Malaysia’s monopoly casino operator is headed for a record year, and looks forward to extending its geographical reach.
The bidding for the second of Singapore’s two planned casino-centred integrated resorts (IRs), on the island of Sentosa – which means “peace and tranquility” in Malay – turned into a heated three-horse race. Despite fielding a proposal that was criticized as “uninspired”, Malaysia-based Genting International was the odds-on favourite, and in December emerged the winner by meeting the government’s criteria for the site – namely, tourism appeal, architectural design, level of investment and strength of the bidding consortium and partners.
Genting provided ‘’the most compelling proposal overall that best meets our economic and tourism objectives,’’ said Deputy Prime Minister S. Jayakumar. He added: “In particular, the proposal reflects our vision for the Sentosa integrated resort as a large-scale family resort with its host of world-class family leisure activities and other strong offerings.”
Up for grabs was a 30-year concession to operate a casino resort on a 49-hectare waterfront site on lush Sentosa, which is connected to Singapore by a 710-meter causeway. Each of the bids exceeded US$3 billion, suggesting the contenders saw significant returns from the site. Genting’s proposal was worth US$3.4 billion, and included a Universal Studios theme park.
The theme park at Genting’s “Resorts World at Sentosa” will feature 22 attractions, with 15 designed specifically for Singapore, along with an animation studio. The theme park will take up roughly half of the site. The resort will have 1,830 rooms in six hotels and the world’s largest marine park, spanning 20- acres and including a whale shark lagoon. It will also have meeting facilities, retail stores and a 1,600-seat theatre for a resident show produced by members of the creative team behind Cirque du Soleil.
Genting plans to fund the project two-thirds by debt and one-third by equity. Genting Chief Executive Lim Kok Thay expects the Sentosa resort to pay for itself in seven years and generate a 15% annual return. Mr Lim is betting the Singapore project will help the company overtake Harrah’s Entertainment and Wynn Resorts to become the world’s third-largest gaming-operator by market value. Genting bought a controlling stake in Stanley Leisure earlier this year, giving it access to the customers of the biggest British casino operator.
The Singapore government evaluation team – comprising of a panel of seven government ministers – praised Genting’s bid for offering a design that reflected the tropical resort feel of the island, with extensive use of water, stone and wood and in its buildings and landscaping. The resort will adhere to Sentosa guidelines that ensure 70% of the island remains “green” with plant life.
Genting unit Resorts World Bhd runs a casino resort in Malaysia’s hill-town of Genting, which sees about 20 million visitors a year. The group made its bid through affiliates Genting International and cruise operator Star Cruises Ltd. The cost of its bid was topped by the US$3.5 billion bid submitted by resort builder Mark Advent – creator of the New York New York casino in Las Vegas – who led a four-partner consortium consisting of his privately-held Eighth Wonder, Mississippi-based Isle of Capri Casinos Inc as well as Australian James Packer’s Publishing and Broadcasting Ltd and Melco International Development, controlled by Lawrence Ho, son of Macau gambling tycoon Stanley Ho.
The third bid came from Bahamas-based casino operator Kerzner International and Singapore’s CapitaLand, Southeast Asia’s largest property developer – a US$3.3-billion concept headlined by Frank Gehry, the architect of the Guggenheim Museum in Bilbao.
In Tune
Given Genting’s monopoly on casino operation in neighbouring Malaysia, Genting would have had most to lose if it did not secure one of the two casino licenses in Singapore. Still, Genting Chairman Lim Kok Thay claimed the company’s Malaysian operations would not be affected by its future Sentosa property. Genting’s winning bid also proves that an old-school Asian operator can compete with the stars of Las Vegas. “There’s no magic to being a Las Vegas player,” said Mr Lim. “The important thing is to be in tune with what your customers want.”
Mr Lim also announced Genting’s Malaysian resort is set for a record year in terms of revenue thanks to rising regional tourism. “The pie is growing. Asians love to game. The Chinese and Indian markets are expected to grow substantially,” he added. Mr Lim also claimed that breakneck tourism and casino revenue growth in Macau had not affected Genting, which is set to enjoy a record year in business.
Singapore lifted its long-standing ban on casinos in 2005 as part of the government’s plan to double visitor arrivals to 17 million by 2015, and fend off competition from other regional rivals like Hong Kong, where a Walt Disney theme park opened in 2005, and Macau, where a casino boom is drawing billions in investment to create a Las Vegas of Asia. The Sentosa resort is also expected to create 30,000 jobs by 2015.
Singapore is the third most popular outbound destination for Chinese tourists after Hong Kong and Macau – the latter two are special administrative regions of mainland China and are accessible by land from major mainland population centres. While Macau is tipped to easily retain Asia’s gaming revenue crown, Singapore could give it a run for conventions and exhibitions and business and family tourism revenues. After all, Singapore is already an established shopping and transport hub, whereas Macau remains primarily a day trip destination – the average stay of visitors to Singapore is 3.4 days, versus 1.1 days in Macau.
The new properties from Las Vegas-based operators opening in Macau have shown that while there is strong demand for an improved environment to gamble in, visitors to the city still have little interest in the high-end dining and entertainment that Vegas is now as known for as its casinos. Las Vegas Sands’ Venetian Macau will open in mid-2007, while the Marina Bay Sands will come two-years behind. Macau has a significant head-start and more operators creating a critical mass of new properties – six casino license holders versus Singapore’s two – but Macau may soon find a serious rival to its claim to be Asia’s Las Vegas.
The license for the first of Singapore’s two integrated resorts – located along its downtown Marina Bay waterfront – was awarded in May 2006 to Las Vegas Sands Corp, which plans to open its US$3.2 billion casino resort by July 2009, primarily attracting convention and business visitors.
The Singapore government has said it will not offer another casino license for at least a decade. It also says the casinos will be heavily regulated, and is imposing measures to curb problem gambling, including a S$100-a-day levy on citizens and permanent residents entering the casinos.
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