Potential cannibalisation of the Philippines casino market due to new supply of venue space is “not a concern” as of now, says a Thursday note from banking group Morgan Stanley.
The institution states that this is thanks to the market being the “fastest growing in Asia,” with a likely 25 percent compound annual growth rate (CAGR) for casino gross gaming revenue (GGR) in 2017 to 2018.
“We expect Okada [Manila] to add US$1.2 billion of GGR by 2019 to the overall market, capturing 32 percent market share,” wrote analysts Alex Poon and Praveen Choudhary. That compares to 30 percent for Bloomberry Resorts Corp, the promoter of Solaire Resort and Casino, and 25 percent for Melco Resorts and Entertainment (Philippines) Corp, which operates the City of Dreams Manila resort, according to Morgan Stanley.
The memo followed a group conference call organised by the bank – for approximately 50 investors – with the chief financial officer of the Okada Manila resort (pictured), a venue in the Philippine capital that is promoted by a unit of Japanese gaming conglomerate Universal Entertainment Corp.
Although Okada Manila had a soft launch – sans gaming and hotel accommodation – beginning in December 2016, the property only started to offer VIP junket play in the third quarter of 2017, noted Morgan Stanley. The bank added that this fact and construction work disruption to mass market table operations had effectively “delayed” the full opening of gaming at Okada Manila until the “first quarter 2018”.
“Currently, Okada Manila has all mass tables up running, but 20 percent to 30 percent of them were affected by day-to-day construction on the [casino] floor,” stated Mr Poon and Mr Choudhary.
“Junkets operation started in the third quarter and more will begin over the next few months. About 100 hotel rooms and five to six restaurants were opened on March 31… [with] 500 rooms and 15 to 20 restaurants by first quarter 2018. The property is allowed to open up to 500 tables and 3,000 slot machines for 993 hotel rooms planned,” said Morgan Stanley.
“We are not concerned about cannibalisation, which is not visible in the second quarter. Strong tourist arrivals and the NAIA Expressway have brought in more Chinese and Filipino mass customers from cities outside of Manila respectively,” said Morgan Stanley, referring latterly to an elevated expressway system in Metro Manila, linking the Metro Manila Skyway expressway to the Ninoy Aquino International Airport and to Entertainment City, where Okada Manila, Solaire Resort and Casino, and City of Dreams Manila are located.
