Casino Outlook, ASEAN Tigers: Philippines, Singapore, Vietnam

from Gaming & Leisure Magazine

Summer 2018

www.mygamingandleisure.com

full issue at:  https://digital.mygamingandleisure.com/issue/summer-2018/

Gaming & Leisure Magazine
Summer 2018

The focus of this issue’s International Roadtrip is a return to the topic from three years ago — Casino Outlook SE Asia, Summer 2015. The focus will be on the three most dynamic casino gaming markets within the ASEAN region, the Philippines, Singapore and Vietnam. (ASEAN is the 10-member Association of Southeast Asian Nations.)

One common thread in the marketing efforts of each these markets is the focus on Chinese tourists. The expenditure of each country on boosting inbound Chinese tourism is a key driver of gaming performance in all ASEAN casino sectors. Chinese visitors were the largest segment by nationality in each of these markets through 2017.

VIP casino tourism from China is expected to continue expanding in mass-market gaming tourism within the region. Some believe that this mass-market segment is under-represented and will continue to grow.

The Philippines

The Philippines is one of the fastest-growing casino hubs in Asia after Macau and Singapore. The high level of growth has some concerned that over-investment in the nation’s thriving gaming sector could become a reality as investors chase lucrative returns in an already crowded market.

In the Summer 2015 issue, it was mentioned that the Philippine government had rightfully recognized that casinos and gaming are central to their drive to boost tourism and the economy. This effort continues with an expanded focus on integrating the casino market with the hospitality sector.

Already noticeable in other markets, casinos in the Philippines have been moving to integrate their businesses with upscale hotels, restaurants and nightclubs, adding to the sense of luxury entertainment for guests with high disposable income.

Despite high growth in recent years, the market is expected to continue growing at a compound annual growth rate (CAGR) of around 10% through 2020. The recent growth is due in large part to the VIP customer segment. Casinos continue adding more VIP tables to press the growth of the market upward.

In the Summer 2015 issue, it was estimated that “the Philippines relies on Chinese VIPs for about 30% of its gaming revenues” due to ties to Macau junkets and the businesses that connect the wealthy to casinos. These VIP customers accounted for approximately 50% of the Philippine casino gaming revenue in the last couple of years. In 2018, and for the foreseeable future, the revenue contribution from the VIP segment will continue to grow. The VIP audience generally includes gamblers who seek entertainment value over ROI for their investments.

New casinos are expected to open in the future as junkets continue to set-up operations in the country. Further, the casinos in the Philippines strive to match the casinos in Australia, South Korea and Vietnam in terms of features and affordability.

Singapore

After a couple of years of falling gross gaming revenues (GGR), Singapore’s casinos have been building on a recent trend of steady growth, expected to be around 10% in 2018-2020. The growth is expected to be driven by increases in visitor arrivals.

Following a peak of 15.6 million arrivals in 2013, growth in tourist arrivals had stalled, declining to 15.1 million in 2014 and 15.2 million in 2015. The recent pickup in tourist arrivals seen in 2016 – 2017 was led by arrivals from mainland Chinese.

China also ranked number one for contribution to Singapore’s tourism receipts for three straight years helping make-up for the fall in entry levies paid by Singaporeans and permanent residents (PRs) in the country’s two casinos.

Citizens and PRs are required to pay a $100 daily levy or $2,000 annual levy to enter a casino. In the financial year ending in March 2017, total levies were at their lowest level since the casinos at Resorts World Sentosa and Marina Bay Sands opened in 2010. The Singapore Totalisator Board reported that it collected $134 million in casino entry levies in its last financial year, down 21% from the $170 million collected in financial year (FY) 2012/2013.

Counsellors who work with gambling addicts said fewer Singaporeans and PRs are going to the casinos as they are put off by the required entry levy. Additionally, there are some who have lost all their money are have barred themselves or have been banned from the casinos. Reports by the National Council on Problem Gambling shows that more than 25,000 Singaporeans or PRs have banned themselves from the casinos, or their families have applied for an exclusion order to ban them from entering. Some have simply attributed the decline in entry levies by Singaporeans as: “The shine of the casinos and the novelty have worn off.”

Despite the drop in revenues from entry levies, growth has returned to the Singaporean casino market with the increase in international arrivals from China, the USA and neighboring countries.

Vietnam

In the Summer 2015 issue, one of the significant concerns to casino executives was the law banning Vietnamese citizens from entering a casino. Studies at that time indicated the country of 95 million people was losing $800 million (18.2 trillion Vietnamese dong) a year with its citizens crossing into Cambodia and Laos to gamble.

