Inside Asian Gaming

The Asian Gaming 50 – 2013 As the largest of the Philippines’ privately owned gaming resorts, Resorts World Manila, located across the street from Terminal 3 of Ninoy Aquino International Airport, was the precursor to the massive gaming and leisure complexes sprouting up at Entertainment City about five miles across town on Manila Bay. RWM is owned and operated by Travellers International Hotel Group, a joint venture between Genting Hong Kong, a subsidiary of the Malaysia-based Genting resort conglomerate, and Alliance Global, a Philippine corporation with extensive holdings in residential and commercial real estate and food and beverage. Prior to the opening of Resorts World, major casinos run independently of the government operator-cum-regulator, the Philippine Amusement and Gaming Corporation, had enjoyed only modest success in the country, with many citing corruptionandmeddlingbyPAGCORand the government as reasons for their struggles. There were market-watchers who believed RWMwould fare no better, and in light of the history, the US$800 million investment was a 23 Kingson Sian President Travellers International Hotel Group big investments. And the long-awaited Entertainment City—first envisioned by PAGCOR almost a decade ago—is finally taking shape with the opening of the $1.2 billion Solaire Resort & Casino in March and with three other resorts under development at the complex or on the drawing board. One of those is Travellers’ $1.1 billion Resorts World Bayshore, though the company has held off on getting it under way. According to Mr Sian, the focus for now is on maximizing returns at RWM, with Resorts World Bayshore expected to open no earlier than 2017. The company intends to spend $600 million over the next three years to expand RWM. Its decision earlier this year to delay a planned $1 billion IPO will not interfere with that, it says. Instead, the expansion, which is slated to include 1,100 hotel rooms, a convention center and additional gaming space, might be funded through the debt markets. “We are not pressured,” Mr Sian said of the IPO. “We will just wait for the right timing.” In addition to serving as president of Travellers and president of Alliance Global, a position he has held since 2007, the 52-year- old Mr Sian holds executive positions with other subsidiaries and affiliate companies of the group. risky one. But Travellers, led by Kingson Sian, who also heads Alliance Global, arrived with the right product at, crucially, the right time and proved the naysayers wrong. The property opened strong in 2009 in the midst of the global financial crisis and has sustained that performance ever since. Travellers reported a 24% year-on-year jump in consolidated revenues in the first half of 2013 to PHP19.1 billion (US$432.8 million), with profit up 25% to PHP2.3 billion. Moreover, its success has inspired confidence among the developers of the Entertainment City IRs that conditions in the country are finally conducive to supporting 24 Philip Chun Chairman and CEO Paradise Group South Korea’s foreigners-only casino sector, characterized by relatively small casino hotels serving mostly Japanese and Chinese players, faces the twin threats of the opening of new integrated resorts across the region and looming legalization of casinos in Japan. Paradise Group, the country’s leading foreigners-only operator, last year received long-awaited approval to develop the country’s first large-scale integrated resort to meet the challenge. The South Korean government legalized foreigners-only casinos in 1967, and for most of the ensuing four decades Paradise Group has dominated the market. In 1968, the company opened what is still the country’s best-known casino at the Sheraton Walker Hill Hotel in the capital of Seoul. Paradise now operates five foreigners- only venues, led by flagship Walker Hill, containing more than 79 table games and 160 slot machines, and as recently as 2005 controlled an estimated 90% share of revenue in the sector. It lost that lead following the government’s decision in 2005 to set up its own casino operating company, Grand Korea Leisure, under the auspices of the Korea National Tourism Organisation, with a remit to boost inbound tourism and generate income to fund tourism infrastructure and other government projects. GKL opened three casinos—two in Seoul and one in the port city of Busan— under its Seven Luck brand in 2006, and by 2010 had grabbed an estimated 54% of a foreigners-only market worth just over KRW1 trillion (US$885 million) a year. As the market expanded to 17 casinos in all, Paradise’s share contracted to around 30%. Philip Chun, chairman of Paradise Group since 2004, has sought to reclaim his company’s lead in the market. In the second quarter of 2012, Paradise’s share was back up to 50% while GKL’s had dropped to 42%, with other operators combining for the balance. However, Paradise needs to continue to work to consolidate that lead, with GKL reclaiming the top spot briefly 36 INSIDE ASIAN GAMING | September 2013