Scientific Game

Faulty Towers?

Resorts World Sentosa taken to task over customer service

Wednesday, 14 April 2010 08:00
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Resorts World Sentosa

Reports from Singapore suggest the uptake by Singaporeans of yearly entry permits for Resorts World Sentosa (RWS) has been low. One reason is said to be that the locals are fairly underwhelmed by the standard of service and management at the Genting-run property.

RWS declined to comment on the claims from industry sources. But if the reports are correct, then it could mean Genting has effectively squandered the first mover advantage it had when it opened on 14th February, nine weeks ahead of its rival, Las Vegas Sands Corp's Marina Bay Sands.

How many Singaporeans could realistically have been expected to commit the S$2,000 necessary to purchase a year's entry to RWS without first seeing what MBS has to offer when it opens on 23rd April is a moot point. It seems they are preferring to hedge their bets and paying the S$100 per 24-hour entry fee for RWS instead.

The assumption in linking uptake of the annual entry fee with first mover advantage is that most of the Singapore casinos' customers will be locals. Is that a fair assumption to make? One of our sources thinks so, for reasons outlined below.

Even if Genting's analysis of the importance of the locals in the market is the same as that particular expert, the operator was to a considerable extent hamstrung by Singapore's tough rules on casino marketing. It could not aggressively promote annual entry to RWS's casino, nor support marketing with equally aggressive cross promotions and special deals. In that sense, the resort itself had to be the 'promotional material'. And equally in that sense, the 'campaign' has been something of a disaster, suggests an industry insider.

"The uptake of the S$2,000 dollar entry fee has not been significant at all," says an industry source with contacts among the management teams of both resorts.

Busted flush

"That was RWS's great opportunity. They had two to three months with the market to themselves. Now because they have been so disappointing and have upset so many people, I think they've lost that first mover advantage.

"There are complaints about the way people are treated, there are complaints about the staff being inadequate in number and being poorly trained or even untrained.

"You might think that somehow I'm anti-RWS. That's not the case at all. I want both properties to do well.

"But MBS, if they're smart, will have watched this very carefully. If MBS deliver, they have an immediate opportunity," suggests the insider.

"Of the US$2.8 billion gross estimated for the Singapore casino market in 2011 by some analysts, possibly half or more is going to go in operating costs. That will give a pot of about US$1.2 billion to US$1.4 billion to split between the two.

"I predict one [resort] will get 60% and the other will get 40%. If MBS gets the 60%, they're going to be in great shape.

"Resorts World has a problem in my view. Theme parks in Asia don't have a track record of being highly successful after the initial rush at the time of launch—especially Western-themed ones. The cost of the theme park puts a lot of extra pressure on the operator's business model. RWS is also further away from town than MBS. Sentosa is like another world. To the locals, it's like going somewhere else. You've got to make a positive decision to be there. Marina Bay, on the other hand, has 250 restaurants, and the biggest shopping complex in Singapore within a few minutes' walk of Marina Bay Sands. Many people would have to pass MBS to get to RWS," says the source.

"If the market breaks 60% to MBS, they're going to be running an annual ROI [return on investment] of 15%. If it breaks 40% to RWS, the extra burden of costs from the Universal Studios theme park will mean Genting could be in a situation where they'll be lucky to show 8% ROI."


The key battleground between the rival resorts, stresses the source, will be the battle for the hearts, minds and most of all, wallets of the locals, suggests the insider. By 'locals,' the source includes the significant cohort of tourists to Singapore who actually come to stay with friends and relatives, and those Malaysians who live within a few hours' drive of Singapore.

"Regarding cannibalisation of Genting Highlands' market, I think the 20% figure quoted by some sources is on the low side. I think it could be up to 30%. One market in Malaysia that is potentially massive for Singapore is Malaysian Muslims—who want to gamble but legally can't in their own country. Indonesia will be next largest market, but it won't be that big a market in my view. The rest of Asia you could put down to opportunity.

"To me, the Singapore casinos are what we used to call in the industry 'city centre' type casinos. You can promote overseas business and bring in specialised tourism, but if you don't capture your local market, you're going to go broke," states the source.

"Why would anyone from mainland China want to bypass Macau? Macau has got better facilities for Chinese visitors than Singapore will ever have. No one from China is going to over fly Macau and spend another three or four hours on an aeroplane just to go to Singapore," adds the insider.

"I think 85% to 90% of the business could be 'Singaporeans'. I include in that figure tourists staying with friends and family. They make up a lot of the visitors to Singapore.

Pipe dream

"The fact that government and the operators are saying this is going to generate foreign tourism is possibly a bit of a pipe dream. Singapore is an expensive destination. It's more expensive than Hong Kong, and more than twice the price of Macau, when costs such as accommodation, meals and transport are factored in. For many overseas tourists it's not going to be attractive, though I imagine there will be some opportunity business."

In 2008, Singapore's average daily room rate (ADR) hit S$245—that's US$175 at current exchange rates. In January this year, the ADR in Singapore stood at S$187 (US$137). Macau's ADR for January 2010 was 1,044 patacas (US$130). The Las Vegas ADR for that month was US$99.75.

And as Inside Asian Gaming reported in recent issues, it's highly unlikely any junket operators with mainland China customers will be able to set up business in the Lion City.

"Not one of the major junkets in Macau—no disrespect to any of them—would pass muster in terms of Singapore's reporting requirements for junkets," states the source.

"Singapore has made itself the most difficult jurisdiction to go through in the world. The process is just horrendous, and most people will not pass. "It's all about knowing everything about your financial background. People are not going to just give that information up for fun."

"In my view, MBS has got to be the favourite for domination of the Singapore market. Genting have done themselves a lot of damage with a half-baked launch. They've invested so much money, you can understand why they wanted to open the doors quickly. The problem is they've done so with not enough staff and without enough thought about what they were doing. It's not, in my view, a well-planned casino. I really hope they get things right soon. They will need to, or LVS could leave them trailing."

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