Inside Asian Gaming

inside asian gaming MArch 2016 8 Cover Story Gaming’s Sea Star Dreams Big A rival executive calls Star Cruises “a casino company that happens to be on ships.” Star is a division of Genting Hong Kong, part of Genting Group, the conglomerate that includes the global Resorts World casino brand stretching from Singapore to New York to the UK. Unique among cruise lines, Star’s revenue mix is dominated by casino revenue. Above this, however, it is Asia’s leading cruise company, fighting hard and dreaming big to defend that position amid the growth of international cruise lines in its home waters. Star currently has six vessels in the region, including two it moved to home ports in China during the past year. SuperStar Libra relocated from Penang in Malaysia to Xiamen in Fujian Province last July for cruises to Halong Bay and Danang in Vietnam. The vessel, with a capacity of 1,338 passengers, then transferred to Haikou on Hainan Island for its annual five month stay to the end of March. In January, Star’s largest cruise liner SuperStar Virgo moved up the coast from Hong Kong to Nansha in Guangzhou, where Star will help develop an international cruise terminal as part of China’s plan of becoming a global cruising center. Virgo, with a passenger capacity of 1,870, sails on two night cruises to Hong Kong each week and then five night itineraries to Halong Bay, Danang and Sanya on China’s Hainan Island. Star Pisces is the line’s third Hong Kong-based ship, with a capacity of 1,009 passengers. It sails on one night cruises, with published rates as low as HK$520 (US$67) per person, based on double occupancy. From Singapore, where the group’s Genting Singapore unit operates Resorts World Sentosa, SuperStar Gemini cruises from two to five nights to destinations in Malaysia and the high seas, carrying up to 1,530 passengers. Based in Taipei’s port of Keelung, SuperStar Aquarius makes two and three night cruises to Japan for up to 1,511 customers. Lastly, Taipan in Penang targets private parties and MICE events for up to 130 passengers, featuring a mini-submarine to explore the briny deep. REVENUE REVERSAL Star’s ships are smaller than those of global cruise lines and its prices tend to By Muhammad Cohen Most Chinese travelers are not primarily looking for gaming, but many do want a vacation experience that includes casinos among other entertainment and leisure options. That puts Macau casino operators on a collision course with the onboard gambling offered by the international cruise operators that are steaming full speed ahead into Asia. be lower, but that alone doesn’t explain the discrepancy in its revenue streams. While global cruise lines get about three-quarters of their revenue from passenger tickets, Star’s ticket revenue typically accounts for less than 30% of its cruise revenue. The rest comes from so-called onboard revenue, mainly gaming in Star’s case. Genting Hong Kong, listed in Hong Kong and initially named Star Cruises, broke out Star’s gaming revenue until last year, but now adds it to onboard revenue figures, following cruise industry practice. In 2014, Star’s gaming revenue was US$349 million and accounted for 63% of its total cruise revenue, up from 58% of US$316 million the year before. For the first half of 2015, the onboard revenue category, which includes income from retail, alcohol, internet usage and other extras plus gaming, was US$166 million, compared with US$187 million in 2014 (with $167 million from gaming alone). Full year results will be released in the weeks ahead. An overhaul of Star’s cruise business that changed the company’s structure resulted in record profits of US$2.2 billion for the first half of last year. Genting Hong Kong, a partner in Travellers International Hotel Group that owns and operates Resorts World Manila, has been selling down its interest in Norwegian Cruise Lines since Norwegian’s January 2013 IPO, from 50% to 18%, after a 10 million share sale last May. The disposal triggered