Inside Asian Gaming

INSIDE ASIAN GAMING | November 2008 40 In Focus opportunities. The development of a multi-billion dollar resort takes a minimum of two years and is likely to extend to three or more years when planning is included. The extent of local economic impact will be related to the amount of local labour and resources utilized in planning and construction, as well as the extent to which the local region can cater to the demands of those employees and resource owners earning higher incomes from the project. Depending on the construction environment, much of the construction budget will be spent locally, although there will be some leakage, depending on the materials being used and the capabilities of local construction firms. In general, however, it would not be unusual to see around forty percent of the construction budget being spent locally with seventy percent of that generating local incomes and employment. If an appropriate income multiplier was around 1.4, the total economic effect of an IR project meeting the above parameters would be about forty percent of the construction budget. In other words, local incomes in aggregate could be expected to increase by about 40% of the magnitude of the entire project over the course of the construction phase. Taking average labour costs into account, it would thenbepossible toestimate the annual number of jobs created and the impact on full time equivalent labour during construction— both of which can be very meaningful to a local community. Of course it is the actual opening of the Integrated Resort that generates the greatest flow of economic benefits. Integrated Resorts tend to be labour intensive, requiring large numbers of staff to service the various facilities and activities on offer to customers and guests. This number can exceed ten thousand direct full time equivalent employees, depending on prevailing wage rates and other factors. The casino in particular can be a major contributor to employment with anywhere from five to seven employees per table game. In Asia particularly—where table games are the most popular form of casino entertainment—an IR casino might have five hundred or more table games with thirty five hundred or more staff just in that department. The diversity of job opportunities within an Integrated Resort can be surprising to outside observers. However, an IR should be viewed as a small township with a multitude of roles required to maintain its operation. It is not unusual for there to be one to two hundred different positions within the entire complex, ranging from accountants and attorneys to, in some cases, zoologists and marine biologists.Direct employment of this magnitude induces a multiplier effect in the local community with additional jobs created to service the employees of the IR. Depending on the extent of economic development in the region,the increase in jobs and incomes deriving from employment at the Integrated Resort can be very large indeed. An employment multiplier of 1.5, for example, would result in an additional five hundred jobs for every thousand full time jobs created within an Integrated Resort.This sort of impact on a local community can be of great significance and should not be underestimated. There are few industries that can provide quality employment at this level of scale in one location.The Crown Entertainment Complex in Melbourne, Australia is an example of an Integrated Resort casino opened in 1997 that can boast of being the largest single site employer in the Southern Hemisphere. Another significant impact of IR developments is the amount of consumable items required on a daily, monthly and annual basis to satisfy staff and guests. Operating expenses, maintenance, marketing and cost of goods sold will be substantial cost elements The Venetian in Las Vegas significant casino revenues could be generated from international tourists. (From Singapore’s perspective, such revenues would be beneficial to the City-State as sources of foreign exchange and “export services, as well as import substitution that would create“net economic impact” for Singapore). Thus a successful casino operation as the nucleus of an Integrated Resort is essential to the process of developing a proposed multi- billion dollar development. Indeed it is difficult to think of many resort projects—with billions of dollars invested and at risk—where such an important economic contributor is not included. The failure in the early 1990s of two multi-hundred million dollar non-casino integrated resort projects in Hawaii—the current Grand Wailea in Maui and the Waikoloa on the Big Island of Hawaii—point out the challenges of success without such an engine. In summary, a reasonable working definition of an Integrated Resort is: A multi-billion dollar multi-dimensional resort that includes a casino that takes up, say, no more than ten percent of the resort’s public floor space, but where the casino generates at least US$300 million in gaming revenues. Economic benefits and the development of Integrated Resorts With any development involving capital in the billions of US dollars there are going to be a number of wide ranging economic benefits and multiplier effects accruing to the region.The first round comes from the construction contracts and the related employment