Regions present expansion opportunities

The Philippines’ regional casinos may not get the same headline publicity as the bigger resorts in Manila, but the number of properties has been growing and their client base evolving as amenities and infrastructure improves.

In the Clark Freeport Zone, the D’Heights Casino recently opened, becoming the sixth property in the area after Fortunegate, Widus Hotel & Casino, Royce Casino, Midori Casino and Mimosa Pagcor.

In Cebu, developments are taking place at a slightly slower rate with two new casinos – the Emerald Bay from Udenna Corp and the Universal Hotels and Resorts – apparently under way after having been granted licences in January 2018, just before the institution of a government moratorium on new casinos.

 Jose Angel Sueiro from PH Resorts – a part of the Udenna Group -  says there is great potential in regional casinos in the Philippines due to the positive demographics and a lack of other quality entertainment options.

“In the Philippines we have, broadly speaking, about 50 million people in Luzon and another 50 million people in the Visayas – Mindanao region, with a totally different language, customs, and a different approach to leisure experiences,” he says “Beside that, in the Metro Cebu market we believe we are in a perfect position to attract a lot of customers from secondary cities in our region, to become their local casino.”

This necessarily dictates the nature of the customers at resorts such as Emerald Bay and the Thunderbird Casino, says David Lawrence, casino general manager at the latter. “Regionally the focus is on mass (play) due to the current market segments and dynamics of the properties,” he says.

However, he adds that “forward-thinking” regional properties are also looking at junket and proxy-betting inclusion.

The example from Entertainment City in Manila, says Sueiro, shows that mass-play growth is tied to the continuing economic growth alongside the evolution of the casino offering. If these two factors remain in place, he sees expansion continuing in the regional space.

“We believe we will experience a similar scenario where gaming propensity will increase with a high-quality product exposure,” he says.

This also means attracting VIP play “(if) our offer is attractive enough to position ourselves as an alternative to existing Integrated Resorts.” Hence, the property benefits from new infrastructure (the new Mactan airport with more than 30 international destinations is just 15 minutes away) and a beach location alongside the property itself, which was developed and project managed by casino development names Paul Steelman and Tenman.

While Sueiro doesn’t disclose the amount of investment required for a regional casino in the Philippines, he does say that the focus is on ‘Galaxy-style’ F&B with top Michelin star restaurants as well as a more Venetian-style retail offering.

“Besides that we are putting a special focus on MICE facilities, a spa and water sports,” he says. “We also have a high-end satellite property in Bohol (Donatela Resort) that will help to complement our offer.”

As for the gaming offer in regional casinos, Lawrence says the Philippines remains a “very strong” slot market that skews 70/30 slots and tables, a percentage that changes towards 50/50 if it attracts a foreign audience.

Sueiro, meanwhile, says that the Emerald Bay will feature 146 tables and around 1100 slots at stage one of the development. “The deployment of the actual positions on the floor will be done under a phasing approach,” he adds.

A further big change in the regional casino market will come with the proposed privatisation of the PAGCOR properties. Until now, Lawrence says the monopoly status of PAGCOR had resulted in a somewhat moribund offering which left the space open in local markets for private operators to establish a presence.

It means, therefore, that choosing which of these properties might be worth taking on will be a task in itself. “For investment purposes in-depth research would be needed locally and cherry picking would be expected,” he adds.

Still Sueiro thinks that if the government does go down the privatisation route, some “interesting opportunities will become available.”

“The process regulations (existing employee guarantees, contract with suppliers, tax, license periods, bid process terms, etc.) will determine the success of the initiative,” he adds. “Demographics and market research (not just actual performance) will give a good indication about which ones are more valuable.”