A year ago, to the delight of international gaming executives, Vietnam approved gambling in certain casinos for citizens who met minimum income requirements. The government has allowed locals to gamble at two locations as part of a three-year pilot scheme. News that the government is liberalizing its gaming regulations has given a significant boost to Vietnam’s growing casino and hospitality industry.

Vietnam’s large growth in domestic tourism is a key driver for casino developments. Records show that in 2015, there were 57 million domestic travelers, an amazing 48% growth from the previous year. Their national initiative launched in 2014 and themed “Vietnamese travel in Vietnam – Each journey to love the fatherland more” has also been instrumental in contributing to the growth in domestic tourism.

As with the Philippines, Vietnam has been moving to integrate their casinos with upscale hotels, ensuring a sense of luxury entertainment for guests with high disposable income. Unlike Singapore, however, a significant portion of the growth in Vietnamese gaming will come from domestic gamblers.

These three tigers of SE Asian gaming – the Philippines, Singapore and Vietnam – will see continued growth for the foreseeable future.

Based in Bali, Bill Healey has been consulting, installing, and supporting solutions in the global golf and leisure industry since 1982. He has been involved with over 1,000 systems installations in 40+ countries from North America to Africa to Asia and Australia. 

Casino Outlook 2015 SE Asia

from Gaming & Leisure Magazine

Summer 2015

www.gamingandleisuremagazine.com

International Casino Roadtrip - Philippines, Vietnam, Myanmar, Cambodia

In recent years, there has been much written about Asian gaming in Macau and Singapore.  The focus of this article is on the outlook for the Philippines, Vietnam, Myanmar and Cambodia. One common thread found with these four SE Asian countries is the focus on whether or not to allow citizens into casinos in their home country.   

Gaming and Leisure Magazine
Summer 2015

Vietnam, Myanmar and Cambodia do not allow their citizens into casinos, but tend to pull gaming-tourists from across their borders.  The Philippines on the other hand, does allow citizens into their casinos. The success they have had in keeping revenues in-country have had the others reconsidering.

A second common point with these four countries is their effort to draw gamblers in from China, whether they be a cross-border drive or a junket into the larger integrated resorts.

Philippines: Casinos Remain Central to Tourism

The Philippines government rightfully recognizes that casinos and gaming are central to their drive to boost tourism and the economy.   Though their gaming revenues are significantly below that of both Macau and Singapore, there are projections that the archipelago's share of the global gaming market could grow from an estimated 3.3% to 5% in the next few years.

Much of the expected growth is expected to come from several factors:  a significant domestic demand, positioning as a low-cost tourist destination and development of Melco’s Entertainment City.

Located at the gateway to Melco’s Entertainment City is the new City of Dreams Manila, which is poised to become the premier leisure and entertainment in the Philippines and within the region.  More than 600,000 visitors have had a first experience of the new integrated resort during its ‘Sneak Preview’ period, with some 20,000 visiting on its first day after doors opened on Dec 14, 2014.

With it’s ties to Macau junkets and the businesses that connect the wealthy to casinos, Melco will likely encourage its existing Chinese VIP clientele to visit Manila.  It is estimated that the Philippines relies on Chinese VIPS for about 30% of its gaming revenues.

The main attraction for most casino operators in Manila however, is its thriving local gambling market.  PAGCOR (Philippine Amusement and Gaming Corporation) expects gross gaming revenues in the Philippines to rise to $6-$7 billion by 2020, when four large integrated resorts are open.

VIETNAM:  Looking to Increase Gaming Market

In last year’s summer issue of Gaming & Leisure we profiled The Grand Ho Tram Strip, considered “Vietnam’s Newest Seaside Gem”.    Recognized as the country’s leading integrated resort, the site continues to dazzle both domestic and international visitors.

Vietnam has managed a decade of solid growth as a tourist destination, most recently experiencing a 4% increase in the number international visitors in 2014 over the year before.  This sustained growth bodes well for the country’s gaming industry which has experienced growing revenues at a robust annual average of 10-15% a year.

Asset management firm, VinaCapital has been in discussions to open a $4 billion integrated resort in the coastal town of South Hoi An.  Construction is planned for mid-2015, with a site that is considered to rival The Grand as Vietnam’s leading IR.  Additionally, Donaco’s Aristo International resort, recently opened in northern Vietnam, has shown strong growth in their first year of operation.

There are ongoing considerations by the government to open the casinos to its citizens.  Studies by officials in Hanoi indicate the country is losing US$ 800 million a year with its citizens crossing into Cambodia to gamble.

Aside from The Grand, Aristo and other planned integrated resorts, much of the growth in gaming revenues comes from the border town of Mong Cái in the northern province of Quang Ninh.  Strategically located near the border with China, these casinos draw from the large pool of gamblers from southern China.

