Inside Asian Gaming

inside asian gaming October 2014 16 In Focus the two properties, in percentage terms, was on the non-gaming side. A closer look at their operations helps explain the gaps. Hotels are the key to non-gaming revenue at both resorts. “One of Singapore’s objectives in allowing the IRs to be built was that they would increase hotel capacity for the country,” Mr Galaviz notes. Combined they have added nearly 4,100 rooms to the city’s inventory. In the first half of this year, MBS reported US$190.2 million in room revenue, 46% of its total non-gaming revenue. Occupancy was 99.2% at an average daily rate of $418, up 10.3% from 2013, for revenue per available room of $415. With those numbers, it’s no surprise that LVS wants to add 1,500 more rooms. In March, LVS Chairman and CEO Sheldon Adelson traveled to Singapore to request land adjacent to MBS for the project from the government. “We need more rooms,” he told reporters. “We are running at 100% occupancy; on a bad day it’s 98%. No other hotel in the world runs like this except some in Vegas.” But during its second- quarter earnings call, LVS said the request for more land is unlikely to be granted. Resorts World Sentosa doesn’t produce nearly as much hotel revenue as MBS. In the second quarter, occupancy ran at 94% with an average room rate of S$390 (US$309), and in the first quarter at 92% occupancy Tourist Traps Since Singapore’s two resort casinos opened in 2010, the government has wanted them focused on driving tourism, which accounts for about 4% of the city-state’s GDP. That’s been a winning play for operators as visitor numbers rose, from 9.7 million in 2009 to 15.5 million last year. But this year, tourism is down. Through the first six months, the Singapore Tourism Board reports international visitor arrivals fell 2.8% to 7.5 million. The decline was entirely due to a 30% drop in arrivals from mainland China—Singapore’s No. 2 visitor source behind Indonesia—from 1.24 million arrivals in the first half of 2013 to 871,000 this year. Arrivals from other destinations grew, though just by 2.3%. STB blames China’s tourism law, implemented in October last year, that bans below-cost tour packages intended to make money through extra fees, such as guide charges or commissions on shopping. The silver lining is that the number of Chinese visitors staying in Singapore two days or more increased by 71,000, and for all markets, longer stays were up by 300,000. Resorts World Sentosa’s first-half hotel revenue was $109 million less than that of Marina Bay Sands, accounting for 64% of the difference in non-gaming revenue between the two properties. One issue is size: RWS has 1,524 rooms, MBS has 2,561. Genting Singapore is attempting to narrow the gap with a new 550-room hotel in the Jurong Lake district, an area outside central Singapore that the government has targeted for development. equating to a similarly enviable margin of 41.2%. In the first half of this year, MBS non- gaming revenue grew 6.3% to $415.5 million, 23.8% of total revenue. RWS non-gaming revenue grew 1% to $245.6 million, including a 3% decline in the second quarter, the first such fall in the property’s history. Comparing the results head to head, in 2013, RWS raked in 71% of the total revenue of MBS, 73% of its gaming revenue, 65% of its non-gaming revenue and 67% of its EBITDA. For the first half of this year, RWS registered 76% of the total revenue of MBS, 82% of its gaming revenue, 59% of its non- gaming revenue and 66% of its EBITDA. In each period, the biggest difference between