PROFITS PLUNGE FOR RW SENTOSA
Singapore’s Integrated Resorts are suffering as a result of the travel restrictions imposed on Chinese visitors
Singapore - Operations
Genting Singapore has reported that net profit has plunged 43 per cent in the third quarter, sparking speculation that the battle between its Resorts World Sentosa (RWS) and Las Vegas Sands’ Marina Bay Sands (MBS) for the VIP gambling market is set to pitch the two mega-casino resorts at each others’ throats.
The thinning stream of high-rolling gamblers from China has led to a plunge in the earnings of the two Singapore casino resorts, prompting MBS par- ent Las Vegas Sands to accuse its rival of resorting to desperate means to win market share.
Genting Singapore yesterday reported that net profit had plunged to S$127.1m in the third quarter ended Sept 30 from S$222.7m in the correspon- ding period a year earlier as overall revenue fell 17 per cent to S$644.8m. Gaming revenue slumped 21 per cent to S$477.3m, Genting said, noting that the premium-player business underperformed in the period. Genting’s results came about a month after MBS reported casino revenue fell 8.7 per cent to US$573.5m (S$741.7m) as VIP betting volume fell almost 34 per cent.
Data from the Singapore Tourism Board showed that Chinese tourist arrivals fell by 30 per cent in the first half of this year, hurt by the economic
slowdown at home and by the disappearance of Malaysia Airlines flight MH370 in March.
The shrinking number of Chinese VIP players is expected to become the new norm as the Chinese government is stemming large cash outflows from the country amid a crackdown on corruption and as domestic reforms have led to slowing economic growth.
CMC Markets analyst Desmond Chua said:
“Chinese high rollers contribute to about half of MBS’ premium segment revenue, for instance. With that slowdown and with Asian governments, such as Japan, Korea and the Philippines, also keen to set up the gaming industry, I believe the boom years that we saw previously are now over – even though the casinos will remain profitable in the long term.”
Genting is trying to woo gamblers by offering overly generous incentives and easy credit to VIPs, chief executive of Las Vegas Sands Mr Sheldon Adelson said in the company’s earnings call last month. Taking a swipe at Genting, the 81-year-old billionaire said: “Maybe one day, they will get used to competing on the basis of a quality prod- uct. If they ever build one, they won’t have to buy the business.”
Macau Revenues were up in Las Vegas for Wynn Resorts in the third quarter but not by enough to save the operator from three tough months in Macau. Combined revenue for the two markets fell by 1.4 per cent to $1.37bn in the quarter whilst net income increased by five per cent due to lower expenses. Net revenues in Macau came in at $942.3m, a 5.6 per cent decrease from the third quarter of 2013., The VIP sector was hit hardest whilst the mass market sector gained impressively. Table games turnover in the VIP segment was $25.1bn for the third quarter of 2014, a 17.4 per cent decrease from $30.3 billion in the third quarter of 2013.
Stanley Ho is persona non grata with Crown Resorts
AUSTRALIA A request by Australian MP, John Kaye, to make public doc- uments relating to the James Packer’s Crown Resorts’ licence application for the Barangaroo casino project, has revealed that to secure the licence Mr. Packer had to agree not to “associate with organised crime figure Stanley Ho.” Crown had to explicitly agree to have nothing to do with Mr. Ho in order to secure the licence for his casino at Barangaroo from the state government and liquor and gaming regulatory authorities.
Despite this caveat, Mr Packer
is in business with Mr Ho’s son Lawrence in Macau and Philippines through the busi- ness Melco Crown, though Crown has made it clear that there is no business connection between Lawrence Ho and his father.
“To the extent to which it is within its power to do so, Crown will ensure that it prevents any new business activities or transactions of a material nature between Stanley Huang Sun Ho or a Stanley Ho associ- ate and Crown, any of Crown’s offices directors or employees or any Crown subsidiary,” the
agreement states. Crown also agreed to prevent “Stanley Huang Sun Ho or a Stanley Ho associate from acquiring any direct or beneficial interest in Crown, a subsidiary of Crown, Melco Crown or a subsidiary of Melco Crown.”
“Stanley Ho has been accused by US regulators of connections to Chinese organised crime tri- ads, strong ties to North Korea and involvement in money laundering activities,” Mr Kaye said. “The provisions that have been hidden from the NSW public supposedly erect a barri- er between this state and the corrupt practices in casinos like Macau.”
Mr Ho has long denied any wrongdoing or association with criminal organisations.
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VANUATU – SIX STAR CASINO HOTEL APPROVED The government in Vanuatu, an Oceanian island nation locat- ed in the South Pacific Ocean, has signed a ten year gaming licence into agreement, for a six-star hotel and casino devel- opment.
Finance Minister Maki Simelum has approved the licence with the directors of Jewels Casino and Iririki Island Resort, located on an island close to the Port Vila waterfront.
Mr. Simelum said the casino sector could be one of the major sources of revenue for the government and hopes the casino will attract wealthy tourists from around the world to use its facilities.
The archipelago already boasts three casinos. The six level Grand Hotel and Casino, which is the tallest building in Vanuatu, comprising 74 rooms overlooks the spectacular Port Vila harbour whilst the Palms Casino is located in the newly branded Holiday Inn Resort Vanuatu. Club 21 Casino Hotel is also located in Port Vila with a 4,500 sq. ft. casino floor featuring 100 slots and five table games. The online sector is also coming into play in Vanuatu.
CHINA – MGM DELAY COMPLETION OF COTAI CASINO MGM China is delaying the opening date of its US$2.6bn MGM Cotai from early 2016 until the autumn of 2016. The Cotai Project will have 1,600 hotel rooms, 2,500 slot machines, and up to 500 gaming tables with a budget of approximately HK$20bn, excluding land cost and capitalised interest.
The Cotai Project will feature over 85 per cent gross floor area of non-gaming offerings, including restaurant, retail and entertainment attractions and remains on schedule to open during the first half of 2016. The Group is also looking at other opportunities to include additional non-gaming offer- ings at the Cotai Site.
Jim Murren, Chairman and CEO of MGM Resorts, said: “The construction of MGM Cotai is progressing well and is on time, and on budget, for a fall 2016 opening.”
Grant Bowie, Chief Executive of MGM China, added: “We are just refining the plans; we’re very comfortable working with the contractor that we have now got.”
The operator has already spent US$81m on the project.
MGM China earned net revenue of $794m, a two per cent decrease compared to the prior year quarter; VIP table games revenue decreased 19 per cent due primarily to a decrease in VIP table games turnover of 19 per cent com- pared to the prior year quarter, as well as a decrease in hold percentage to 2.7 per cent in the current year quarter com- pared to 2.8 per cent in the prior year quarter.
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