Melco Crown’s City of Dreams Is Second Resort to Open Within Entertainment City
Manila moved nearer to its goal of becoming a global gambling hub Monday when a second casino-resort opened along the Philippine capital’s waterfront.
The new resort, run by Macau casino operator Melco Crown Entertainment Ltd. , will test Manila’s ability to attract high-rollers from China and elsewhere in the region to one of Asia’s less glamorous capitals—all while Chinese gamblers are spending less in Macau, their favorite destination.
City of Dreams Manila is a glimmering clutch of golden glass cubes rising from reclaimed land on Manila Bay. It is the second development to open within Entertainment City, which is now halfway to becoming a Las Vegas-style cluster of four casino-resorts.
Manila is already reaping the rewards, said Julius Guevara, country director for the Philippines at real-estate consultancy Colliers. He said plans for four mega casinos have fueled a “revival” in Manila’s run-down bayside area, which has driven property values up and spurred road-building and other developments.
City of Dreams Manila, with three luxury hotels and 380 gaming tables, has already created 5,000 jobs, Melco Crown said.
The Philippine Amusement and Gaming Corp., the country’s gambling regulator and overseer of the Entertainment City plan, has said it expects the Manila strip to propel national gambling revenues to $10 billion a year by the end of the decade, enabling it to surpass the Las Vegas Strip and Singapore.
Those hubs are currently the second- and third-largest markets globally behind Macau, raking in more than $6 billion in annual gambling revenue each. The Philippines netted nearly $2.5 billion in 2014, including contributions from older casinos operated by the gambling regulator, known as Pagcor, ratings agency Fitch estimates.
Like other gambling developments springing up around Asia, Entertainment City was in large part inspired by phenomenal growth in Macau, which generated $44 billion in gambling revenue last year.
But Manila has run into a few snags.
While a new resort near the airport and the first resort in the Entertainment City complex have drawn in more local gamblers than anticipated, they haven’t attracted as many Chinese VIPs, said Francis Hernando, vice president of Pagcor’s gaming, licensing and development department, citing “external factors.” Mr. Hernando was referring to a diplomatic spat between Beijing and Manila over disputed maritime territories, which coincided in September with the Chinese government telling its citizens that the Philippines’ “worsened security situation” meant they should steer clear of the country.
The idea of having Manila follow in Macau’s footsteps also predated the worst downturn to date in the world’s largest gambling market. Macau last year recorded its first annual decline in gambling revenuesince data became available in 2002, as a crackdown on corruption in China led high-rollers to shy away from the baccarat tables.
Some analysts say Manila casinos are well-placed to benefit from Macau’s troubles, arguing that Chinese VIPs scared to set foot in the Chinese territory will instead flock to casinos out of Beijing’s reach.
But at Monday’s lavish grand opening, Melco Crown Co-Chairman and Chief Executive Lawrence Ho played down the importance of Chinese VIPs to the casino’s prospects.
He said the target market for City of Dreams Manila is “first and foremost the domestic market,” followed by VIPs from other Southeast Asian countries, as well as guests from South Korea.
Even so, much lower taxes on VIP gambling revenue in the Philippines—around 15% versus around 40% in Macau—make it attractive for Macau gambling-junket operators to reroute their customers to Manila, some analysts say.
Junket operators, a network of middlemen, propelled Macau’s success. In exchange for commissions, they recruit wealthy gamblers in China, lend them money to bet in Macau and later handle debt collection. Mr. Ho said Manila would become more attractive to Chinese VIPs over time, as perceptions about the city improve thanks to the Philippines’ fast-growing economy.
But other analysts say the junket model is evolving differently in Manila.
Source: http://www.wsj.com/articles/manila-nears-goal-of-becoming-gambling-hub-with-new-city-of-dreams-1422879949
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