with the hotel, it was an opportune time to come out at this point," he added.

According to SVL in its statement, the restructuring exercise was aimed at improving efficiency in operations, thereby contributing more to the group's profitability.

But the company has, so far this financial year, seen a slight dip in performance. Nine-month profit was a healthy $458.53 million at July 2009, but that was a slight drop from $484.68 million for the corresponding period last year.

"The gaming business is being largely affected by the economic downturn as we have seen over the last three months in the spending pattern of our customers," said George.

Coral Cliff and the Acropolis are doing well, he added, but are still being monitored.

Lottery up, lounges challenged

"The lottery is doing extremely good growth but it is the gaming lounges and slot machines that are the challenge and where we will further look to streamline business," he said.

The lounge requires hostesses, bartenders; it is more people intensive and most susceptible to the economic downturn while lottery on the other hand, is more electronic driven," George explained.

Coral Cliff in Montego Bay was also restructured at the top of the year, leading to a change in opening hours, the closure of unprofitable Coral Cliff hotel and Ma Lou's restaurant.

Some 43 jobs were cut as a result.

The company now says the present restructuring will see the redeployment of 12 persons to other areas within the group's business operations, but that 20 positions would be made redundant.

The company did not disclose the cost of shutting down Villagio.

Its last round of changes resulted in an $89 million write-off linked consolidation adjustment activities reported in the company's second quarter earnings report.

On the lottery side of the business, SVL also terminated its Bingo game, but two months ago introduced Super Lotto, played in six countries across the Caribbean.

SVL says it expects to pocket between US$35 million and US$40 million in revenue each year from the game.

sabrina.gordon@gleanerjm.com