The gaming and lotto holdco Berjaya Philippines [BCOR 5.32 5.17%] was forced to issue a clarification of the news that its hotel in Makati, the Berjaya Hotel, has had its accreditation suspended for 3 months by the Department of Tourism (DOT) for its involvement in the “Poblacion Girl” incident.
For those that have not followed this story that closely, the “Poblacion Girl” is Gwyneth Chua, a Filipina from the US that evaded quarantine at the Berjaya Hotel to party in Pobla. Ms. Chua tested positive for COVID after she evaded quarantine at the hotel to attend the party, and may have exposed/infected many others.
After the DOT suspended the Berjaya Hotel’s accreditation, the City of Makati issued an order for the hotel to close, citing IATF rules that only accredited hotels may be open at this time.
BCOR clarified that the DOT’s suspension was appealable, and that the hotel would remain open while the appeal process was still active and until the suspension order became final.
BCOR also plans to appeal the City of Makati’s closure order, based on the argument that the DOT’s suspension has not yet become final.
BCOR maintains that it is not aware of any law that penalizes a hotel for not reporting guests that breach quarantine, and that even if the closure order by the City of Makati were enforced, the lost revenue from the Berjaya Hotel would not be material to BCOR’s financial statements, as the hotel accounts for “less than 0.50% of Berjaya Group’s revenue”.
MB BOTTOM-LINE
“Materiality” is a concept in finance that is used to separate the big things that matter and are important, from the little things that don’t and are just noise.
The actual threshold of materiality differs from situation to situation, but if we take BCOR’s statement as true that the Berjaya Hotel accounts for less than 0.5% of BCOR’s revenue, then this certainly wouldn’t rise to the level of materiality that shareholders should care about.
While this story is just “noise” for BCOR and its shareholders, it’s high-profile noise and that’s precisely the kind of noise that calls for a clarification like this. BCOR’s response, paraphrased, is basically this: “we don’t think we’ve done anything legally wrong, we’re appealing the orders, and even if the hotel shuts down, it’s not really a big deal to shareholders.”
BCOR and its shareholders probably have nothing to worry about, unless things go sideways and Duterte decides to make a personal example of the Berjaya Hotel and its owners for pogi points, though he appears to have lost his appetite to fight against the oligarchs and entrenched corporate interests as his presidency loses momentum near the end of his term.
Wait and see.
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