Billionaire Tan and Star Cruises Open Manila Casino

02.09.2009, Philippine billionaire Andrew Tan and Star Cruises Ltd. today opened their $700 million Resorts World Manila, which will double the tables in the city and may boost its casino revenue more than 120 percent.

Our expectation is this will contribute to earnings within the first year of operations,” said Kingson Sian, president of Alliance Global Group Inc., the holding company of Tan, the Philippines’ fourth-richest person. The venture will tap Star Cruises’ network of more than 2.5 million customers and will bus in people from outside Manila, he said.

The casino’s opening in a former air force base is another step in the Philippines’ effort to tap Asia’s gambling boom as it could gain revenue from the region’s high rollers, Macquarie Group Ltd. analysts said. While growth has slowed in Macau, the world’s largest gambling hub still had about $6.4 billion casino revenue in the first half of this year.

“The Philippines has some of the world’s best beaches and dive sites,” Macquarie strategist Alex Pomento said in an interview. “Resorts World Manila, with its world class casino and entertainment, can help the country attract more tourists and revive its gaming industry.”

Star Cruises gained 5.8 percent to 27.5 cents at 2:08 p.m. in Singapore, boosting its surge this year to 224 percent. Its Hong Kong-traded stock climbed 6.7 percent to HK$2.07 and has advanced 245 percent this year. Alliance Global, which has almost tripled this year, was unchanged at 5.10 Philippine pesos in Manila trading.

Revenue Forecast

The venture, Travellers International Hotel Group Inc., opened the first floor of a three-level casino at a complex that will include hotels and a shopping mall. Resorts World Manila may earn 21 billion pesos ($430 million) in gambling revenue next year, compared with the city’s 17 billion pesos in 2008, according to Macquarie.

“This can create a lot of buzz and attract regional players into the Philippines,” said Manila-based CLSA Ltd. analyst Raffy Manalaysay. The project may also spur the government to “get moving” on its planned $20 billion casino resort complex on Manila Bay, he added.

Resorts World Manila, located in front of the capital’s new airport terminal, will draw 11.1 million visitors and raise $315 million in gambling taxes over three years, Sian said.

Visitor Arrivals

The Philippines had 3.14 million tourists in 2008 and that’s forecast to grow as much as 1.9 percent this year.

Travellers will probably make a 6.41 billion peso profit next year on sales of 23.04 billion pesos, Macquarie analysts Nadine Javellana, Edward Ong and Pomento said in an Aug. 10 report.

Sian, who declined to comment on Macquarie’s forecasts, said it’s possible to double Philippine tourism arrivals because the number is “very low.” Malaysia had 22 million visitors last year, Thailand had 14.3 million and Singapore 10.1 million.

“The whole idea for this kind of investment is to grow the market and not grab from the existing businesses,” Sian said. We have a product that we can market for tourists to come in a big way.”

The project, occupying part of a former military camp near Manila’s airport, will have three hotels with 1,574 rooms, a 30,000 square meter (323,000 square feet) casino and a 30,000 square meter shopping mall.

Philippine Casinos

The resort’s casino will have 300 tables and more than 1,000 slot machines by the end of the year, when all three floors will be ready, Sian said. The 100 tables ready today make it the Philippines’ biggest casino.

Philippine Amusement & Gaming Corp., the state-owned gambling operator as well as regulator, owns four casinos in Manila with 293 tables. Its biggest casino has 92 tables and Macquarie estimated it accounted for 20 percent of the company’s 30 billion peso revenue last year.

Travellers is one of four groups that won approval last year to build hotels and casinos at Philippine Amusement’s $20 billion Pagcor City on Manila Bay.

In Singapore, Las Vegas Sands Corp. is building the Marina Bay Sands casino resort, estimated to cost more than $5.25 billion, to compete with the S$6.6 billion ($4.6 billion) project being built by Malaysian casino operator Genting Bhd.

Star Cruises is controlled by Genting and its Chairman Lim Kok Thay, according to data compiled by Bloomberg. Travellers is 50 percent owned by Star Cruises with the other half owned by Alliance Global and unit Megaworld Corp.

Sian said Travellers may start building its share of the Pagcor City project as early as next year. The venture last year committed to spend $1.1 billion to develop 91 acres in Pagcor City into a complex of hotels and a theme park.

“This is infrastructure that the country needs to grow its tourism traffic,” Sian said. “We need a product that’s comparable with the rest of the world.”

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net

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