Inside Asian Gaming

INSIDE ASIAN GAMING | April 2009 24 In Focus the heart of the economy. Newport City (also sometimes referred to as Newport Entertainment City) covers a 25- hectare site in the Pasay City district of Metro Manila within sight of the international airport. Building work on the gaming resort portion (about eight hectares) is already well under way and that part of the scheme is touted for completion this year. Inside Asian Gaming understands it will have a casino (though the precise branding of the casino is yet to be confirmed officially) as well as a Marriott Hotel (understood to be the first Marriott-branded property in Metro Manila) and a suites-only Maxims Hotel—a Genting branded product. The second gaming resort project is a more ambitious 40-hectare site on reclaimed land at Manila Bay near to the SMX Convention Center. This site has been referred to at various times in various ways as: Bagong Nayong Pilipino—Manila Bay Integrated City; Bagong Nayong Pilipino— Entertainment City Manila; Pagcor City and just plain ‘Manila Bay’. What does seem clear is that it will have a casino resort under the branding ‘Okada Resort Manila’ or possibly ‘Okada Resort Manila Bay’, in recognition of Kazuo Okada, founder and chairman of ARUZE Corp., which has confirmed it will be the gaming partner for the second scheme. Funding is still being finalised for the second scheme, says one of the partners, SM Investments Corporation, the holding company of the Philippines-based SM Group, although no clear guidance has so far been given to the media on the budget. In September last year, a figure of US$1.1 billion was mentioned in the local media in relation to development of an area referred to as ‘Manila Bayshore’, a zone that forms part of the Manila Bay regeneration area. It seems reasonable to assume that this budget may well have been revised downward in the wake of the global credit crisis that gripped financial markets soon afterwards. SM Group’s parent company was publicly listed in 2005 and is now one of the Philippines’ biggest conglomerates, occupying a leading position in shopping malls, retailing, banking, finance and property. The success of both Manila schemes may depend on howmuch the two business models rely on foreign visitors and how much on home-grown customers. Those numbers will in turn be influenced by what happens in the regional economy. B agong 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’ gamingexpansionplanistheGentingparent, 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 theWynn 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] Gone with the Wind Manila Bay will be radically different from the scheme first announced last year