The ongoing revamp of Genting Malaysia Bhd’s Resorts World Genting casino complex “will reinvent [the property] as a competitive integrated resort regionally, which will not only help to retain local visitors but also attract regional visitors,” says a note from Affin Hwang Investment Bank Bhd.
Genting Malaysia is investing heavily in the property – Malaysia’s only casino resort and based in an upland area outside the capital, Kuala Lumpur – via the Genting Integrated Tourism Plan, known as GITP. The multi-phase plan is described by Genting Malaysia as a 10-year, MYR10-billion (US$2.25 billion) blueprint that was launched in December 2013.
“We believe that the GITP will be a game changer for [Resorts World Genting], despite the delays and increase in capital investment needed,” Affin Hwang’s analyst Ng Chi Hoong wrote in a Thursday note. Genting Malaysia announced in February that it would be doubling the investment under its GITP, in order to expand and add new facilities to the property.
The first of the new facilities under the GITP – the First World Hotel Tower 3 – was fully opened in June 2015. The main attraction under the plan – a theme park called 20th Century Fox World – is “slated for operation by the end of 2017,” Mr Ng said.
He added: “While some might argue that the success of GITP depends heavily on the attractiveness of the new theme park, we would argue otherwise, as there is still a strong following among locals, but visitation is constrained by some bottlenecks. The increase in gaming floor space, the new cable car system with parking and the new hotel rooms, just to name a few, are part of the initiatives taken to address the issue under GITP.”
Other key amenities under the GITP phase one include the Sky Avenue and Sky Plaza shopping mall, “to progressively open from end of 2016”, said Mr Ng. The “Genting Premium Outlet” – another new retail area – is to open by May next year, the analyst added.
The Affin Hwang note stated that Genting Malaysia was already seeing some benefit from the GITP implementation, including an increase in the number of visitors.
“Based on the recent development project at GITP, we foresee that the non-gaming revenue per visitation will also be higher than previously, as most of the new facilities are catered towards the premium mass market, which should drive EBITDA [earnings before interest, taxation, depreciation and amortisation] growth higher,” Mr Ng said.
Affin Hwang forecast visitor arrivals to Resorts World Genting should record a compound annual growth rate of 6 percent between 2016 and 2020, “driven mainly by the new amenities” developed under the GITP.
Third-quarter profit at Genting Malaysia rose 70.3 percent year-on-year, to MYR555.73 million, the firm announced last month. Besides Resorts World Genting, the company also operates casinos in the United States, the Bahamas and the United Kingdom.
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”Month-to-date [in October], we are encouraged that our properties have crossed property-EBITDA break-even levels, led by the recovery in the premium segments”
Chief executive and president of MGM Resorts