87
Too early to call
two casinos at S$16 million (MOP96 million). DBS Bank, controlled by Singapore government investment fund Temasek Holdings, forecasts that the two integrated resorts, which prompted unprecedented public opposition when proposed in 2005, will add S$2 billion, or 0.7 percentage points to the country’s GDP this year. Second quarter results seem to
C Singapore Prime Minister Lee Hs-
ien Loong has invested political capital in the casino experiment in the face of unprecedented public debate. His gov- ernment cannot afford to have the re- sorts fail but must also combat social ills associated with casinos. “Governments around the world
tend to do things before elections and some initiatives
they only do before
elections,” said the analyst. “We have an election pending in Singapore and, well, the bus issue got lots of news time. My guess is the bus issue will have no im- pact on gaming revenue and therefore no impact to tax dollars, but get lots of publicity.” Junkets, however, are a different
matter, according to the analyst. “They probably represent between 30 and 40 percent of casino gaming revenue to- day,” he said. “That segment is now a large contributor of
But alas, strangely enough, we have heard nothing from government.” Casino regulation is proving to be a
diffi cult balancing act for a government that is accustomed to having things its own way.
Adelson calls the shots Nothing has come easy for Marina Bay Sands so far. In mid-September the shopping mall had opened barely half of its planned 300 stores. The resort has de- layed opening its theatres, the primary entertainment component, the conven- tion business is still
ramping up and many areas that are open have problems,
starting with casino fl oor ineffi ciency. Mr Adelson has nevertheless pro-
fessed he was “extremely happy with Singapore. It’s outdone our expecta- tions.”
Observers say Mr Adelson himself
has contributed to the slow start. “Cur- rent operating strategy is being set by Mr Adelson,” the analyst said. “Sheldon has limited management’s ability to of- fer competitive programmes and pric- ing.”
Just as when the Venetian debuted
in Macau, Mr Adelson is balking at promotions, convinced that Las Vegas Sands offers the best product in the mar- ket and that customers will gladly pay for it. Management has yet to conceive an effective marketing strategy and lacks international marketing expertise, the analyst added. Mr Ling wonders how long it will
taxation revenue.
be before Mr Adelson orders a manage- ment shake-up. Mr Adelson’s ambivalence about
bus customers from Malaysia contrib- utes to positioning diffi culties. The overseas visitors Marina Bay Sands seemingly prefers are more evident in the hotel and shopping mall than on the casino fl oor. This may be a good sign over the
long haul, Mr Galaviz said. “Measuring the success of the integrated resorts in Singapore should be done by analysing the total return on investment for Re- sorts World Sentosa and Marina Bay Sands, rather than just measuring casino cash fl ow,” he said.
have convinced most analysts that the resorts will be winners although it may be too early to pass judgement. The quarter’s implied annual gaming revenue of S$5.8 billion is at the high end of forecasts for the gaming market, but no blow-out, and is amplifi ed by the weakness of the US dollar. Moreover, the fi gures are for a single quarter and may not be sustainable. “The Singapore gaming market
is currently exceeding expectations, but whether these monthly gaming fi gures can be maintained for a multi- year period is another question,” said Galaviz and Company managing director Jonathan Galaviz. The travel and leisure consultant
said “the booming macroeconomic situation of Asia” and not the integrated resorts was boosting visitor numbers. Platform Asia managing director
Felix Ling believes there is a novelty factor at work that will fade over time. He also warns that a Universal Studios theme park in South Korea, due to open by 2014, will diminish interest in Singapore’s version. Investors may be well advised to enjoy it while it lasts. On the other hand, Las Vegas
Sands chairman Sheldon Adelson predicts Singapore gaming revenue will overtake the Las Vegas Strip’s current annual revenue of US$6.5 billion by 2012, suggesting nearly 50 percent growth during the next fi ve quarters. “We’re never going to change the
culture of a society,” Mr Adelson said in Hong Kong last month. He asked the audience if they
knew anyone who did not play mahjong. When no hands went up, he said: “That’s the nature of all Asian people. They like to play... They’re never going to give up the spirit of challenging luck.”
OCTOBER 2010
urrent estimates peg daily gaming revenue for Singapore’s
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