‘Second wave’ of revenge spending from China seen in 2023
Billionaire Andrew Tan-led conglomerate Alliance Global Group Inc. (AGI) will accelerate expansion across key businesses units in 2023, betting on a “second wave” of spending with the expected reopening of the Chinese economy.
Kevin Tan, CEO of AGI, highlighted planned investments for hotels, offices and townships under flagship property developer Megaworld Corp.
“[F]or the first half [of 2023] China will open up very quickly and the Philippines, being situated where we are, will be able to take advantage of this second wave of revenge travel from over 130 million Chinese tourists that went out travelling in 2019,” Tan said during a media event last week.
He mentioned plans to open hotels in “new tourism areas” and additional townships, which are large-scale integrated real estate developments. Tan said demand for offices coming from the business process outsourcing sector also remains resilient despite the prevailing hybrid work setup.
“We see demand for [office space] continues to be there and the growth of that industry remains strong,” he said.
“All our businesses are in very good positions to be beneficiaries of this second wave of pent-up demand and second wave of revenge spending. That is why we are very bullish next year for all of our businesses,” he added.
The rosier outlook comes on the back of surging inflation in 2022 and fears over a global recession next year.
From January to September this year, AGI’s net income slipped 0.9 percent to P11.92 billion while revenues increased 16.7 percent to P128.4 billion.
The gaming and casino sector remained a drag on earnings as Travellers International Hotel Group Inc., operator of Newport World Resorts (formerly Resorts World Manila), remained in the red during the nine-month period.
The reopening of the China market bodes well for their gaming segment, Tan said.
“China is really the market that we are after if you talk about hospitality and gaming. They are always the largest source country for quite a number of Asean countries,” he added.
Tan also cited AGI’s global expansion efforts, principally through its hard liquor arm Emperador Inc., which completed its dual-listing in Singapore last July.
But plans for a follow-on offering would have to wait until market conditions improve.
“We will have to gauge it next year. It really depends on the United Status and if there will be inflows of capital in region,” Tan said, adding that Emperador would be ready for a capital raise once conditions are ripe.
“It’s just a matter of when we will pull the trigger. Right now, we don’t know. The market has been improving slightly but we don’t see the momentum yet,” he said.
