Manila Envelope - Gone with the Wind
The Philippines is busy building the first of two casino resorts—but will tourists come?Wednesday, 15 April 2009
Gone with the Wind
Manila Bay will be radically different from the scheme first announced last year
Bagong Nayong Pilipino (aka Manila Bay) will be a pale shadow of the grandiose US$15 billion scheme proposed back in April last year, when credit was cheap and plentiful and consumer confidence in the region was soaring. Gone is the Universal Studios theme park proposed by Genting International, the development wing of Malaysia's gaming operator Genting Group Berhad. Gone indeed from the Philippines' gaming expansion plan is the Genting parent, leaving its subsidiary Star Cruises, the casino ship operator, as the only participant from the group. Star Cruises has set up its regional back office at the Newport site and has also taken an equity stake in Alliance Global Group, the local conglomerate developing the Newport resort.
ARUZE Corp., the gaming equipment maker and casino hotel operator with roots in Japan is though a good catch for Pagcor as a gaming partner, given its powerful position in the international industry. According to a 10-K filing with the US Securities and Exchange Commission on 2nd March this year, ARUZE, through its subsidiary ARUZE USA Inc., is a 21% shareholder in Wynn Resorts' common stock (equal to Steve Wynn's personal holding). As the Wynn filing puts it: "As a result Mr Wynn and Aruze USA Inc., to the extent they vote their shares in a similar manner, may be able to control all matters requiring our stockholders' approval, including the approval of significant corporate transactions." Kazuo Okada, chairman and founder of Universal Co. Ltd, which became ARUZE Corp in 1998, has served as vice chairman of Wynn Resorts since 2002. ARUZE has underlined its commitment to the Philippines by recently moving its gaming machine manufacturing facility there from Japan. The company adds it also plans to relocate its game software development team to the Philippines.
Kingson Sian, President of Travellers International Hotel Group Inc, a 50:50 joint venture between the local conglomerate Alliance Global Group and Malaysia's Star Cruises, gave an update on the Newport project during Asia's GEM, the annual congress and expo of the Philippines gaming industry organised by Pagcor and held at the beginning of April.
"Last year we [as Global Alliance] applied for a gaming licence [for Newport] and that was granted on 2nd June last year," said Mr Sian.
"On 31st July we sold 50% of the company to Star Cruises and thus we brought in a gaming partner—Star Cruises being ultimately owned by Genting Group of Malaysia. Together we are embarking upon creating a dream and making the dream a reality. We are embarking on two projects. The first is called Newport Entertainment City, a 7.8-hectare property across from the [Manila] airport Terminals 2 and 3. The construction there is ongoing and we are looking to spend around US$450 million. The project will be completed in phases but we should be open this year," added Mr Sian.
He added the company was working to complete a five-star, 365-room Marriott Hotel on the Newport site and a 70-room all-suite hotel under a Genting brand called Maxim's Hotel, plus a 1,000-room budget hotel.
"Another part of the integrated entertainment concept will be a 1,000-seat theatre and there'll be a mall. Most of that should be completed this year," he stated.
It's reasonably safe to assume that when the planners came up with the name Newport City, they did not have in mind Christopher Newport. He was one of the most successful English pirates and explorers of the 16th century, plundering huge amounts of gold from the Spanish (the colonial power in the Philippines from 1565 to 1898) and from the Portuguese (the European settlers and later administrators of Macau from 1557 to 1999). Newport may need to plunder a few visitors from other regional casino jurisdictions if it is to be a success.
"Because of this financial crisis the entire system changed, so certainly some [casino] operators around the world are struggling right now," says Mikio Tanji, Executive Adviser in charge of preparing ARUZE's entry into the Philippines market.
"But in the medium to long term certainly, growth can still be expected in this particular industry. That's because fortunately the number of rich people is getting bigger and bigger in places like China, in India, in Brazil—in fact all over the world. It seems to be a kind of human instinct that people want to play machines or table games. They are tired to sit at a desk [at work] and face their computer and their paperwork. So maybe once or twice a year they like to get away from that and go on holiday to try their instinct and their luck on machines or table games," he explains.
"One important aspect for us on this project is certainly to invite Filipino people to our [Manila Bay] resort but at the same time to invite foreign people to the Philippines so that they can play at our casino and spend money here," adds Mr Tanji.