Keeping up appearances

The Philippines needs to improve its international image to boost tourism numbers and inbound investment, allowing it to achieve its full potential, local operators say.

Gross gaming revenue reached P149.1 billion ($2.9 billion) last year, with that number expected to rise to between P155 billion and P160 billion in 2017. Revenue is being driven by the opening of new resorts and increasing revenue from online gaming licenses.

However, the country is finding it hard to overcome a long-standing impression that there are security issues, which have been exacerbated by global media headlines over President Rodrigo Duterte’s crackdown on drug dealers.

“Whether in Entertainment City, or regional cities, or casinos, the main thing we have to concentrate on is changing the perception of the Philippines because that’s one thing that is stifling the tourism industry,” said David Lawrence, vice president of gaming operations at Widus Hotel and Casino, which is located in the Clark Freeport Zone.

Lawrence was speaking on a panel discussion during the first day of the ASEAN Gaming Summit in Manila, which was dedicated to the opportunities and challenges for the gaming industry in Southeast Asia.

“I think with our foreign customer base, once they are here and they feel safe, they enjoy the environment and they are return customers, but we have to get more tourists coming in.”

That said, tourism numbers in the country have been steadily improving. Arrivals hit 5.96 million in 2016, just shy of a six million target, but an 11.3 percent gain from the prior year. The government is targeting a doubling of the current numbers by the end of 2022.

Chinese tourism has seen particularly strong growth, jumping 37.65 percent with a target for 3 million Chinese arrivals this year, helped by warming ties between the two countries.

Still, the perception of instability continues to haunt the country. Earlier this month, Riskwise Global Capital told the Philippine Stock Exchange that concern over political risk caused investors in a $1.4 billion project to build a casino in Mactan, Cebu, to pull out.

“To get money from outside there is a challenge because people have a misconception about the Philippines and they are nervous about investing,” Lawrence said.

“Definitely at the moment the focus is on investors who know the market.”

It’s an issue that clearly irks the head of the country’s regulatory body, the Philippine Amusement and Gaming Corp.

Andrea Domingo gave the keynote address at the conference and used the occasion to launch an attack on the vice-president of the country over a video message sent to the United Nations, which criticizes the government’s methods in tackling crime.

Domingo, whose comments took an industry audience by surprise, later said she was venting her frustration at constantly seeing the Philippines portrayed in a bad light on the international stage.

The noise is overshadowing the achievements of a country otherwise known for its natural beauty and hospitable, well-educated people. The Philippine economy is estimated to have grown between 6.5 percent and 7 percent in Q1, making it one of the best performing in the region.

Domingo said she had agreed to a five-year moratorium on new licenses in Entertainment City to give the market time to absorb new supply and protect the investments of the resorts which have already invested billions in projects there.

However, she is open to considering regional licenses with a minimum investment of $300 million, providing the host municipality agrees with the proposal.

Pagcor has recently approved a license for a $500 million IR in the Cebu region, which Domingo said could become another casino hub. She also said an application for a $300 million plus project in Mandaue City, Cebu, had been submitted by a group of Hong Kong investors and was under consideration.

Angel Sueiro, chief operating officer of Thunderbird Resorts, which owns two regional casinos, said he sees strong potential for growth, with many areas of the country underserved. The country has a population of more than 102 million people. They tend to live in many small clusters of about 150,000 to 200,000, which can mean a demographic of about 2 million to three million people within a two-hour drive.

“We recognize there are still strong pockets of population that are underserved, so we believe there is an opportunity in regional markets which are underserved by Pagcor,” Sueiro said. “After the chairman’s remarks it’s clear that the focus of growth should be on those markets rather than those where Pagcor operates.”

Lawrence concurs, pointing to the fact that the population of North Luzon, which is where the Clark base is located, is the same as Metro Manila, but spread over a wider area. “It’s not just in North Luzon it’s all over the Philippines so the potential is very great. Certainly with our property we’ve seen revenue growth year on year.”

Tiger Resort Leisure and Entertainment

Philippine’s largest integrated resort, the 44-hectare Okada Manila, is continuing to roll out its attractions, opening up its giant water fountain feature and 116 deluxe accommodations at the end of March. Company executives have said they hope the fountain will be a must-see attraction for visitors to Manila. Designed by Wet Design, the same firm that created the fountain at the Bellagio in Las Vegas, the fountain has 739 water nozzles, including WET’s proprietary underwater robots, 2,611 colored lights, and 23 speakers across a 9.2 acre manmade fountain lake.

The $2.4 billion casino resort held a soft opening on Dec. 21, and officially commenced casino operations on Dec. 30.

