Lack of fresh airport infrastructure is a factor holding back the growth of inbound tourism to the Philippines, says a report from Japanese brokerage Nomura.
“The Philippine gaming industry is still mostly driven by the ‘grind’ market, but improving Philippine-China relations and the possible resolution of airport bottlenecks could translate to a major bump-up in VIP business,” stated Nomura.
Earnings from tourists arriving from overseas accounted for only 2.4 percent of 2017 Philippine gross domestic product (GDP), despite tourism’s direct contribution to the local economy being an estimated 8.7 percent of GDP in the period, stated the report, issued last week.
It cited data from the World Travel and Tourism Council and Nomura research.
“It appears that locals are doing much of the tourist spending,” said the analysis compiled by the brokerage’s Philippine research team and that covering the member-countries of the Association of Southeast Asian Nations (ASEAN).
“In order to realise a broad, sustained boom in Philippine tourism, constraints to inbound tourism need to be addressed,” noted the authors.
The team gave commentary on the structure of the Philippine casino market, which has been growing significantly in gross gaming revenue terms. Last week the local operator of state-owned casinos, cum-regulator of private-sector venues, said its gross revenue from casino operations rose 18.7 percent year-on-year in the first nine months of 2018.
Nomura’s analysis stated: “We expect industry gross gaming revenues to grow by 10 percent to 15 percent from full year 2017 until 2020. While this represents a slowdown versus the 24 percent compound annual growth rate registered by the industry over the past eight years, it nonetheless constitutes a healthy growth rate, in our view, especially since Entertainment City is nearly fully built up.”
Entertainment City is an area in Manila earmarked by Philippine authorities as a casino zone, and meant to emulate the success of Macau’s Cotai district. It currently features three casino resorts: Solaire Resort and Casino, by Philippines-based Bloomberry Resorts Corp; City of Dreams Manila, operated by a unit of Melco Resorts and Entertainment Ltd; and Okada Manila, by Japanese gaming conglomerate Universal Entertainment Corp.
Philippines casino operator Travellers International Hotel Group Inc – a venture between local conglomerate Alliance Global Group Inc and Hong Kong-listed Genting Hong Kong Ltd – is also due to develop a casino resort in Entertainment City, to be called Westside City Resorts World.
The brokerage added: “We believe that the continued health of the domestic economy remains the key driver for the Philippine gaming industry, especially as the mass-market segment accounts for roughly 60 percent of total Philippine casino GGR. Mass is more reliable, less volatile, and generally more profitable than the VIP market. Nonetheless, we believe there remains significant upside in the VIP market, especially if the influx of Chinese tourists into the Philippines continues to accelerate.”
The report authors noted: “The Philippines currently lags most ASEAN peer countries in terms of quality of airport infrastructure.”
They further stated: “Key Philippine airports are bottlenecked, with six of the top 10 international airports currently operating above designed passenger terminal capacity and with the runway for the largest airport (Ninoy Aquino International Airport, or NAIA, which services Metro Manila) already operating close to its maximum limit.”
Several proposals for extra airport capacity in Manila – involving either expanding Ninoy Aquino International (pictured) or building one or more new airports – have been made in recent years.
Nomura said, giving as an example a scheme to expand air travel capacity to the holiday island of Cebu, for which there was a ground breaking in 2015: “The removal of capacity bottlenecks should allow pent-up demand for additional flights to be met as was the effect of the completion of the upgrade of the Cebu Mactan airport last June.”
Sep 19, 2018Nowadays, millennials, people who were born in the 1980s or...
Aug 16, 2018Food and drink have been heavily marketed as part of Macau...
Jun 27, 2018Macau’s gaming law needs to be amended in order to...
Nov 13, 2018The Macau Statistics and Census Service estimates that Typhoon Mangkhut caused economic losses to the city amounting to MOP1.55 billion (about US$192.1 million), including MOP960 million in losses to...
Nov 13, 2018
Nov 13, 2018
Year-on-year decline in net profit reported by Asian casino operator Bloomberry Resorts in the third quarter