Drop in global casino earnings unlikely to hit Singapores IRs - Saturday 25th of July 2009
The surprise drop in casino earnings around the world is unlikely to affect Singapores integrated resorts in a big way when they open.
Analysts said that is because their business operations will encompass much more than just gaming tables.
Macau has seen its fortunes dip in recent months. Its total gambling revenue dropped by 13 per cent in the first quarter compared to a year ago, defying popular belief that the casino industry is recession-proof.
With Singapores two integrated resorts set to open in early 2010, analysts said there are reasons to stay positive.
They noted that the revenue from casino operations are expected to account for around 40 per cent of total turnover at Marina Bay Sands and Resorts World at Sentosa. They said the two integrated resorts have other attractions to draw in the crowds.
Leon Perera, group managing director, Spire Research and Consultancy, said: "The IRs will need to leverage off their non-casino operations very strongly, especially in the short term when I think the casino operations will be more affected by the economic downturn.
"If we look at a location like Las Vegas, it is an attractive location not only because of its casinos, but because it is a generally attractive place to visit because of theme parks, entertainment options, family entertainment, entertainment for children, and so on.
"And I think the IRs are in a strong position to leverage benefits such as these - theres Universal Studios at Sentosa, Resorts World, theres a marine life park, theres an arts science museum.
"So all this, I think, will have to be pushed very hard to generate more profit and to help to offset the hit that will be taken to the casino operations in the short term."
Jonathan Galaviz, gaming analyst & partner, Globalysis Ltd, said: "The integrated resorts for Singapore have always intended to be complementary to the dynamics of Singapores tourism rather than to create a pure casino integrated resort industry.
"So, in this respect, I think that Singapore is obviously going to be presented with competitive dynamics with Thailand over the next several years, and its normal competitors in the tourism sector in the Asian region."
Still with that chip laid down, they noted that challenges do exist. In the near term, for one, the poor economic environment will hurt demand for conventions and travel. And if you look further down the road, competition will increase.
Analysts added that Singapore will have to capitalize on its first-mover advantage and market it well when the integrated resorts open in early 2010. This could mean lower rates in the short term to generate interest and momentum.
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