GGRAsia – Bloomberry boss cautious on expansion in Philippines

Bloomberry boss cautious on expansion in Philippines

Jan 20, 2016 Newsdesk Latest News, Philippines, Top of the deck

The chairman and chief executive of Philippines casino operator Bloomberry Resorts Corp, Enrique Razon (pictured), says the firm will invest more money to expand its business in the Philippines “at the right time”.

The firm developed and operates Solaire Resort and Casino, a US$1.2-billion property in Entertainment City in Manila, the Philippines capital. The property was the first to open in March 2013 at Entertainment City, a zone of new private sector casino resorts recently built or still being constructed on reclaimed land in the Metro Manila area.

“We still have land for expansion. Once we’re fully efficient here and have maximised the existing facility, we will go into Phase 2,” Mr Razon told the Philippine Daily Inquirer newspaper in an interview. According to the report of the interview, the executive declined to give a time frame for Phase 2 or to say how much it would cost.

Solaire Resort and Casino completed an expansion in November 2014 – identified as Phase 1A – with the opening of the Sky Tower, which added 66 VIP gaming tables and 223 slot machines to the property.

“Phase 2 will be a big project but [it will happen] when the market size warrants it,” Mr Razon told the newspaper. “So we really don’t know how much that will be. The market has to tell us what it wants and what it’s looking for,” he added.

Bloomberry Resorts posted consecutive quarterly losses in the first nine months of 2015. The firm posted a PHP1.5-billion (US$31.4-million) net loss for the nine-month period, in contrast to a PHP3.3-billion profit in the prior-year period. The casino firm posted a 64-percent annual decline in share price in 2015, show data compiled by GGRAsia from investment research firm Morningstar Inc.

Mr Razon was quoted saying he was not worried about the financial results, as they reflected expenses incurred while building Solaire. “Our quarterly performance doesn’t really reflect the top line. It’s the bottom line,” he told the Inquirer.

He added: “We’re ramping up Phase 1A [of Solaire], and that means additional costs. Now we have to generate the revenues to cover all those costs, and the growth is providing that. So the problem is not the top line, it’s the bottom line. But slowly, [the losses] are narrowing, quarter-on-quarter.”

Brokerage CLSA Ltd said in its latest report on Chinese outbound tourism – and referring to factors including China’s anti-graft campaign – that the Philippine casino operators were “not immune to the collapse in the Chinese VIP space, but we estimate the [casino gross gaming revenue] impact to be 10 percent to 15 percent at most”.

CLSA added that “Philippine gaming is a much more domestically focused sector” than casino industries in other jurisdictions in the region. A potential headwind for the development of the domestic gambling market is a proposal from several lawmakers in the country for a PHP3,500 entry fee on all Filipinos – resident in the country – that use the country’s casinos.

Bloomberry Resorts’ CEO said the Philippines’ gaming industry is still posting revenue growth. “Gaming in the Philippines has been growing. Even the mass market has been growing,” he said, adding that the opening of new properties at Entertainment City helps create additional interest from potential clients.

The chairman of the Philippine Amusement and Gaming Corp (Pagcor), Cristino Naguiat, said earlier this month that accumulated casino gross gaming revenue for the full year of 2015 in the Philippines grew by 17 percent year-on-year to PHP130 billion.

Mr Razon said in the interview that the casino at Solaire has been performing well, attracting diverse customers.

“People have such a misconception of the problem with the Chinese gaming market,” the executive told the Inquirer, adding that the casino operator has from the beginning been focused on tapping markets other than the Chinese gamblers.

“We had Chinese coming from Macau, Hong Kong, and we developed a good market in Taiwan. We have a very good market in Malaysia, and then other countries followed,” Mr Razon said.