Inside Asian Gaming

inside asian gaming August 2016 22 Feature In Focus Not surprisingly, personal consumption, the largest component of the economy, has bounced back. It grew at a robust 4.2% clip in the second quarter, with total retail sales up more than 3.1% in the first six months of this year over the same period in 2015. That’s not to say there aren’t concerns. Fewer adult Americans are working than at any point since the late 1970s, and in part that’s because many of them (around 2.6 million, according to The Wall Street Journal) have given up looking for jobs. This points to a lot of what is known as “long-term unemployed,” and their numbers remain abnormally high. Sluggish wage growth is also a concern. With unemployment as low as it’s been, wages should be rising at around twice the rate they are. It’s estimated that the typical salary, after taxes and other deductions, is about the same as it was 20 years ago, adjusted for inflation. In attempting to assess how all this might play out on the Strip in the next 36months or so, maybe the first question to ask is howmuch of the bad news is affecting Las Vegas right now? The answer is “not much.” The economic recovery is well into its seventh year, uneven as it’s been, and it appears that the negatives aren’t intruding overly much on the lives of the core Strip tourist. Surveys commissioned yearly by the LVCVA consistently identify this individual to be a solid mid-to-upper-middle class consumer, who gambles, to be sure, but is motivated more by a desire for an inclusive resort experience. This is reflected in Las Vegas’ evolution as a destination that derives more than 60% of total revenues from non-gambling activities. On the Strip it’s closer to 70%. As Las Vegas-based brokerage Union Gaming stated in a client note earlier this year, “Non-gaming continues to be the economic growth driver in Las Vegas overall, including the retail, food and beverage and hotel businesses. We believe these segments represent the greatest opportunity for new supply to grow the market.” Genting, which is all about the mass market, couldn’t ask for a better business mix. It’s been the foundation of its success in its native Malaysia, in Singapore at Resorts World Sentosa, in Manila and in the US at Resorts World Casino New York City. TAKING IT SLOW To replicate this model in Las Vegas the company has secured a strong location – 87 acres at Las Vegas Boulevard and Desert Inn Road, just north of the Wynn Resorts megaresort and within walking distance of a major phased expansion of the Las Vegas Convention Center. Las Vegas-based Boyd Gaming planned to construct a megaresort called Echelon at the site but canceled it when the financial crisis hit. Genting snapped it up in 2013 for US$350 million and broke ground for Resorts World Las Vegas last May. A parking structure for 4,500 vehicles has been grafted onto some of the Echelon substructure, and plans are for this building to house 5,000 workers once construction begins in earnest, which Genting says will be later this year. The 20,000 seat T-Mobile Arena opened in April “What is certain is that when Resorts World does open the Strip will be a dramatically different place.”