GGRAsia – Belle urges Philippines govt to control casino expansion

Belle urges Philippines govt to control casino expansion

Apr 26, 2016 Newsdesk Latest News, Philippines, Top of the deck

The vice-chairman of Belle Corp, an investor at the City of Dreams Manila casino resort in the Philippines, said that country’s government should control the expansion of the casino industry beyond Manila’s Entertainment City. The latter is an area earmarked by Philippine authorities to become a casino district, and meant to emulate the success of Macau’s Cotai district.

On the sidelines of Belle’s stockholder meeting on Monday, vice-chairman Willy Ocier told reporters the government should work to direct all foot traffic toward Entertainment City, where companies have invested billions of U.S. dollars to build casino resorts.

City of Dreams Manila was the second of four integrated resorts planned for Entertainment City. Each Entertainment City resort is required to have a minimum investment of US$1 billion. The first property there, Solaire Resort and Casino, opened in 2013 and is owned and operated by Bloomberry Resorts Corp.

Other licence holders for Entertainment City include Travellers International Hotel Group Inc, developing a casino resort planned to open in 2018; and Universal Entertainment Corp, which aims to open its Manila Bay Resorts project by the end of 2016.

“We’ve put in a billion dollars in this thing [City of Dreams Manila]… If the government allows small casinos here, there [and] everywhere, it defeats the purpose,” Mr Ocier said, quoted by the Philippine Daily Inquirer.

The executive was reacting to plans by market rival Bloomberry Resorts to develop a casino hotel – similar to its Solaire Resort and Casino – in Quezon City, north of Metro Manila.

Bloomberry Resorts’ chairman, Enrique Razon, said construction of the new casino scheme should start next year. The firm bought the land for the new project from the National Housing Authority last year.

Commenting on Bloomberry Resorts expansion plans, brokerage Union Gaming Securities Asia Ltd said the Quezon project “makes a lot of sense … from a location perspective in that there is virtually no existing gaming supply in the area”.

“Even though the driving distance from the Quezon site to Solaire/ City of Dreams/Manila Bay Resorts is only [about] 12 miles [19.3 kilometres], the drive-time can be upwards of three hours each way. In other words, if it’s difficult to bring the people to the casino, then bring the casino to the people,” said analyst Grant Govertsen in a note on Monday.

The brokerage expects the development cost of the new project to be significantly lower than the US$1.2 billion spent in Solaire Resort and Casino.

“We estimate a 2019 opening under the assumption that the project begins in earnest next year,” added Mr Govertsen.

Adjusting projections

Mr Ocier however told reporters that Belle “will have to make the adjustments in term of our projections and strategies now that they [Bloomberry Resorts] are allowed to put up a casino in Quezon City”.

Belle’s vice-chairman said the firm might also consider expanding its casino business to other areas in the Philippines. “In the license that we all have, it guarantees a level playing field,” Mr Ocier said, quoted by local media.

In a note last week, brokerage Daiwa Securities Group Inc said that questions exist as to how quickly demand for casino gaming in Manila will grow relative to the increasing supply of venues.

On Tuesday, Belle reported net income of PHP413 million (US$8.8 million) for the first quarter of 2016, up by 9 percent from the prior-year period.

Belle leases land and buildings for City of Dreams Manila on a long-term basis to Melco Crown Entertainment Ltd. Belle also realises a share in earnings from City of Dreams Manila’s gaming operations through Belle’s 78.7-percent-owned Premium Leisure Corp.

Belle’s chief financial officer Manuel Gana said the company is optimistic about its earnings from gaming this year.

“We do expect significantly higher earnings from our gaming subsidiary. We are very excited about the prospects for Premium Leisure,” Mr Gana said, quoted by the Manila Times.

On Tuesday, Premium Leisure reported a net profit of PHP122.1 million for the three months to March 31, compared to PHP29.6 million a year earlier. Operating revenue for the period jumped to PHP783.4 million, compared to PHP196.7 million in the first quarter of 2015.

The company said its operating growth was fuelled by an increase in its share in the gaming income of City of Dreams Manila. Premium Leisure’s gaming income share from the casino operations rose 77.6 percent year-on-year to PHP349 million in the first quarter of 2016.