Inside Asian Gaming

INSIDE ASIAN GAMING | April 2012 20 communities and golf and country clubs. Its flagship Tagaytay Highlands project is an iconic leisure development and well-known real estate brand in the Philippines. In September 2009, the company acquired a gaming licence from SM Investments to own and operate a casino in Pagcor Entertainment City. “Belle has no experience in operating casinos and has thus outsourced the management of the casino to Asia Pacific Gaming (APG) and Leisure & Resorts World Corp. (LR), with the company committed to paying rentals and royalties for owning the facilities and the gaming licence.” “LR has a substantial track record in the gaming sector and is currently the largest bingo operator in the Philippines with a client base of over one million patrons. LR has also engaged the services of APG, whose principals each have at least 20 years of experience in setting up and managing casinos. APG’s principals have been involved in the opening and management of five casinos in Macau, including Galaxy’s flagship StarWorld Casino. Both LR and APG have developed strong relationships with junket operators in Asia and plan to leverage these relationships to attract foreign VIP players to Belle Grande.” Manila Bay Resorts CLSA also gives details of Japanese gaming entrepreneur Kazuo Okada’s Manila project. “Universal Entertainment Corporation (formerly known as Aruze Corporation) is a Japanese-based pachinko machine manufacturer, which used to be the largest shareholder of Wynn Resorts (with 19.9% interest). Universal Entertainment’s Manila Bay Resorts is expected to include 500 gaming tables, 3,000 slots and 2,000 hotel rooms. The integrated resort is also expected to have the world’s largest oceanarium, The Manila Eye ferris wheel, a sports arena, a theatre and a museum. The construction capex for the entire project is expected to be US$2 billion.” Solaire Manila Last but not least, CLSA fills in some of the detail about the Solaire project. “Bloomberry Resorts and Hotel investments have commenced construction on its 8.3-acre land site. The Solaire resort and casino is scheduled to complete in 3Q12, which would include 300 gaming tables, 900 slot machines, over 500 hotel rooms, convention facilities and live performance theatre. The complex is expected to cost US$1 billion. “The hotel complex is developed by Enrique Razon Jr, chairman of port operator International Container Terminal Services (ICTSI) and property developer Sureste Properties Inc. (SPI) and its subsidiary, Bloomberry Resorts and Hotels Inc. (BRHI).” CLSA then presents some scenarios regarding the likely impact of new resorts and extra gaming inventory on the Philippines market. “With the significant addition of mass-market tables and strong expected inflows of gamers, we expect mass-market gaming revenue to grow rapidly at 25% Cagr from US$0.3 billion in 2011 to US$0.7bn in 2015. We also expect rapid VIP revenue growth of 24% Cagr from US$0.7 billion in 2011 to US$1.7 billion in 2015, underpinned by inflow of higher-tier VIP players post opening of integrated resorts in [Pagcor’s] Entertainment City.” CLSA says it bases its estimates on what it calls “back-tested growth assumptions” “We derive our 2015 industry gaming revenue forecast of US$3.0 billion by using a bottom-up calculation. We combined the number of gaming tables expected in the market with our estimated win-per- table to calculate our industry gaming-revenue forecast. To ensure validity of our forecast, we have also cross checked some of our key Renderings of Universal Entertainment’s Manila Bay Resorts Artist’s impression of Solaire Manila Market Outlook