The success of the Aquino administration’s thrust to develop the local tourism industry hinges, to a large degree, on the success of the Entertainment City of the Philippine Amusement Gaming Corp. (Pagcor), according to a report published recently by CLSA Asia-Pacific Markets.
In turn, the success of Entertainment City is anchored on the policy of the state gaming agency requiring investors to put up hotels before they could operate casinos within the complex, the local unit of the international stock brokerage firm said.
Under Pagcor’s existing policy, each of the gaming complex’s four anchor investors must first build—and operate—an upscale hotel of at least 800 rooms in size, before being allowed to open their more lucrative casino facilities.
The policy is being backed enthusiastically by the Travellers International Hotel Group, which is a joint venture between Alliance Global Inc. and Malaysia’s Genting group, but has received a mixed response from certain investors, some of whom are eager to partake of the higher returns from gaming operations.
“The Pagcor requirement for a minimum number of hotel rooms per slot machine and gaming table is positive for both individual gaming license holders and the entire (tourism) sector,” said the report, authored by CLSA’s Leo Venezuela.
He argued that Pagcor’s requirements forces the license holders to be more disciplined with their capital expenditures (since investments in hotels with longer payback periods will make investors more financially prudent), while muting local opposition to gaming since the construction of hotels would suggest the presence of more foreigners rather than locals patronizing casinos.
The four license holders that form the backbone of Pagcor Entertainment City are the SM group, through its gaming- and leisure-oriented unit, Belle Corp.; Japan’s Aruze Corp.; Enrique Razon-owned Bloombury Corp., and Travellers International Hotels.
Up to $4 billion in investment is expected to be poured into the project which will rise on a 120-hectare reclamation area along Manila Bay.
The Aquino administration is aiming to attract some 6.5 million tourists yearly into the country by 2016. However, this goal is presently capped by the lack of hotel rooms, which number only 15,641 in Metro Manila as of the latest government data.
The addition of hotel rooms in the Entertainment City complex will boost this number by 72 percent, according to the CLSA report, allowing for more tourists and gaming enthusiasts—especially from the North Asia region—to visit the country.
Pagcor chair Cristino Naguiat said that, to ensure investors’ adherence to international standards and that Entertainment City remained aligned with the Aquino administration’s tourism thrust, the agency would appoint a third party assessor that would periodically audit each licensee’s compliance with set standards.