Inside Asian Gaming

INSIDE ASIAN GAMING | September 2009 8 Lim Kok Thay may seem to some a surprise choice for top position in this year’s Asian Gaming 50 – 2009 , especially because he knocks ‘Mr Macau’, Dr Stanley Ho, off pole position. On closer inspection, Mr Lim’s rise isn’t so surprising. In a world where casino operators are cutting budgets and in some cases struggling to make debt payments, Mr Lim’s company, Genting Berhad, is not only holding its own but is growing. The Genting group operates Malaysia’s only casino, Casino de Genting at the Genting Highlands Resort, the world’s largest single resort, which includes over 10,000 hotel rooms within a complete entertainment city. It also controls Star Cruises, Asia’s leading and the world’s third biggest cruise line. Last month, on 28th August, Genting unit Star Cruises, in partnership with Philippine billionaire Andrew Tan, unveiled the US$700 million Resorts World Manila at Newport City near Manila’s international airport. It is stocked with an initial 100 gaming tables, set to increase to 300 tables and more than 1,000 slot machines by the end of the year. Even with its opening complement of 100 tables, Resorts World Manila already ranks as the Philippines’ largest casino. The real centrepiece of Genting’s international gaming operations, however, will be a S$6 billion (US$4 billion) integrated resort located on Singapore’s resort island of Sentosa, scheduled for an early 2010 opening. Industry whispers suggest the property could even be ready before Christmas 2009. Investment bank CLSA forecasts Resorts World at Sentosa will garner a 46% share of an estimated US$3.2 billion national market in casino revenue in Singapore in 2010. That’s not the only bright spot on the horizon. Genting, in common with many other Asia-based gaming and non-gaming companies, has managed to keep its financial gearing modest, arguably putting it in a better position to take advantage of the economic recovery when it comes. In late July this year, the Group announced two share buybacks. They were for relatively 1 (4) Lim Kok Thay Chairman and CEO, Genting Berhad modest amounts (just under US$5 million), but at a time when some rival foreign casino operators are issuing new shares like there’s no tomorrow, it provides some positive news for Genting’s existing equity investors. Genting recently took a 3.2% stake in the Macau and Las Vegas operator MGM MIRAGE for US$100 million. Genting was at pains to point out the purchase related to a valuation opportunity presented by MGM MIRAGE’s under-pressure shares. Speculation had suggested Genting harboured a strategic aim to become partners with an existing operator inMacau. This speculation was stoked by the fact that Star Cruises had previously expressed interest in a partnership with Dr Stanley Ho in a casino project in Macau, although that idea faded after reports it might cause difficulties for the parent Genting in its relationship with the Singapore regulators. ‘Coherence’ is a word that has been used by some analysts to describe Genting Group’s activities. The achievement of a coherent strategy would be no mean feat, given that the conglomerate has activities ranging from gaming to power generation, plantation farming, property and oil and gas. What analysts suggest is that rather than operating its diverse activities discretely, Genting has managed to create synergies whereby those activities and their revenue streams support each other and the business as a whole. Genting was named ‘No. 1 in Overall Most Convincing & Coherent Strategy In Malaysia’ in Euromoney’s ‘Asia’s Best Managed Companies 2009’ awards. The company was also voted ‘No.2 in Top Ten Most Valuable Malaysian Brands’ in Brand Finance Plc’s ‘Malaysia’s Top 50 Brands 2008’ awards. An example of Genting’s strategic approach is the way the company has positioned Genting Highlands Resort in its home market of Malaysia in anticipation of its new resort in Singapore. Mr Lim ordered amajor refurbishment of GentingHighlands Resort, commencing in 2007. This wasn’t rocket science, given that the existing resort was starting to look a bit dated in the light of developments in Macau and elsewhere. Nonetheless, Genting’s understanding of the need for a modern marketing strategy and cross-promotion enabled the company to redefine its Genting Highlands facility as a hilltop resort with some gaming, rather than a hilltop casino with some entertainment. This approach has helped to familiarise Genting’s casino customers with the integrated resort concept well in advance of RWS’s opening. It brought immediate results, with the annual number of visitors to Genting Highlands peaking at almost 20 million. RWS in Singapore will feature not only a casino but a Universal Studios theme park and animation studio, six hotels, the world’s largest marine park, meeting facilities, shops, and a 1,600-seat theatre. Elsewhere, Genting has been careful not to over-extend its gaming ambitions. Plans formulated last year for a casino resort and Universal Studios theme park at Manila Bay in The Philippines faded in 2009. Privately, Genting executives denied that a formal deal had ever been on the table. As we reported last year, Under Mr Lim’s watch, Genting has expanded its overseas interests. Since his appointment as Genting’s president and chief executive in November 2002, and later as chairman in December 2003, Mr Lim has overseen Genting’s acquisition of Britain’s Maxims Casino Club, an exclusive high-end casino, and raised its stake in London Clubs International, which operates casinos in London, Egypt, South Africa and Lebanon. Through its Genting Stanley (formerly Stanley Leisure) subsidiary, Genting is now effectively the largest casino operator in the UK, according to the company. Mr Lim also drove casino developments for Genting in Australia (Burswood and Adelaide casinos) and brokered a partnership to operate Subic Bay Resort and Casino in the Philippines. Asian Gaming 50 – 2009