Inside Asian Gaming

INSIDE ASIAN GAMING | April 2008 28 Cover Story operational within 2 1/2 years of PAGCOR’s approval of the project. The other components of Phase 1 must be completed within 5 years from PAGCOR’s approval of the project.” Routine Another source told IAG : “This is nothing unusual. The Macau government wrote in a timetable for LVS in Cotai for example. In terms of the business model, it’s obviously desirable for all parties to get the casino element up and running first. “This might be Steve Wynn’s chance to build his own ‘big box’ or even‘small box’in Asia and get a good rate of ROI.It could be toWynn Resorts what Armani Exchange is to Armani—the mass-market offer of a luxury brand. “With the time frame the Philippines’ government is talking about, a ‘box’ would make sense,” added the source. “You could service the capital costs quite quickly and Pagcor could start taking a percentage of the gaming revenue. A Universal Studios theme park is a big attraction in its own right, but without the gaming element I can’t see the project providing enough foreign tourists to produce a sufficiently attractive return on investment.” Economic boost By signing up international partners experienced in marketing and runningmajor leisure facilities,Mr Genuino and his board believe Philippine casino revenue could rise at least threefold to US$1.5 billion in the first few years of the project.This is likely to be achieved mainly through the introduction of foreign VIP players. Dean Macomber, a Las Vegas-based marketing consultant, told the conference: “I estimate in 2007 Philippine gaming revenue reached US$792 million. It’s not stretching things too far to say this market could be doing US$1.8 billion in gaming revenue by 2013, even without Manila Bay Integrated City. That would amount to a doubling of the domestic market and a tripling of the VIP business.” Hong Kong-listed Star Cruises, one of the partners announced for ManilaBay,couldbe a valuable ally indrivingup thenumber of foreign gamblers. The company runs very popular casino ship excursions from Hong Kong to international waters in the South China Sea, but a trip that actually goes somewhere could be even more successful. Hong Kong is only a day and a half away from Manila by cruise ship, and only two hours by plane. Taiwan is little more than a two-day cruise away and the journey from Taipei is only one hour 45 minutes by air. Japan is around three and a half hours away by plane. Mr Macomber said even by very modest estimates, Philippine casino revenue was at least US$613 million last year. “My figures are conservative and based on 49 million gaming age adults. Of these, about 10 million are potential customers. The number of actual players is 1.9 million, representing a penetration rate among potential customers of 19%. It works out to an average annual gaming budget per player of around US$319. “Of the US$613 million gaming revenue, I estimate 66% comes from the Metro Manila area. Around US$40 million of total revenues includes money gambled by Filipinos elsewhere in Asia. I also estimate the US$613 million figure includes US$220 million in junket revenue.” “You have to be a little careful in quoting Pagcor’s revenue figures because it’s my understanding that some of the reported revenue is fees for access, not actually the total gaming revenue that’s being generated.” In order to boost foreign tourists, the country may need to ramp up its tourismmarketing.ThePhilippines is certainlyunderperforming as a tourism destination compared to Thailand, which received 13.82 million visitors in 2006, and Malaysia, which had 17 million arrivals that year. Only 1.92 million foreign tourists visited the Philippines between January and September 2007,according to the Department of Tourism. Trouble in paradise This is probably because of a perception that the Philippines can be as chaotic on occasions as it is beautiful. The tourist numbers for the first three quarters of 2007 represent a 38.14% rise compared to the equivalent period in 2006, but it’s only a fraction of the 27 million visitors tiny Macau received last year. Even straight-laced Singapore attracted 10.3 million tourists in 2007, and is expecting a lot more once its two integrated casino resorts are operational in 2009 and 2010 respectively. Manila Bay Integrated City could be an important step in re- Some existing Pagcor casinos in the Philippines