The Philippines is shaping up as the next VIP gaming destination in Asia as new integrated resorts rise at the Pagcor Entertainment City, which would allow the country to double annual gross gaming revenues to at least $3.5 billion by 2016 from last year’s level.
Credit Suisse, in a recent research note titled “All The Right Cards,” projected Philippine gross gaming revenues to post a 34-percent compounded annual growth rate (CAGR) from 2014 to reach $3.5 billion in 2016 “on the back of new and imminent gaming capacity, the formation of critical mass within Entertainment City and a spillover effect from Macau.”
An earlier research note written by CLSA dated June 6 likewise projected a doubling in Philippine gaming revenue from $1.8 billion in 2013 to $3.6 billion in 2016, saying that new casino openings and infrastructure improvements should drive market growth while resolution of an industry tax dispute and the end of consensus earnings downgrades were seen getting investors more bullish on the sector.
The first complex in Pagcor City, Bloomberry Resorts Corp.’s Solaire Resort and Casino, opened early last year and is opening a new wing before year’s end. City of Dreams Manila, a partnership between the SM group and Macau’s Melco Crown group, is set to open before the end of 2014. Another complex, Manila Bay Resorts of Japanese tycoon Kazuo Okada, is under construction and is targeted to open next year. Travellers International Hotel Group Inc., a partnership between the group of tycoon Andrew Tan and the Genting group (the same partnership that operates Resorts World Manila in Newport City), broke ground for its second hub called Resorts World Bayshore City, the last licensee to open at Pagcor City by the last quarter of 2018.
The Credit Suisse research note written by Patricia Palanca, Kenneth Fong and Alvin Arogo said the Philippines had the window of opportunity to generate synergies within the Entertainment City—envisioned to be the country’s mini-version of the Las Vegas strip—beginning in the fourth quarter of this year.
“We believe that supply constraints and policy restrictions for Macau and other regional players will create a window of opportunity for the Philippine gaming sector. We expect critical mass to be formed once City of Dreams Manila opens in Entertainment City in fourth quarter 2014 following Solaire. As evidenced in the past with Macau, operators within the same vicinity mutually benefit from synergies that form within that area,” the research note said.