State-owned PAGCOR is further scaling back its operations in the Philippines, while the private sector continues expanding
The Philippines government continues to downsize its role as a casino operator with plans to close another Manila venue, the second in the last year.
With the future of the market shifting toward large-scale commercial resorts, Casino Filipino Parañaque, located near the capital’s Ninoy Aquino International Airport and one of the largest venues in the portfolio of the Philippine Amusement and Gaming Corp., will shut down in July amid mounting losses.
PAGCOR’s casino at Heritage Hotel Manila was closed last July.
“As much as possible we don’t want to close down any casino, but the decision depends on the viability of a casino,” Chief Executive Cristino Naguiat said.
Casino Filipino Parañaque generates an average of PHP180 million in gross revenues a month (US$4 million), half of which is remitted to the national treasury, leaving a balance that is not enough to cover expenses, Mr Naguiat said. The rent alone amounts to PHP23 million a month, he said—“plus salary for more or less 800 employees, we also pay for the food for our players and, of course,electricity and other fees”.
He said the outlook for gaming in the country is positive but that growth will be driven mostly by the private sector, which PAGCOR regulates and licenses. This includes Resorts World Manila—also located near the airport, the Philippines’ largest and most lucrative casino, operated by Travellers International Hotel group, a joint venture between Genting Hong Kong and Philippines property developer Alliance Global—and the four megaresorts under development at the PAGCOR-licensed Entertainment City complex on Manila Bay. The first of these, the US$750 million Solaire Resort & Casino, which is locally owned, opened last March. The second, City of Dreams Manila, partowned by Macau’s Melco Crown Entertainment and priced at $1.2 billion, opens later this year. The other Entertainment City projects are Manila Bay Resorts, under development by Japanese machine gaming giant Universal Entertainment, and Resorts World Bayshore, Travellers’ planned second property in the country.
The national market is estimated at around US$2 billion currently, but PAGCOR’s share of it has been declining. The agency fell PHP2.4 billion shy of its 2013 revenue goal of 42 billion (US$683 million) and acknowledges that it will be hard-pressed to make its target of PHP45.4 billion this year.
“We know that it will not be easy because competition is getting stiffer,” Mr Naguiat said. “But just like what I keep telling our employees, we always have to do our best so we can reap the fruits of our labor.”
He assured that the airport casino’s workers will not be jobless but will be transferred to other PAGCOR casinos at the Hyatt Hotel Manila and the Pavilion Hotel.
“Every month, we process about 50 applications for retirement or early retirement, so there are plenty of job opportunities for about 800 affected employees of Casino Filipino Parañaque.
” The closure will leave PAGCOR with 11 Casino Filipino-branded properties. Nationwide, the agency also operates around two dozen standalone machine gaming venues.
Funds Raised for Solaire Expansion
Last month, shortly before PAGCOR stated its intention to further scale back its operations, Bloomberry Resorts, the operator of Solaire, announced it had raised about US$254 million in a private debt sale to fund the property’s expansion.
In a disclosure to the Philippine Stock Exchange, Bloomberry said its subsidiary Sureste Properties and the latter’s Bloomberry Resorts and Hotels subsidiary raised PHP11.42 billion from institutional investors through what is known as a corporate notes facility with BRHI acting as the issuer and Sureste as guarantor.
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Participating banks included BDO Unibank, BDO Leasing and Finance, BDO Private Bank, China Banking Corp., Robinsons Bank Corp. and United Coconut Planters Bank.
The proceeds of the fund raising are earmarked for construction of a second hotel tower with 300 suites, a 20,000-square-meter retail mall, a theater with up to 1,800 seats, a nightclub and parking for about 3,500 cars. The casino will be enlarged to include 200 more slot machines and 65 more table games.
Solaire has struggled in the early going despite the high quality of the offering, which includes a five-star hotel totaling some 400 rooms, an array of fine dining and mid-market food and beverage offerings and the second-largest casino in the country after Resorts World Manila. The result was that Bloomberry, which is controlled by ports tycoon Enrique Razon, reportedly the third-wealthiest individual in the country, fired its operating partner and 8% shareholder, William Weidner’s Global Gaming Asset Management, in the latter part of last year, and litigation between the two is ongoing.
Third-quarter results, the most recent available, show Bloomberry posting a profit of PHP165 million ($3.6 million) on PHP4.87 billion of gaming revenue.
