Inside Asian Gaming

October 2014 inside asian gaming 17 In Focus So despite the drop in overall arrivals, visitor expenditures— excluding gaming, sightseeing and entertainment—rose 5% in the first quarter to S$6 billion, roughly on track for STB’s target of S$24.6 billion. Despite the lemons to lemonade outlook from STB, Marina Bay Sands appears to be suffering from decreased affluent arrivals from China, which are estimated to account for half of VIP play. MBS’ VIP volume declined by 28.2%, or US$9.2 billion, in the first half of the year, and mass drop fell 4%. Gaming revenue grew 7.8%, mainly thanks to VIP win rates above 3.4% in both the first and second quarters. At Resorts World Sentosa, analysts estimate VIP volume grew around 10%, while mass-market volume fell about the same as at MBS, while non-gaming spending rose just 1%, including a 3% decline in the second quarter. “We believe that all RWS business segments are still experiencing material headwinds in the form of a strong Singapore dollar against the currencies of two of its larger feeder markets, Indonesia and Malaysia,” Union Gaming Research Macau wrote in its analysis of SGX-listed Genting Singapore’s second-quarter earnings. Malaysia’s No. 3 ranking in Singapore’s visitor count doesn’t include arrivals by land, thus excluding the thousands who visit the resorts daily on bus tours. During the second quarter, the Malaysian ringgit was 5% lower than a year earlier against the Singapore dollar. Since the start of last year, Indonesia’s rupiah has fallen a relative 20%. “We think this puts a cap on mass-market revenue for the foreseeable future,” Union Gaming said, “and if the headwinds were to become stronger, we think this could actually result in a decline in visitation (rather than just a decline in spend per visitor today) as these customers might seek out alternative destinations.” Those headwinds are sending shivers throughout Singapore’s tourism sector. By Muhammad Cohen with an ADR of S$409, a total of $81.2 million in first-half room revenue, which amounted to 33.1% of the resort’s non- gaming revenue. Over the past three years, hotel RevPAR has grown at a compound annual growth rate of 14%. Still, RWS’ first- half hotel revenue was $109 million less than that of MBS, 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. But price also matters: RWS has 59.5% as many rooms as MBS, but it brought in just 42.7% as much in room revenue. 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. “With our hotel being the first to open in this growing precinct, we hope to create another unique Each IR has more than 60 F&B outlets. MBS reported F&B revenue of $92.7 million in the first half, representing 22.4% of its total non-gaming revenue. RWS doesn’t break out those numbers, but given the comparable range and number of outlets, it’s likely the results are close. Morgan Stanley Asia analysts Praveen Choudhary and Xin Jin Ling expect the Jurong hotel, slated to open in May next year, to boost the bottom line for RWS and Genting Singapore. In a report issued last month, the analysts estimate that with an ADR of S$170, 80% occupancy and 50% of occupants mass-market players, the hotel could boost mass visitation, revenue and EBITDA each by 5%. FORKING IT OVER The table is more level for MBS and RWS when it comes to F&B. Each resort boasts five celebrity chefs, with French chef Joel Robuchon leading the charge with two restaurants at RWS and fusion star Tetsuya Wakuda carrying the banner for MBS, which has announced plans for Gordon Ramsay, star of television’s “Hell’s Kitchen” and “MasterChef US,” to open a branch of his casual dining Bread hospitality product that will crank up the buzz meter in this already vibrant area to even higher levels,” Genting Group Chairman Lim Kok Thay said at the groundbreaking in July last year.