Thursday, August 11, 2022

Image problem seen hindering growth

The Philippines needs to improve its international image to boost tourism numbers and inbound investment, allowing it to achieve its full potential, local operators say.

Gross gaming revenue reached P149.1 billion ($2.9 billion) last year, with that number expected to rise to between P155 billion and P160 billion in 2017. Revenue is being driven by the opening of new resorts and increasing revenue from online gaming licenses.

However, the country is finding it hard to overcome a long-standing impression that there are security issues, which have been exacerbated by global media headlines over President Rodrigo Duterte’s crackdown on drug dealers.

“Whether in Entertainment City, or regional cities, or casinos, the main thing we have to concentrate on is changing the perception of the Philippines because that’s one thing that is stifling the tourism industry,” said David Lawrence, vice president of gaming operations at Widus Hotel and Casino, which is located in the Clark Freeport Zone.

Lawrence was speaking on a panel discussion during the first day of the ASEAN Gaming Summit in Manila, which was dedicated to the opportunities and challenges for the land-based gaming industry in Southeast Asia.

“I think with our foreign customer base, once they are here and they feel safe, they enjoy the environment and they are return customers, but we have to get more tourists coming in.”

That said, tourism numbers in the country have been steadily improving. Arrivals hit 5.96 million in 2016, just shy of a six million target, but an 11.3 percent gain from the prior year. The government is targeting a doubling of the current numbers by the end of 2022.

Chinese tourism has seen particularly strong growth, jumping 37.65 percent with a target for 3 million Chinese arrivals this year, helped by warming ties between the two countries.

Still, the perception of instability continues to haunt the country. Earlier this month, Riskwise Global Capital told the Philippine Stock Exchange that concern over political risk caused investors in a $1.4 billion project to build a casino in Mactan, Cebu, to pull out.

“To get money from outside there is a challenge because people have a misconception about the Philippines and they are nervous about investing,” Lawrence said. “Definitely at the moment the focus is on investors who know the market.”

It’s an issue that clearly irks the head of the country’s regulatory body, the Philippine Amusement and Gaming Corp.

Andrea Domingo gave the keynote address at the conference and used the occasion to launch an attack on the vice-president of the country over a video message sent to the United Nations, which criticizes the government’s methods in tackling crime.

Domingo, whose comments took an industry audience by surprise, later said she was venting her frustration at constantly seeing the Philippines portrayed in a bad light on the international stage.

The noise is overshadowing the achievements of a country otherwise known for its natural beauty and hospitable, well-educated people. The Philippine economy is estimated to have grown between 6.5 percent and 7 percent in Q1, making it one of the best performing in the region.

Domingo said she had agreed to a five-year moratorium on new licenses in Entertainment City to give the market time to absorb new supply and protect the investments of the resorts which have already invested billions in projects there.

However, she is open to considering regional licenses with a minimum investment of $300 million, providing the host municipality agrees with the proposal.

Pagcor has recently approved a license for a $500 million IR in the Cebu region, which Domingo said could become another casino hub. She also said an application for a $300 million plus project in Mandaue City, Cebu, had been submitted by a group of Hong Kong investors and was under consideration.

Angel Sueiro, chief operating officer of Thunderbird Resorts, which owns two regional casinos, said he sees strong potential for growth, with many areas of the country underserved. The country has a population of more than 102 million people. They tend to live in many small clusters of about 150,000 to 200,000, which can mean a demographic of about 2 million to three million people within a two-hour drive.

“We recognize there are still strong pockets of population that are underserved, so we believe there is an opportunity in regional markets which are underserved by Pagcor,” Sueiro said. “After the chairman’s remarks it’s clear that the focus of growth should be on those markets rather than those where Pagcor operates.”

Lawrence concurs, pointing to the fact that the population of North Luzon, which is where the Clark base is located, is the same as Metro Manila, but spread over a wider area.

“It’s not just in North Luzon it’s all over the Philippines so the potential is very great. Certainly with our property we’ve seen revenue growth year on year.”

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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