The first integrated resort in Manila, Newport World Resorts has reached a certain level of maturity, underlined by now being under a single umbrella group. Hakan Dagtas, COO of the IR, says that 2023 was the best results year for the property since its opening, and the group is planning to heavily invest in being a non-gaming attraction.
On the gaming side, competition is tough, but the group continues to focus on its international VIP, while also targeting local VIP and premium mass, with the executive lauding the open business environment embraced by PAGCOR’s current leadership.
We’re joined today by Hakan Dagtas, the COO of Newport World Resorts. Thank you for being with us.
Hello.
You’ve been with Newport World Resorts – formerly Resorts World Manila – for over 15 years. How mature would you say is the company?
We are the first integrated resort in Manila after PAGCOR decided to issue licenses to private enterprise. And the first four years of our operation we were the only player in town. And I believe that that timeframe we spent with growth, and perhaps we grew really quick and fast. And during that period, we had a lot of issues and shortcomings.
But from our fifth anniversary onwards, we spent quite a bit of time and added some professionals into the company. And from there onwards, I can say that we progressed well, for the maturity. Now we are 15 years old. I’m sure like every other company, we also have some room for improvement. But I can say that we are quite mature.
Now that maturity has also expressed itself within your results. So, I wanted to ask you, how was 2023? How are the 2023 results? And how is 1Q24 looking so far?
The maturity that we just mentioned, as well as some other factors, like a couple of new colleagues joining us in 2022, and 2023. And we are now under one umbrella rather than both Genting and AGI groups. So that creates definitely some effectivity in our organization, and that allows us to have the best result ever since we opened, in 2023. We were quite happy with the growth. There are some slight revenue issues that we faced in January and February. Some of them are hold issues, some luck-related factors. But so far, March is quite good. I hope that it will allow us to compensate the first two months and we will still reach our target.
Now, we saw that post-pandemic and even during the pandemic, the mass market was the sustainer of the GGR within the Philippines. And the mass market is obviously going to be very, very important going forward. What is your breakdown of VIP versus mass?
I think I would like to split it into two. When we look at the international business, we are stronger on the international side in the VIP segment. But for the local segment, our mass is quite strong. And because of the obvious margin reasons we are more focused on mass and premium mass. We recently opened in Q4 a nice club called Grand Club in our new building. So, that’s a sign for us to basically excel in the premium mass and local VIP area. That’s 65-70 percent of our local business.
Well, competition is tough. We’ve got the four main IRS within the region, how are you working to increase your market share?
Again, as you said, competition is tough and we are not only competing within Metro Manila. There are also some successful operators, primarily in Clark, maybe in other jurisdictions too. But while we are trying to get our share increased, we are also trying to welcome more international players and grow in certain segments where we have a higher margin.
Has there been any large change – you mentioned that being under the same umbrella has made it easier. Now we know that Alliance did get the shares from Genting Hong Kong. Has that changed anything in terms of the corporate environment, in terms of the operating environment?
Not really we, we were like a handful of guys from Genting Hong Kong group. All of us remain with the AGI Group. So, we just added a couple of new colleagues into the team. But as I said, the changes were more positive. We are receiving macro level guidelines from our chairman, Mr. Kevin Tan, and we are having open communication channels. And living in the same city, just 20 minutes drive between the offices, I guess that simply makes our life easier and efficient.
Definitely. Speaking of more efficiency and improved operations, PAGCOR is aiming to have different taxation changes, which will affect both land-based and online, how are you expecting those tax changes to affect Newport?
To be honest with you, I don’t know any tax changes in land-based casinos. But I’m monitoring PAGCOR’s move to basically block the illegal online gaming and move the business towards legal and regulated gaming – it’s really a major, major initiative. In general terms, it’s not easy for any government in the world to lower the tax rate. You get a lot of (raised) eyebrows, and people tell you Why”?
The governments, unfortunately, don’t think like businessman, and I don’t want to say this to criticize the previous administrations, it’s more a compliment to the current administration, headed by a Chairman Al Tengco.
In order to make us profitable, and basically for us to invest, there should be some kind of reasonable tax rate, because the illegal operators do not pay any tax. So, I need to spend some CAPEX, some OPEX, a large marketing dollar, you know, online business requires a lot of acquisition cost. So, at the end, I am only going to go into a business if I see that there is a possibility for us to generate profits. And if the tax rate is too high, obviously, we will think twice, three times, and at the end we may or we may not go into that business.
But if we don’t, if we do not transfer the illegal business into legal, the government is not going to generate any money, we will not be able to invest and we will not be able to hire some employees or do things a little bit more – (as) in a regulated environment. So, as I said, it’s not a criticism to the previous administration. But I really would like to say that I salute the PAGCOR administration’s move towards allowing us to generate business which we will generate profit, as well as tax revenue for government agencies.
One of the components of the massive property that you have is non-gaming. I know that you have invested into revamping some of the shopping alternatives and even some of the other VIP rooms etc. How much of a component is non-gaming for your bottom line?
I don’t really have the exact numbers but I think Newport World Resorts by far is having the pole position. We are definitely the number one integrated resort in terms of non-gaming revenue. We have more than 3,500 hotel rooms; including the restaurants that we operate, nearly 90 restaurants. And in the second half of the year we are going to open the first Gordon Ramsay Bar & Grill in our place. So, we were with him in January and after the opening he will also come in visit our place.
So we are just adding, because in the long term we want to create a real integrated resort, not casino-only. People will come and attend our shows. We are creating one musical for this year. We are going to generate another musical for next year. We have a 1,700-seat theater. As I said 3,500 hotel room. So when you come into Newport World Resorts, you’re just going to check into our hotel and spend a few days without getting bored.
That’s also the experience that Macau is trying to create, you know, with having the whole experience being a part of one package. You want to go in and get everything from entertainment to dining to gaming. That Chinese visitation, though, had been a key component before. There were expectations that the Chinese visitation could come back in the second half of the year. Do you have any thoughts on whether that’s going to happen?
We operate three hotels in Boracay, we have nearly 1,200 rooms. And we know that there are charter flights going into Boracay and the Chinese tourists started to arrive – these are more on and off travels. But eventually, this is going to be a regular move from China to maybe with islands to start with and then the visit will be targeted to other cities such as Cebu and Manila. 1.5 billion people, I’m sure they’ve seen and visited some Chinese cities, but there is always this desire to go abroad.
Every time I go to Hong Kong and Singapore I see them. So, it’s just a matter of sequencing. And I’m sure they will definitely consider the Philippines because it’s such a beautiful country. The beaches offer different beauties. And you can do diving, you can do parasailing, different water sports. And it’s a rich Spanish and local culture. So, if I’m living in a different country, and it’s just a matter of three-four hours flight, I will definitely visit Philippines a few times in a year. Well,
Well we hope to see that happening more and we hope to see everyone coming to visit Newport World Resorts. I wanted to thank you again. Hakan Dagtas, the COO of Newport World Resorts. Thank you.
My pleasure. Thank you.
