Lawrence Ho, co-Chairman and CEO of Melco Crown Entertainment Ltd, gestures during a news conference and grand opening of the City of Dreams in Manila. Photo by Romeo Ranoco, Reuters
SINGAPORE/MANILA - More than three years after opening ultra-luxe nightclub Pangaea in Singapore's glitzy Marina Bay Sands, owner Michael Van Cleef Ault is now betting that Manila's casinos will be able to draw rich punters and partygoers through his doors.
The founder of some of the world's most popular luxury clubs launched two nightclubs in casino operator Melco Crown Entertainment Ltd's $1 billion-plus City of Dreams casino-resort, hoping to capitalize on rising wealth in the Philippines, which last year was the fastest growing Asian economy after China.
The increase in the number of wealthy Chinese gamblers fleeing Macau amid Beijing's intensifying crackdown on corruption is also likely to work in Manila's favor: VIPs are already frequenting casinos in locales such as Australia.
Macau, the world's biggest gambling hub, is due to post February gambling revenues on Monday, which analysts expect to fall by up to 55 percent versus 40 percent growth a year ago.
"We want to bring more people to Manila, make Manila more of a club destination, a destination for other things, for luxury, for clubbing and these integrated resorts will only add to that," Ault told Reuters at the newly opened Pangaea in Manila, with its animal skin and gold-dipped feather decor.
Melco's City of Dreams is the second of four integrated resorts licensed for Entertainment City, Manila's much-smaller version of the Las Vegas gaming strip. The first casino, the $1.2 billion Solaire, is seeing a pick up in business after intensifying efforts to attract more high-rollers.
The casinos are central to the government's aim to boost tourism and the economy, but challenges include Manila's dilapidated infrastructure and concerns over safety and corruption, problems that have limited foreign investment in the Philippines for years.
In its most recent published data, industry regulator the Philippine Amusement and Gaming Corp (Pagcor) said gross gaming revenues rose by a tenth to $2.2 billion in 2013 from a year ago, a figure dwarfed by Macau's $45.2 billion revenues and Singapore's $7 billion intake in the same year.
Melco's ties to Macau junkets, the businesses that connect wealthy punters to casinos, and high-rollers could encourage its existing Chinese VIP clientele to visit Manila, analysts say.
But Manila's main attraction for casino operators is its thriving local gambling market. The regulator expects gross gaming revenues in the Philippines to rise to $6-$7 billion by 2020, when all four casino-resorts open.
"Ultimately, what will underpin this property, is really first and foremost the domestic market and people who are already coming here," Melco Crown co-Chairman Lawrence Ho told reporters at the casino's opening ceremony.
The Philippines relies on Chinese VIPs for about 30 percent of its gaming revenues, compared to over 70 percent in Macau, brokerage Macquarie says.
Entertainment City has two other casino licensees - Japan's Universal Entertainment Corp, which is opening a $2 billion casino-resort in 2016, as well as Alliance Global Group Inc and Genting Hong Kong Ltd, partners in casino-hotel firm Travellers International Hotel Group Inc that will start operations in 2018.
More casino openings will encourage more visitors to the area, and attractions like the City of Dream's clubs, the DreamWorks Animation indoor theme park and Hollywood actor Robert De Niro's Nobu Hotel will also boost its appeal.
"It helps to show that it's a serious destination with great all-round facilities," said Greg Unsworth, the head of PricewaterhouseCoopers Singapore's technology, media and telecommunications practice.