The SG$4.5 billion (US$3.3 billion) expansion projects being undertaken by Singapore’s two integrated resort operators may only provide a minor boost to gross gaming revenues as competition for players heats up across the region, according to investment bank Morgan Stanley.
Speaking at the G2E Asia Special Edition: Singapore conference this week, Morgan Stanley analyst Praveen Choudhary said the addition of 1,000 new hotel rooms at Marina Bay Sands (MBS) and a similar number at Resorts World Sentosa (RWS) would inevitably drive revenues higher, however the magnitude of that growth may be limited.
“I would not put a line in the sand to say there will not be an increase in GGR in Singapore ever and having a new tower with 1,000 rooms plus at MBS, I’m hopeful this will drive the GGR higher,” Choudhary said.
“But I would also say it’s not always about GGR, it’s about the quality of the revenue.
“We know VIP has a lower margin and mass has a higher margin but to the extent that everyone is going to go after the ASEAN market, the international market, the competition [Singapore is facing] has never been so heated.
“This means that, despite adding more capacity, they need to be mindful of competition from Cambodia, the Philippines and even Macau which has said it will provide tax breaks to operators for attracting people from outside Macau.
“So Singapore, we expect some growth, but we don’t expect the market to be growing in proportion to the number of hotel rooms being added.”
Both MBS and RWS announced SG$4.5 billion (US$3.3 billion) expansion plans in 2019, with MBS to add a fourth hotel tower with a “rooftop attraction” including a sky pool and signature restaurant, MICE facilities comprising meeting rooms, function rooms and exhibition halls plus a state-of-the-art live entertainment arena with a seating capacity of at least 15,000 people.
The RWS development will see the property’s gross floor area expand by 50%, adding 164,000 square meters of leisure and entertainment space including an expansion of Universal Studios Singapore, the addition of another 1,100 hotel rooms as part of a new “waterfront lifestyle complex”, an enhanced waterfront promenade with restaurants and retail, expanded MICE facilities and development of a driverless transport system around the property.