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[email protected] ManilaWill Matter “We’re not going to be Macau. But we can definitely compete with Macau”. That was Brad Stone bristling with confidence at a recent gathering in Manila of media types eager to learnmore about Solaire Resort and Casino, the billion-dollar gambling palace Philippines- listed Bloomberry Resorts is ushering into the world come March, the first of four super-resorts with casinos planned over the next few years for 120 hectares of reclaimed government-owned land along Manila Bay on the southwestern lip of the country’s teeming capital city. Mr Stone is president of BillWeidner’s Global GamingAssetManagement, whoseGlobal Gaming Philippines unit owns 8.7% of Bloomberry’s equity and will be running Solaire’s 18,500-square- meter casino and 500-room hotel—the core offerings of what Bloomberry Chairman Enrique Razon Jr says will“match and hopefully even surpass casino resorts in Macau, Singapore, Las Vegas and Australia.” In addition to luxury suites and bayfront villas, Solaire’s first phase calls for 1,200 slot machines and 300 table games, an array of restaurants under the direction of Wolfgang Fischer, late of Emirates Palace, plus spa and fitness facilities, an 1,800-seat theater, a ballroom capable of seating 1,000 and parking for 3,000 cars. Mr Weidner, who also wants to build a US$2 billion resort casino in Taiwan, was Las Vegas Sands’ chief operating officer from the planning of The Venetian on the Las Vegas Strip in the mid- ’90s through the development of most of Sheldon Adelson’s Asian gaming empire. Mr Stone was executive vice president under Mr Weidner during those years and later LVS’ president of Global Operations & Construction. On the ground inManila is Chief Operating Officer Michael French, who worked under Messrs Weidner and Stone at The Venetian in Las Vegas and held senior positions at Altira and City of Dreams. Senior Vice President of Gaming Dennis Andreaci comes from Galaxy Macau, where he held the same position. Backing up this impressive pedigree is a blended tax on gaming revenue of 21-23%, considerably higher than Singapore’s but a lot lower than Macau’s and a potential edge framing a strategy targeting the region’s lucrative premium-mass players. Leveraging the experience of Macau and Singapore, which have done much to incubate this most desirable of demographics, Solaire, tellingly, will segregate floor space between its mass and premium-mass segments and has designed a “Club Solaire” to cater to the latter with exclusive services and perks. Management estimates VIPs will comprise less than half of gaming revenue in the early going. But they’ll be working to change that. For one thing, Global Gaming’s management fee of 2-6% of EBITDA shoots up to 6-40% based on incentives for achieving certain thresholds on earnings derived from “Foreign High Roller Tables” and “Foreign Junket Players,” according to Bloomberry filings. Then there’s the considerable marketing latitude built into the 17% tax rate on VIP. “It’s like saying, here’s a Mercedes-Benz in Macau and here’s a Mercedes-Benz in Manila,” as Mr Stone put it. “Here, you can buy it at 20% cheaper. Because of my incentives, I can price mine cheaper. I get a good chance of winning.” Of course, no one expects the Philippines to challenge Macau’s hold on its (predominantly) Cantonese market. But it doesn’t need to. If Macau, in essence, is a play on the dynamism of China’s emerging middle class, the chain reaction it’s ignited in terms of new, planned and proposed resort-scale casino investment across the region speaks to the belief that the formula can and will be applied across a good chunk of the hemisphere. PricewaterhouseCoopers is forecasting that Asia-Pacific gambling revenues will top US$79 billion by 2015, surpassing the United States. By then, experts believe the Philippines market will be worth US$3 billion-$3.5 billion, more than twice its current size. Brad Stone, for one, believes that to be conservative. At least three of the four IRs planned for “Entertainment City Manila” should be up and running by that time, and given that Resorts World Manila alone has nearly doubled the size of the market since opening in 2009, maybe he’s on to something. He says Solaire would be more than satisfied with 6 or 7% of what its counterparts in aggregate do in Macau in a year. That would be around US$2 billion. Which is not out of reach, depending on how far we dare to project. Looking ahead to 2015, $700 million to $1 billion is not unthinkable. Certainly, Resorts World’s success implies both significant domestic demand eager to trade up to a better experience and a market with credible appeal to big spenders, both locally and drawing from the larger region, which we know Macau and Singapore have only begun to tap. This also implies the right product and able management. Solaire does appear to have both. Conceptualization of completed Solaire Resort and Casino, Manila