Inside Asian Gaming

INSIDE ASIAN GAMING | May 2010 28 “MBS retail is impressive. The retail offering at MBS surprised on the upside with a slew of luxury brands and over one million square feet of retail space. Coupled with 16 restaurants in the IR, we believe that this will change the lifestyle of upper-middle class and above Singaporeans, and will be the centre of attraction for wealthy tourists.” The report describes the decision of LVS to price entry-level rooms at the Marina Bay Sands Hotel at S$450 (US$322) for a relatively modest 300 square feet as “a high rate for Singapore”. “We still expect high occupancy,” say the authors. CLSA expects RWS, located as it is on another island some distance from the CBD, will appeal particularly to lower end day-trippers arriving by bus. “We are bullish that RWS’s product offering (especially gaming) is suited to the low to mid mass market while [the] MBS product offering is tailored to the higher- end market,” states the report. The authors do, though, issue a note of caution regarding uncertainties over the VIP segment. “While we are more bullish than the consensus, we still see upside risk to our VIP estimate.We currently expect VIP tomake up around 33% of the market, which compares to around 66% in Macau. The report concludes in an upbeat mood. “The IRs have completely transformed the entertainment landscape of Singapore. With average daily foot-traffic ranging from 25,000 to 50,000 per day in each of the two casinos, there is less of a doubt now that Singapore is truly a gaming market that was waiting to be unleashed. Both the casinos are ‘transformational’, unlike Macau where it has now become an ‘incremental’ market with stiff competition. While it would appear one of the most obvious points, we want to highlight that it is unheard of globally for governments to allow two very major casinos in the middle of a city’s CBD. Melbourne and Sydney [in Australia] do have large casinos, but not the scale of Singapore, a city that also attracts a larger number of tourists. The Singapore government is providing easy access to its five million population. “We find the S$100 entry fee rather nominal compared to typical bet sizes. Also, the S$100 represents a light obstacle compared to the public of Hong Kong who have to travel over one hour to Macau via ferry; or for Malaysians living in KL [Kuala Lumpur] who have to travel to Genting Highlands or Singaporeans that currently travel to Genting or board gaming cruises. Also, [Chinese] mainlanders are restricted to visit Macau once very two months, which dramatically constrains the size of Macau’s gaming market. Tourism boost “The Singapore government’s STB [Singapore Tourism Board] has recently issued guidance for a 30% rise in visitor arrivals for 2010, on the back of the two IRs. The Singapore casino-resorts will offer more combined gaming and non-gaming activities than are available in Macau or elsewhere in Asia-Pacific. “All these attractions will support more than 17million tourist arrivals by 2015 (+70% from 2008). We expect average length of stay will increase to four days (from 3.2 days currently), which compares with Macau’s 1.3 days. Lastly, Singapore’s airport sees 38 million visitors per year—visitors that could be convinced to stop over for one to two days en route to further away locations. This could represent some low hanging fruit for the IRs.” Finally, CLSA stresses the backing from Singapore’s government for the IR experiment as a big plus. “There is strong government support, with no policy pushbacks. Gaming taxes are between 12-22% [inclusive of Goods and Services Tax] versus 39% in Macau and 25% in Malaysia. The success of the IRs is in the interests of the government as this initiative represents a tool to attract tourists, create jobs and add to the increasingly dynamic cultural landscape of Singapore. Furthermore, unlike the regional gaming jurisdictions Macau (China visa policies) and Malaysia (religious backlash), Singapore IRs have the full support of the government, ranging from guaranteed duopoly to no immigration policy pushbacks for now.” CLSA estimates on contribution of gaming market segments to Singapore Source: CLSA Asia-Pacific Markets New heights—the IRs are part of Singapore’s master plan to boost tourism Market Outlook