Inside Asian Gaming

inside asian gaming November 2014 34 consulted with the Entertainment City licensees about the possibility. As Laurence Hawke put it—he’s senior vice president of Casino Finance for Manila Bay Resorts operator Tiger Resorts, Leisure and Entertainment—“Entertainment City was never touted as exclusive. But current investments are probably made on the assumption that four groups would make up Entertainment City.” Mr Naguiat has said, “If we will bring in someone new, there has to be value-added. Of course, Caesars believes there is. “Our feeling is that bringing what would really be the first major international brand to the marketplace differentiates us,” says Mr Tight. Speaking recently in Manila to the Foreign Correspondents Association of the Philippines, President Aquino said that within his cabinet “there is a sector that believes Caesars is a brand name that kind of tells the world that … in a sense, we have arrived”. Others might dispute that. “We don’t think the Caesars brand has any notable legs in Asia, so the brand in and of itself wouldn’t necessarily be a driver of visitation,” says a regional gaming analyst who asked not to be identified. “Caesars, however, is a storied name in the gaming industry, which would lend credibility to a market like the Philippines.” Mr Hernando says that while the interest is “flattering,” PAGCOR prefers to take a wait-and-see approach. “Caesars submitted a concept proposal and met with PAGCOR a couple of times, but in both instances they were told that PAGCOR prefers to substantially complete Entertainment City first and gauge the capacity of the market to absorb supply before going in depth into the possibility of a fifth licensee.” A prudent course, says the analyst. “It isn’t clear to us that the market will be able to support three or four IRs, let alone a potential fifth IR. City of Dreams Manila opening in late 2014 will be a good indicator if the market can support incremental supply. Our gut tells us that the return on investment story will be very long-tailed.” Pointing to Solaire, which posted about US$100 million in EBITDA for the first half of this year, Mr Tight says Caesars is confident in the future of the Philippine market. “With the addition of capacity from folks like Melco Crown, I think you’re going to continue to see that [market] grow as a true alternative for Chinese looking for gaming experiences and a quality gaming operation in Southeast Asia. As you look at the developments inMacau and in Singapore, the customer that we target is looking at alternatives, and given the location of the Philippines and a lot of these developments we’ve talked about from a business perspective, I think it will be a strong competitor to those other markets.” EMPIRE BUILDING The real magic for Caesars would be the potential for linking a Manila IR with the US$800 million resort casino the company is developing near South Korea’s main international airport at Incheon, about 30 kilometers west of the capital of Seoul. South Korea is enjoying a boom in Chinese tourism, and like the Philippines is increasingly looking to gaming as a way to leverage that as an economic development tool. Paradise Group, the country’s largest operator of foreigners-only casinos (Korean nationals are restricted by law to a single casino in a remote northeastern province), is also building in Incheon, and reports are the government may authorize three more casinos for the expansive special economic zone where the Caesars and Paradise projects are located. South Korea also is the top source tourist market for the Philippines, providing about a quarter of the country’s 4.7 million visitors last year. “We are hoping Koreans will have a chance to experience all of the non-gaming we have in Incheon and by giving them a taste of that and exposing them to our brand, having a Caesars gaming opportunity in Manila for them to enjoy would be a great complement,” Mr Tight says. Feature In Focus “It isn’t clear to us that the market will be able to support three or four IRs, let alone a potential fifth IR,” says one gaming analyst. “City of Dreams Manila opening in late 2014 will be a good indicator if the market can support incremental supply. Our gut tells us that the return on investment story will be very long-tailed.” “PAGCOR prefers to substantially complete Entertainment City first and gauge the capacity of the market to absorb supply before going in depth into the possibility of a fifth licensee.” Francis Hernando | vice president for Licensing and Development, Philippine Amusement and Gaming Corporation