China gamblers fuel growth of Phl casinos
Chinese gamblers are fueling the growth of the casino market in the Philippines and there is still much room to grow given the rosy prospects of visafree access for Chinese visitors and junket-based proxy betting, Morgan Stanley said in a recent report.
Enrique Razon’s Solaire Resort and Casino is among Manila’s casino resorts seen benefitting from more Chinese players, the global banking giant said in a re- port authored by Alex Poon and Praveen Choudhary.
Chinese gamblers contributed 30 percent of Solaire’s gross gaming revenues and 50 percent of its VIP vol- umes in the first half and are growing faster than other customer segments, Morgan Stanley said.
“Macau junkets (with proxy betting) and improving ties between China and the Philippines leading to strong Chinese visitor arrivals — 30 percent up in the first half of the year — are the key drivers,” it said.
On Aug. 17, the Philippine government granted visas on arrival to Chinese visitors such as those in tour groups and businessmen, a move that might eventually expand to visa-free status.
Morgan Stanley said there is still much room for growth for Chinese gamblers coming to the Philippines.
“Comparing the GGR (gross gaming revenue) mix that is contributed by Chinese across gaming jurisdic- tions, we see ample room for growth in the Philippines, compared to Macau (90 percent), Paradise in South Korea (55 percent VIP drop in 2016) and Australia (50 to 60 percent of VIP),” Morgan Stanley said.
Aside from the growing number of Chinese visitors, Solaire has likewise started capturing more local mass customers from cities away
from Manila after the completion of the NAIA Expressway in December 2016.
“It has shortened the driving time between Entertainment City and the southern part of Metro Manila which is 20 kilometers away, to less than 30 minutes,” Morgan Stanley said.
The population in Manila represents only 14 percent of the total population of Metro Manila, thus with the elevated highway, a much larger population can be penetrated, it added.
Razon’s plan to put up another Solaire casino resort in Quezon City would also help boost revenues.
“We expect the Quezon City property to generate EBITDA of $70-to $100-million per annum initially,” Morgan Stanley said.
It noted that Quezon City, being the largest and most populous city in Metro Manila with GDP per capita of over $11,000 compared to $9,000 for Metro
Manila and $3,000 for the Philippines, is an ideal place for a casino expansion.
There is also no competition yet in Quezon City.
The casino could open in 2020 with groundbreaking in mid-2018, according to Morgan Stanley’s estimates.
In the first half Solaire operator Bloomberry Resorts Corp. posted a 24-percent surge in income to P4.1 billion from only P174 million in the same period last year on the back of robust gross gaming revenues.
In the second quarter alone, Bloomberry’s net income rose 47 percent to P1.95 billion from P1.33 billion a year earlier, on 34-percent increase in profitability in Philippine operations and lower losses from Korean gaming operations under Jeju Hotel & Casino.
Solaire, the first to open in Pagcor’s 100-hectare Entertainment City in Parañaque, continues to attract both high rollers and the mass market despite tougher competition brought about by the opening of Okada Manila, the latest integrated casino resort to open in the country’s Las Vegas-style gaming hub.