The Philippine casino market may have taken a backseat this year to other stories, such as the fall of Macau. But billionaire developer Enrique Razon Jr. has brushed off reports that the industry there is in dire straits, despite share prices in his Bloomberry Resorts Corp. nosediving 61 percent this year.
Razon’s company owns the multibillion-dollar Solaire Resort and Casino.
Meanwhile, comparisons with Macau, where revenues are tumbling month-by-month, are inaccurate and unhelpful, he says.
Philippine casinos’ stock has plunged throughout 2015. The market had been expected to benefit from Beijing’s anti-corruption drive, which has stemmed the flood of high rollers to Macau from the Chinese mainland and put the squeeze on the junket operators who facilitate their trips. Macau’s loss would be Philippines gain, or so it was thought.
Philippines is Not Macau
But the hordes of Chinese VIPs failed to materialize, thanks to a slowing of the yuan economy and a thawing of diplomatic relations between the two countries. Meanwhile, the investors lost faith in the Philippines casinos which had for so long seemed like a good bet.
But the market will recover, says Razon. That’s because, unlike Macau, its gambling revenue is growing, particularly the mass market revenue.
“The whole industry has been painted with the same brush, but we’re nowhere near the situation in Macau, where revenue is really falling,” he told Bloomberg Business this week.
Razon says that Bloomberry’s earnings will improve before the end of the year, because credit lines extended to VIP players, totaling some $39 million, could still be reeled in.
Market Will Grow Without China
He also believes that the Philippine market will grow without the help of China through the local and mass markets, and meanwhile VIP players will still be pursued by the Philippine junkets, but coming from Southeast Asia, Taiwan, and South Korea, rather than China. The mass market will comprise some 60 percent of gambling revenue in three to five years, he says.
“The good thing now, in hindsight, is that our relationship with China is really not that good,” Razon said. “So we never had the business from China, which nowadays is probably a good thing.”
The number of Chinese tourists to the country fell around 33 percent in the first quarter of this year, due to a spat between China and the Philippines over disputed territories in the South China Sea.
Most of the gambling in the Philippines is controlled by the government-backed Philippine Amusement and Gambling Corporation (PAGCOR), but the market has opened itself to foreign operators in recent years.
In 2013, Genting opened the country’s first integrated resort, Resorts World Manila. Last year, Melco Crown opened the City of Dreams resort, also in Manila. The Solaire Resort was the first to open in PAGCOR’s “Entertainment City,” which has been declared a special economic zone by the Philippine government.