CASINO OUTLOOK 2015 SE ASIA: PHILIPPINES, VIETNAM, MYANMAR, CAMBODIA
In recent years, there has been much written about Asian gaming in Macau and Singapore. The focus of this article is on the outlook for the Philippines, Vietnam, Myanmar and Cambodia.
One common thread found with these four SE Asian countries is the focus on whether or not to allow citizens into casinos in their home country. Vietnam, Myanmar and Cambodia do not allow their citizens into casinos, but tend to pull gaming-tourists from across their borders. The Philippines on the other hand, does allow citizens into their casinos. The success they have had in keeping revenues in-country have had the others reconsidering.
A second common point with these four countries is their effort to draw gamblers in from China, whether they be a cross-border drive or a junket into the larger integrated resorts.
PHILIPPINES: Casinos Remain Central to Tourism
The Philippines government rightfully recognizes that casinos and gaming are central to their drive to boost tourism and the economy. Though their gaming revenues are significantly below that of both Macau and Singapore, there are projections that the archipelago’s share of the global gaming market could grow from an estimated 3.3% to 5% in the next few years.
Much of the expected growth is expected to come from several factors: a significant domestic demand, positioning as a low-cost tourist destination, and development of Melco’s Entertainment City.
Located at the gateway to Melco’s Entertainment City is the new City of Dreams Manila, which is poised to become the premier leisure and entertainment resort in the Philippines and within the region. More than 600,000 visitors have had a first experience of the new integrated resort during its ‘Sneak Preview’ period, with some 20,000 visiting on its first day after doors opened on Dec 14, 2014.
With its ties to Macau junkets and the businesses that connect the wealthy to casinos, Melco will likely encourage its existing Chinese VIP clientele to visit Manila. It is estimated that the Philippines relies on Chinese VIPS for about 30% of its gaming revenues.
The main attraction for most casino operators in Manila, however, is its thriving local gambling market. PAGCOR (Philippine Amusement and Gaming Corporation) expects gross gaming revenues in the Philippines to rise to $6-$7 billion by 2020, when four large integrated resorts are open.
VIETNAM: Looking to Increase Gaming Market
In last year’s summer issue of Gaming & Leisure, we profiled The Grand Ho Tram Strip, considered “Vietnam’s Newest Seaside Gem”. Recognized as the country’s leading integrated resort, the site continues to dazzle both domestic and international visitors.
Vietnam has managed a decade of solid growth as a tourist destination, most recently experiencing a 4% increase in the number international visitors in 2014 over the year before. This sustained growth bodes well for the country’s gaming industry, which has experienced growing revenues at a robust annual average of 10-15% a year.
Asset management firm, VinaCapital has been in discussions to open a $4 billion integrated resort in the coastal town of South Hoi An. Construction is planned for mid-2015, with a site that is considered to rival The Grand as Vietnam’s leading IR. Additionally, Donaco’s Aristo International resort recently opened in northern Vietnam and has shown strong growth in their first year of operation.
There are ongoing considerations by the government to open the casinos to its citizens. Studies by officials in Hanoi indicate the country is losing US$800 million a year with its citizens crossing into Cambodia to gamble.
Aside from The Grand, Aristo and other planned integrated resorts, much of the growth in gaming revenues comes from the border town of Mong Cái in the northern province of Quang Ninh. Strategically located near the border with China, these casinos draw from the large pool of gamblers from southern China.
In the Spring 2012 issue of Gaming & Leisure®, we had a discussion with May Myat Mon Win, a leading hotelier in Yangon, Myanmar. The discussion highlighted the country’s “Remarkable Journey: The Opening of the Tourism & Hospitality Market.”
The resource-rich country has attracted quite a lot of attention since its opening in 2011. Since that time, Myanmar’s tourism has seen a significant rise in arrivals each of the past few years, demonstrating the desirability of the country as a tourist destination. The government’s current target is for the country to host 7.5 million visitors annually by 2020. The Ministry of Hotels and Tourism has unveiled its Master Plan, with the aim to have tourism expand from a baseline of US$534 million in 2012 to $10.8 billion by 2020.
A small gaming industry does exist in Myanmar. Though not officially licensed, casino ownership is tolerated for the well-connected individuals and those in the semiautonomous areas bordering China and Thailand. Legal loopholes and cooperation with local police have allowed dozens of smaller venues and a few larger casinos to remain open.
As is the case with Vietnam, Myanmar also has a casino area along its border with China. The town of Mong La in Shan State successfully targets casino gamers from over the border. In fact, the currency used at the Mong La casinos is the Chinese Renminbi rather than the national Burmese Kyat.
Buoyed by the surge in tourism since 2011, the government looked to take advantage of the growing foreign influx by drafting a law to allow casinos in hotels and resorts. Drafted in late 2014, the law would help formalize and regulate the country’s gaming sector. This has fueled a growing optimism about the expansion of upscale gaming in the coming few years. With these positive moves, however, there are concerns about what the local market can bear, as the country is still very rural, with roughly 60 million still living without electricity.
The Burmese gaming industry, in its current form, is highly profitable, which demonstrates a strong demand both from locals and the bordering countries in Thailand and China. Burmese officials continue to research and review the gaming successes by others in the region including Singapore, Vietnam, Cambodia and Laos.
CAMBODIA: One of the Gaming Stars
Cambodia has had one of the strongest economies in Asia for the past decade, with growth rivaling that of China. Economic growth in 2013 was at 7.4%, in 2014 at 7.2% and is expected to be near 7.5% for the current year (2015). They have also met their Millenium Development Goal of halving poverty by 2009.
Tourism statistics also provide good news, as their tourist arrivals have increased by 24% in 2012, by 18% in 2013 and 7% in 2014. Tourist arrivals are expected to reach an annual number of 4 million by the end of 2015 or 2016.
Cambodia currently has more than 60 casinos; most are small casinos on the borders of Vietnam and Thailand. These border casinos are successful since they attract Vietnamese who are banned from casinos in Vietnam, and gamers of all nationalities from Thailand due to the ban on casino gaming in the country.
NagaWorld in Phnom Penh is Cambodia’s only Integrated Resort, and by far the largest casino in the country. They continue to be a top performer in the regional casino industry.
Owned by NagaCorp, they are fortunate to hold a 70-year license running through 2065, which includes a 41-year monopoly in an area within a 120-mile radius of Phnom Penh. The NagaWorld site pays no taxes on income or gaming revenue, just a low fixed fee. Labor and construction costs remain lower than that of other Asian gaming destinations. Projections were that they built their property for $200 million – that would have cost $1.5 billion in Macau.
Similar to Vietnam & Myanmar, there is consideration by the Cambodian government to open the casinos to its citizens. They have noted that they have been successful in pulling US$800 million in revenues from Vietnamese gamblers – and they would like to see that they don’t lose their gaming revenues back outside casinos.
Though Macau and Singapore remain the largest casino markets in Asia in terms of revenues, the industry is experiencing respectable growth in the Philippines, Vietnam, Myanmar and Cambodia.
Based in Bali, Bill Healey has been consulting, installing, and supporting solutions in the global golf and leisure industry since 1982. He has been involved with over 1,000 systems installations in 40+ countries from North America to Africa to Asia and Australia.