MYANMAR: The Remarkable Journey continues

In the Spring 2012 issue of Gaming & Leisure, we had a discussion with May Myat Mon Win, a leading hotelier in Yangon, Myanmar.  The discussion highlighted the country’s “Remarkable Journey :: The opening of the Tourism & Hospitality Market”.

The resource-rich country has attracted quite a lot of attention since it’s opening in 2011. Since that time, Myanmar’s tourism has seen a significant rise in arrivals each of the past few years, demonstrating the desirability of the country as a tourist destination. The government’s current target is for the country to host 7.5 million visitors annually by 2020.  The Ministry of Hotels and Tourism has unveiled its Master Plan, with the aim to have tourism expand from a baseline of US$534 million in 2012 to $10.8 billion by 2020.

A small gaming industry does exist in Myanmar.  Though not officially licensed, casino ownership is tolerated for the well-connected individuals and those in the semi-autonomous areas bordering China and Thailand.  Legal loopholes and cooperation with local police have allowed dozens of smaller venues and a few larger casinos to remain open.

As is the case with Vietnam, Myanmar also has a casino area along its border with China.  The town of Mong La in Shan State successfully targets casino gamers from over the border.  In fact, the currency used at the Mong La casinos is the Chinese Renminbi rather than the national Burmese Kyat.

Buoyed by the surge in tourism since 2011, the government looked take advantage of the growing foreign influx by drafting a law to allow casinos in hotels and resorts. Drafted in late 2014, the law would help formalize and regulate the country’s gaming sector.  This has fueled a growing optimism about the expansion of upscale gaming in the coming few years. With these positive moves however, there are concerns about what the local market can bear, as the country is still very rural, with roughly 60 million still living without electricity.

The Burmese gaming industry in its current form is highly profitable, which demonstrates a strong demand both from locals and the bordering countries in Thailand and China.   Burmese officials continue to research and review the gaming successes by others in the region including Singapore, Vietnam, Cambodia and Laos.

CAMBODIA: One of the Gaming Stars

Cambodia has had one of the strongest economies in Asia for the past decade, with growth rivaling that of China.  Economic growth in 2013 was at 7.4%, in 2014 at 7.2% and is expected to be near 7.5% for the current year (2015).  They have also met their Millenium Development Goal of halving poverty by 2009.

Tourism statistics also provide good news, as their tourist arrivals have increased by  24% in 2012, by 18% in 2013 and 7% in 2014.  Tourist arrivals are expected to reach an annual number of 4 million by the end of 2015 or 2016.

Cambodia currently has more than 60 casinos, most are small casinos on the borders of Vietnam and Thailand.  These border casinos are successful since they attract Vietnamese who are banned from casinos in Vietnam, and gamers of all nationalities from Thailand due to the ban on casino gaming in the country.

NagaWorld in Phnom Penh is Cambodia’s only Integrated Resort, and by far the largest casino in the country.  They continue to be a top performer in the regional casino industry.

Owned by NagaCorp, they are fortunate to hold a 70 year license running through 2065 which includes a 41-year monopoly in an area with a 120 mile radius of Phnom Penh. The NagaWorld site pays no taxes on income or gaming revenue, just a low fixed fee. Labor and construction costs remain lower than that of other Asian gaming destinations.  Projections were that they built their property for $200 million that would have cost $1.5 billion in Macau.

Similar to Vietnam & Myanmar, there is consideration by the Cambodian government to open the casinos to its citizens.  They have noted that they have been successful in pulling US$ 800 million in revenues from Vietnamese gamblers --  and they would like to see that they don’t lose their gaming revenues back outside casinos.

Though Macau and Singapore remain the largest casino markets in Asia in terms of revenues, the industry is experiencing respectable growth in the Philippines, Vietnam, Myanmar and Cambodia.

Thunderbird Golf Resort - Poro Point. A New Shining Star in the Philippines (2008)

In early 2008, Republic of the Philippines’ President Gloria Macapagal Arroyo formally opened the first phase of the Thunderbird Resort – Poro Point leisure and tourism complex located in San Fernando, La Union, Philippines.  This new resort, complete with a 9-hole golf course, entertainment and  casino, is intended to put La Union on the world map of major tourist destinations. 

While pledging to invest $100 million over a 25-year period, Thunderbird has also contributed $10 million for the upgrade of the San Fernando Airport, which will enable it to accommodate larger aircraft like Airbus 320 and Boeing 737’s.   

