Inside Asian Gaming

inside asian gaming November 2017 28 “Some believe controversies attached to Okada Manila plus the Philippines’ poor probity reputation make owning it, or any Philippine casino, an impediment to IR success in Japan. But sources in Japan and beyond see it differently.” machines. It had one active junket promoter from Taiwan with a subjunket, both mainly drawing customers from Korea, and is expected to add bigger junkets during this quarter. Suncity President for Marketing Strategy YM Choong confirmed that Macau’s top junket promoter is working with Okada to create a VIP club housing 25 gaming tables and seven private salons. Morgan Stanley says revenue at Manila’s integrated resorts – Okada, Travellers International’s Resorts WordManila (RWM), Melco’s City of Dreams Manila and Bloomberry’s Solaire – grew 27% year-on- year to August, with no signs of cannibalization. Market revenue grew despite reduced operations at RWM following the fatal attack there in June. Okada took a 15% share of Manila IR’s PHP15.4 billion (US$300 million) mass market revenue in the second quarter, according to Morgan Stanley analysts Alex Poon and Praveen Choudhary. The Philippine growth story should continue, they write, for several reasons. Chinese visitor arrivals rose 33% in the first half of 2017 to nearly 450,000, thanks in part to improved geopolitical relations between the Philippines and China under President Rodrigo Duterte. The trend got a boost fromvisa on arrival for Chinese tour groups in August andMorgan Stanley expects visa on arrival for all Chinese visitors soon. Their research finds City of Dreams and Solaire comp about 50% of rooms for gaming customers, below the 80% to 90% rate in some Macau casinos, so there’s scope to expand outreach. Clustering Okada, Solaire and CoD makes Entertainment City a local and regional gaming destination. Pagcor regulation remains friendly, allowing Macau junkets and proxy betting, increasingly with video streaming. The expressway opened last December that connects Ninoy Aquino International Airport (NAIA) with Entertainment City – and exits on Okada’s doorstep – extending the bay front district’s reach deeper into Metro Manila’s population centers. HARD CHOICES “Potential is significant” for Okada Manila, Mr Bromberg says. “It has a great location and real [critical] mass is achieved with City of Dreams and Solaire in the neighborhood.” But it remains unclear how Universal wants to handle that potential. Management chose, for now, to keep the name Okada Manila, but more difficult decisions lie ahead. When Okada premiered its signature dancing fountain in March, it opened about 100 guest rooms of a projected 1,000 for its first phase and a half-dozen restaurants. It has since opened new restaurants but few rooms. “The primary focus now is the completion of Phase One,” an Okada Manila spokesperson says. Universal has set a target of 500 rooms, plus 15 to 20 restaurants, by the first quarter of next year. There’s been no indication of when the IR plans full buildout to 1,000 rooms that would entitle it to 500 tables and 3,000 machines, based on Pagcor’s allocation formula. The IR site also has 19 hectares free for expansion. Sources outside the company say progress on completing the resort slowed because Universal cut funding. “Running out of money is a consequence of Okada going, but who knows what other problems exist that have yet to be disclosed?” Mr Bromberg says. “They need to cut costs and overhead. They have a huge loan,” explains a knowledgeable source. “They offered 20% to 30% of local management voluntary separation [in August].” BUYERS’ MARKET Universal is reportedly seeking to sell some or all of Okada Manila but that may not prove easy. The Philippines has been Feature In Focus Global Market Advisors Senior Partner Andrew Klebanow