A legalized Thailand casino industry could steal away a large chunk of the Chinese tourists to have traditionally favored Singapore’s integrated resorts, placing up to 25% of the sovereign state’s gross gaming revenues at risk, according to Maybank IB Research.
In a lengthy report examining the road ahead for gaming in Singapore and Malaysia, analyst Samuel Yin Shao Yang said liberalization of Thailand’s IR industry could “supercharge” the country’s tourism at the expense of both Singapore and Malaysia, although it would be Singapore at most risk in the gaming sphere due to its greater reliance on Chinese visitation.
Noting that foreign visitors contributed somewhere between 66% and 75% of GGR to Singapore’s IRs, Marina Bay Sands and Resorts World Sentosa, in 2019, Yin wrote, “We do not expect many Malaysians and Indonesians to visit Thai IRs over the Singaporean ones should Thailand proceed to liberalise its IR industry due to deep personal and commercial ties between the 3 countries.
“[But] we would expect many Chinese to visit Thai IRs over the Singaporean ones should Thailand proceed to liberalise its IR industry. Thailand is already very popular with Chinese tourists even without IRs currently.
“Thus, we believe that the SG$1.5 billion or 5% of 2019 Singapore GGR derived from Chinese visitors could be as risk should Thai IRs materialise.”
As reported by IAG, Thailand’s House of Representatives has approved a report proposing the establishment of integrated resorts with casinos in various locations across the country, although the process of putting any such legislation in place is expected to take two to three years.
Nevertheless, popular opinion is increasingly pointing towards a legalized casino industry with proposed IR investment levels set to exceed those of its Singapore peers.
In his research report, Yin observes that Chinese visitation to Singapore outstripped that to neigboring Malaysia by a ratio of almost 2:1 following the 2010 opening of MBS and RWS, suggesting that “the Singaporean IRs did persuade more Chinese to visit Singapore exclusively.”
As such, “we fear that Thai IRs could seriously impact Singaporean IRs … negatively if they do materialize,” he wrote, adding such a scenario could prove a disaster for the Singapore IRs’ future investment commitments.
“To exacerbate things, recall that MBS and RWS have to reinvest at least SG$4.5 billion (US$3.3 billion) each into their IRs until as late as 2027. Should more tourists not be forthcoming, we fear that the financial viability of ‘MBS 2.0’ and ‘RWS 2.0’ will be called into question. To put things into perspective, SG$4.5b is only 8% of MBS’ parent, Las Vegas Sand’s market capitalisation but a much larger 38% of Genting Singapore’s market capitalisation. Thus, the threat of Thai IRs is more clear and present to Genting Singapore.
“Then again, the end-game could turn out differently as the Singaporean government will likely go back to the drawing board if Thai IRs materialize, to counter/soften the impact on its tourism/gaming industry.”
On a more positive note, Yin said RWS and MBS are well-placed in the short-term to enjoy a bump in GGR following the reopening of China’s borders on 8 January, allowing for regional travel trends to pick-up again in the months ahead.
“We do expect the return of Chinese visitors to Singapore to impact the operations and earnings of the Singaporean integrated resorts,” he wrote.
RelatedPosts
