Gaining strength from adversity

Resorts World Manila (RWM) is owned by Travellers International Hotel Group Inc. (TIHGI) – a publicly listed company wherein Alliance Global Group Inc. (AGI) and Genting Hong Kong (GHK) are majority shareholders. It was the first integrated resort (IR) to open in the Philippines and is the only one not located in Entertainment City, but opposite the country’s primary international airport. The property is currently in the third phase of its expansion, which will consist of a further three hotels, more gaming and other amenities, and is scheduled to be completed by 2018. Further down the road, it will open the fourth and final IR planned for Entertainment City.

In June last year, the casino was attacked by a lone gunman, who set fire to casino facilities, resulting in the death of 37 guests and employees, as well as the gunman himself.

Chief Operating Officer Stephen Reilly speaks to AGB about the recovery from the tragedy and optimism for the future.

AGB: What security measures has RWM taken since the incident?

PAGCOR came to us as they wanted to make sure that RWM was ready. We hired directly from the Philippine National Police and invited Generals to join our team. We have some of the biggest heads at the table from a security and safety standpoint. We engaged Black Panda which is one of the best security firms worldwide. They are still with us and engaged for another year.

A lot of our renovation work is to build security bunkers. We have had to redefine the industry standards as you can’t settle for just a regular door and dog sniffing the back of cars. We have to make it as pleasant as possible for the guest, but you also need to consider that the world is changing fast, therefore we try to do things with the end in mind.

We now have security bunkers and a double layer of security around the property. It’s very expensive, but it’s something we must do. PAGCOR reviewed our plans and I believe what you see at the other IRs today is a result of what Travellers presented to PAGCOR.

AGB: How close to completion is Phase 3?

It looks like a massive construction site, but a lot of it is completed. The first to open will be the Hilton Hotel. We’re looking for that to open up by late May 2018. Then we are going to have the Sheraton Hotel Manila, which is now a Marriott brand, and lastly we are going to have Hotel Okura. Altogether, these are the three international hotel brands to add to what we already have. The first gaming component will be the ground floor, which will be as big as the floors we have here within the Garden Wing. It will, in a way, replace the capacity we lost on the second floor, and then we’ll also have the new second and third floors. We will phase them in rather than just open it all in one go.

The gaming component will be open early in the first quarter.

AGB: What about the plans for Westside City?

It will open in 2020. When we look at Entertainment City and we see what everyone else has already done, we’ve found ways in which to create something that fits in the City, but also introduces a different experience. We have drafted the builds numerous times. We are going ahead and we’re doing it, but we’ve changed it many, many times to be something that’s quite unique.

AGB: What is RWM’s unique selling point in the Philippines?

I think one of the things we have is that we understand the local market. If anyone understands business in the Philippines from a retail and property perspective that’s Dr. Andrew Tan (head of Alliance Global). He understands what the market really requires. His finger is on the pulse and he has taught us how to get it as well by opening our eyes and helping us think out of the box and focus on the consumer market.

AGB: What segment of the market does RWM focus on?

Premium mass was something we actually started. VIP business at the time was volatile with credit risk, though premium mass and mass were doing very, very well and was a stable base, so we are still focusing on this. We are not going to turn VIPs away and we are signing new junkets all the time. Of course, when there are new properties and it’s all shiny, the junkets like to shift, but we still have our base for our VIPs and it’s growing. We are very, very careful with our credit.

The Philippine market is getting used to luxury goods, but sometimes things are too big and too quick. For some of the domestic market, they feel intimidated. You have to tap into that market and understand what they want. Some of the restaurants we opened up initially were fine dining, because we thought the market would adapt very quickly. But no, they want to have their rice with a fried egg on top. So we cater to demand.

Locals are our core market. About 80 percent of our market is domestic. The revenue stream is different. Half of the revenue is international and 12 percent non-gaming.

AGB: Where do you see the market five years from now?

There is potential for growth. The market is growing at 12 to 15 percent per annum and the tourism industry is growing rapidly. The infrastructure is not quite in place, but people really want to come to the Philippines, even more so with the relationship between the Philippines, China, and SE Asia having recently improved.

AGB: How much potential is there for expansion outside of Manila?

There are an awful lot of tourists coming in who do not go through Manila and go through Cebu instead. There are also direct flights to Caticlan which is the gateway to Boracay. They can come in from southern China and other parts of Southeast Asia.

People don’t think of coming to the Philippines for gaming first. It’s a destination and people look at what the destination has to offer. The huge market here now is diving and surfing. Both have exploded and become extremely popular. A lot of our hotel rooms are taken by divers. If you look at the Korean market, they love golf and you can golf all year around. The Korean, Japanese, and now the Chinese market love to come to the Philippines for both golf and diving. There are not many places in Southeast Asia with pristine waters and multiple dive sites without overly developed islands.

AGB: Does RWM entertain proxy betting?

Not at this moment. We are studying it carefully since we acknowledge that this is an area that is growing around the world. But of course, we have a brand to protect and recognize the risks involved.

AGB: What’s different about the Philippines in terms of gaming preferences?

You have to make sure you keep the latest product line for slots. I love slot machines. They turn up to work on time, we don’t have to feed them too much, they don’t need much supervision. They are absolutely great, but make sure you have the latest technology. The Philippine market loves slot machines. The area for growth is big. Table games will shrink just like in Las Vegas eventually. It is only a matter of time. If you look at the middle income earners, it’s growing and they will go into the electronic side of gaming, so it will grow.

We have added a sports book through MSW, and they have been extremely happy with Resorts World, where they have gotten a lot of traction. Tennis and basketball are big and people bet a lot. Also cock fighting, which is very popular here in the Philippines, and is just one of the many things that makes this country a unique destination not just in Southeast Asia, but the entire world.