Philippines Wants to Become China’s Hawaii, Macau Revenues Poised for Single-Digit Growth
Posted on: February 14, 2017, 02:00h.
Last updated on: February 14, 2017, 07:33h.
A gambling tycoon in the Philippines wants to transform the Southeast Asian island country into a leisure and entertainment resort destination for wealthy citizens of nearby nations.
Japanese billionaire Kazuo Okada is on a quest to overhaul the Philippines into a marquee vacation hotbed for countries like China, Taiwan, Korea, and even his native Japan.
Saying he wants to make the Philippines “the next Hawaii,” a reference to how the US state is largely seen as a retreat to mainland Americans, Okada recently opened a resort in Manila’s Entertainment City district. Revenues have been strong during his property’s first quarter, leading the Japanese businessman to reveal he has plans to construct three additional casinos in the area in the coming years.
It’s unclear of Okada has actually ever been to Hawaii, the home of where his country bombed Americans at Pearl Harbor in December of 1941. While the suggestion of making the Philippines the Hawaii of Southeast Asia holds in terms of an abundance of beaches and beautiful weather, gambling is explicitly illegal in the Oceania Pacific state.
Manila’s Entertainment City is the country’s version of Las Vegas. Owned and operated by the Philippine Amusement and Gaming Corporation (PAGCOR), the city is currently home to three casinos, the City of Dreams Manila, Solaire Resort, and Okada Manila. Resorts World is expected to complete the fourth gambling and hospitality establishment in 2018.
Okada used to be business partners with Steve Wynn. The two had a highly publicized falling out in 2013.
Macau Growth Slowed
It’s still the richest gambling zone on planet Earth, but times have certainly been better for Macau.
The Special Administrative Region of the People’s Republic is on a run of six straight monthly revenue percentage gains, but only after it ended 25 straight months in the red.
The plummeting income stems from China’s crackdown on VIP players and junket touring companies bringing the mainland’s elite to gamble on credit, a sly form of alleged money laundering.
Macau gross gaming totaled $45 billion in 2013, but came in around $28 billion last year. Casino companies in Macau are rethinking their strategies to switch focus from the high-stakes gambler to the more family oriented visitor.
Fitch Ratings, one of the Big Three credit rating agencies, predicts the marketing transformation will work to some degree. The firm anticipates a revenues climb as much as 10 percent, with a more realistic figure being in the mid to upper single digits.
“We expect the returns on investment of the new resorts to improve as the market pivots toward the mass market segment,” Fitch wrote in its note.
Plenty of Variables
The year ahead should be an exciting time for gaming observers. A slew of potential hurdles stand in the way of casino companies trying to infiltrate budding Asian markets, as the law in many countries remains in limbo.
Philippines President Rodrigo Duterte is one of the most unstable political leaders in the world. He’s recently eased his assault on illegal gambling enterprises, but still considers the practice of betting a “social menace.” It’s also unclear what the next steps are for China and Japan in regards to gambling.
It’s why the major players like Wynn Resorts, Las Vegas Sands, and MGM continue to wait patiently on the sidelines before proceeding in the Philippines and Japan.