Strategically positioned in the Poro Point Special Economic and Freeport Zone, Thunderbird Resorts - Poro Point is home of The Cliffs Golf Course & Beach Club and Fiesta Casino.  It is part of the Philippine government’s plan for San Fernando, La Union, to be developed into a tourism attraction that can compete with Phuket and Bali. Home of the Voice of America (VOA) and a former US military station, Poro Point’s close proximity to other Asian countries and territories like Malaysia, Thailand, Vietnam, Taiwan, Macau, Canton, Hong Kong, and Japan makes it an ideal destination for commercial service to the Asian market.

Prior to their ventures into the Philippines, Thunderbird Hotels & Resorts has been the leading gaming and integrated resort company in Central America.  In just a decade, they have made great strides in successfully developing new business opportunities while experiencing substantial growth:

• Established dynamic, themed, and integrated resort venues anchored by a total of 24 gaming and casino businesses in eight countries: Peru, Panama, Nicaragua, Guatemala, Costa Rica, India, Poland and the Philippines.
• Collectively, Thunderbird Resorts offers 3,800 slot machines, and 1,300 table positions.
• Market share leader in Peru, Panama, Costa Rica, Nicaragua, and Guatemala.
• The Fiesta Casino at the El Panama Hotel is now one of the largest revenue producing casinos in Latin America.
• Two operations have been opened in the Philippines which will serve as a platform to the entire Southeast Asian market (Thunderbird Resorts – Rizal & Thunderbird Resorts – Poro Point).
• Successful development of non-gaming entertainment businesses. Eight bars collectively serve over 10,000 beverages per day.  The first restaurant within the company serves 15,000 meals a month. The Performing Arts division has produced dancing and musical shows drawing worldwide talent.
• There are over 4,500 international employees within Thunderbird Resorts subsidiaries and affiliate companies.
• Thunderbird Resorts manage over US $125 million in gaming revenues.
• Currently, there are two hotels and resorts under construction with a pipeline of over $85 million global projects.

 

I had the pleasure of spending a couple weeks at the Poro Point property as they prepared for their Grand Opening in May 2008.   Below are a few questions I had for them as they went through their first full month of operations:

-        [BH] What are the venues at Poro Point?

[Thunderbird]  Thunderbird Resorts - Poro Point features a world-class casino, a 36-room luxury hotel, a par 36 9-hole Golf Course, watersports and fine-dining and restaurant, bar and entertainment facilities.

-        [BH] The Poro Point property is a 5 hour drive from Manila.  Where is the property expected guests coming from? 

[Thunderbird]  Most of the current guests are locals in the Northern provinces of the Philippines.  With its growing visibility, there have been a number of Manila-based clients who are being drawn to the resort to experience this new destination.  Upon the opening of the San Fernando Airport in August, foreign guests are expected to come from the Asia Pacific region - namely Taiwan, China, Japan, Korea, Malaysia, Singapore, Vietnam and Thailand.

-        [BH] Golf is a part of the Poro Point property in La Union, Philippines.  This is the first Thunderbird property with Golf.  Have there been any unique challenges implementing golf into the group? 

[Thunderbird]  Thunderbird Resorts partnered up with International Management Group (IMG) as the golf course design consultants, in order to provide expert golf course design and offer the most unique golf experience for its members; on the other hand, Sta. Elena Properties, the leading provider of golf services and facilities in the country, has also been contracted for the maintenance of the golf course, in order to set benchmarks on providing the most aesthetically pleasing fairway.

-         [BH] Along with the new golf facilities comes a unique need to source a golf solution.   Have there been any challenges in finding appropriate Golf & Membership software?

[Thunderbird]  It’s nothing but the best for Thunderbird Resorts, as we have invested in the Concept Software System, a leading supplier of systems for golf and leisure facilities. Our current software supports the golf component of the company, and later down the line, can support our spa and other leisure services.

-        [BH] IT Plays an important role in the success of a multinational organization. What has been the resorts experience in sourcing PMS and POS Solutions in the Philippines?

[Thunderbird]  As far as IT is concerned, we never encountered great challenges in sourcing PMS and POS Solutions since the Micros & Opera systems have already been in place in our other properties in Latin America. When we ventured to the Philippines, the first thing that we did was to check if Micros had a presence in this country. Luckily they have already established their niche here - that made things easier for us.

-        [BH] Has the Property's remote location had an impact on finding qualified IT & Managerial Staffing?

[Thunderbird] In a way yes, but when we hire people in IT, they first need to meet the minimum requirements, and then they undergo a rigorous training to acquire the needed skill and expertise. The training is anchored on prescribed company policies and procedures.

I appreciate the time the management team at Thunderbird Resort – Poro Point gave to me during the course of recent months.