MANILA — A Macau company opened a big casino resort here Monday, betting that Asia’s gaming sector will continue to flourish despite sliding revenues back home.
Lawrence Ho, co-chairman and CEO of Melco Crown Entertainment, and his business partner James Packer were on hand for the grand opening of $1-billion City of Dreams Manila. American singers Ne-Yo and Kelly Rowland performed at an outdoor concert.
Melco Crown Entertainment, through its Philippine unit, partnered with the Philippines’ SM Group, which owns the 0.062-sq. km piece of reclaimed land on which the casino stands.
SM Prime Holdings, a unit of the SM Group, the country’s largest retailer, also operates the vast SM Mall of Asia nearby.
The City of Dreams Manila holds 380 gaming tables, 1,700 slot machines and 1,700 electronic gaming tables. It includes a 940-room luxury hotel as well as more than 20 restaurants, bars, retail outlets and amusement spaces.
Filipino gamers tend to spend less compared to the mostly high-rollers that Macau, the world’s gambling capital, gets. According to Ho, around 85% of City of Dreams Macau’s EBITDA comes from its casino operations.
City of Dreams Manila is MCE’s first venture outside Macau, which has been hit by plunging revenue due to China’s anti-corruption drive.
“We expect some loss of momentum in the key Macau market over the next 12 months, primarily from a decline in VIP gaming revenues and a shift toward mass-market gaming, reflecting slowing economic growth and the impact of an anti-corruption campaign in China,” Standard & Poor’s credit analyst Joe Poon said in a report last November.
Ho sees the setback in Macau as “temporary.”
“I think the anti-corruption measures in China are mid-term and long-term positive because it’s about time that it was cleaned up,” Ho said. “We are confident that once people get used to the new normal — given the size of the Chinese population, 1.4 billion people, the up and coming affluent — it’s a long-term positive for the rest of Asia.”
Ho’s outlook was echoed by Poon, who in the same report said the region’s overall gaming prospects remain rosy.
“For Asia-Pacific’s expanding gaming industry, we expect the macroeconomic environment to remain supportive of the sector’s growth and credit quality, underpinning our stable outlook on the sector,” he said.
South Korea, Cambodia and Malaysia are also building more casinos, and Japan is mulling whether to legalize them.
For its part, the Philippines expects at least two more mega-casinos to rise in the Manila Bay entertainment hub that the government is developing.
The Philippines aspires to become the world’s second-largest gaming hub in terms of revenue, after Macau, by 2020. It is so determined to overtake Las Vegas — presently the second biggest — that it is now building an expressway dedicated to connecting the airport and the Manila Bay hub.
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