The resort will feature two Y-shaped hotel towers with a total of 993 rooms, a casino floor with about 500 table games and 3,000 electronic gaming machines, a 90,000 square-feet nightclub and beach club entertainment complex. It will also have an 8,409 square-meter retail promenade, a world-class spa and 40 restaurants ranging from casual, buffet, and international dining. The restaurants include culinary masterpieces of Michelin-star chef Hirofumi Imamura at the Japanese Kappou Imamura restaurant.

Bloomberry Resorts

Bloomberry Resorts swung to a net profit of P2.3 billion (US$46.1 million) for the year ended December 31, 2016, compared with a loss of P3.4 billion (US$66.9 million) in 2015. The group’s results are being held back by its operations in Jeju, South Korea, which it unsuccessfully attempted to sell last year. Without South Korea, profit would have been P3.46 billion. Net revenue of P30.4 billion in 2016 was up 21.2 percent from the previous year. Gross gaming revenue grew to a record P38.5 billion in the full year 2016, up 18.7 percent from 2015, while non-gaming revenues increased 26 percent to a record P2.4 billion. VIP volume growth was 29 percent, while mass table drop grew by 12 percent and EGM coin-in grew by 18 percent.

Solaire is a 16-hectare gaming and integrated resort complex along Asean Avenue in Parañaque City. The Bay Tower of Solaire consists of a casino with an aggregate gaming floor area of approximately 18,500 square meters (including approximately 6,000 square meters of exclusive VIP gaming areas), with approximately 1,400 slot machines, 295 gaming tables and 88 electronic table games. Bay Tower has 488 hotel rooms and 15 specialty restaurants. Contiguous to the existing Solaire Resort and Casino, the  Sky tower consists of a 312 all-suite hotel, an additional ten VIP gaming salons with 66 gaming tables and 223 slot machines. It also includes a certified 1,760-seat lyric theatre

City of Dreams

The $1.3 billion City of Dreams Manila is owned by Belle Corp and Melco Crown Entertainment’s local unit. At the end of Q4, the resort was operating 272 tables and 1,686 gaming machines. The table games win per unit per day was $4,576. In Q4 revenue surged to $144.7 million from $80.9 million in the fourth quarter of 2015, while adjusted EBITDA gained to $50.2 million from $15.5 million. Rolling chip volume totalled $2.1 billion for the fourth quarter of 2016 versus US$1.3 billion, while the mass market table games drop increased to $149.0 million for the fourth quarter of 2016, compared with $106.3 million.

For 2016, VIP rolling chip volume surged by 110.1 percent to $6.8 billion. Mass market saw a 24.6 percent increase to $550.5 million, compared to $441.4 million in 2015.

City of Dreams Manila has six hotel towers with approximately 950 rooms in aggregate, including VIP and five-star luxury rooms and high-end boutique hotel rooms, a wide selection of restaurants and food & beverage outlets, a 4,612-square meter family entertainment center in collaboration with Dreamworks Animation, a live performance stage, two international nightclubs and a multi-level car park. It includes an approximately 260 room Crown Towers hotel, Hyatt City of Dreams Manila, a 365-room hotel managed by Hyatt International Corporation and Asia’s first Nobu Hotel with 321 rooms.

Resorts World Manila

Travellers International Hotel Group, a joint venture between Genting Hong Kong and Alliance Global, is the owner and operator of Resorts World Manila. For 2016, the group posted a decline in gross gaming revenue, with analysts attributing the drop to competition from the new IRs opening in Entertainment City. Net revenue for the year increased by 2 percent to P25.09 billion ($499 million). Gross gaming revenue dropped 2.3 percent to P23.65 billion, due to a decline in VIP volumes. The company’s Non-VIP segment drop volume increased by 8.3 percent, while the drop volume in the VIP segment contracted by 17.4 percent.

The hotel room count for the group’s three hotels (Maxims Hotel, Remington Hotel, and Marriott Hotel Manila) remains at 1,226. Phase 2 at RWM is nearing completion with the addition of 228 rooms in the Marriott West Wing in Q4. Phase 3, which will consist of three hotels, Hilton Manila, Sheraton Manila Hotel, and Maxims II, will be completed by 2018. It will also include an additional gaming area, new retail spaces and six basement parking decks. PAGCOR has approved new gaming capacity of 420 gaming tables and 4,148 gaming machines at the resort.

Revenue from hotels, food and beverage was up by 6.4 percent in 2016, with hotel occupancy at Maxims at 81 percent, Remington at 88 percent and Marriott 81 percent. However, the company said the occupancy rates were boosted by complimentary rooms and promos. This accounted for 71 percent of the occupancy at Maxims compared with 64 percent the prior year and 53 percent at Remington compared with 39 percent the year before.