With a land mass of only 25km², the city of Manila – capital of The Philippines – is heavily packed with about 1.6 million people. Throw in the more than 1 million tourists that visit the Pearl of the Orient each year, and we can see why area hotels reach so far into the sky. In that relatively minuscule space, there are 3 thriving Manila casino resorts, but as a fourth USD $1.1bn gambling destination prepares to open, analysts are concerned about market saturation.
While demand for casino resorts is still moderate in Manila, it’s not what it was two years ago, when plans for the new resort were established. The experts at Daiwa Securities Group, Inc. now fear that the added supply could be a detriment to the city’s gambling industry.
“The Manila Bay Resorts project of Kazuo Okada’s Universal Entertainment Corp is set to open in Entertainment City before the end of this year, with its approved gaming capacity potentially growing total market supply by another 53 percent,” wrote Daiwa analyst Patricia Tamase.
The heads of Manila Bay Resort told local press in September 2014 that the new Manila casino could contain as many as 3,000 slot machines and 500 gaming tables. At that time, demand was incredibly high for integrated casino resorts. Since then, however, an economic downslide and anti-corruption campaign from China have seen the gambling market growing at a much slower pace than in recent years.
The upcoming Manila casino will be entering a gaming space that’s already occupied by three major operators. Resorts World Manila has been here the longest, having opened in August of 2009, and is the most trafficked of all due to its prime location, adjacent to the city’s Ninoy Aquino International Airport.
The Solaire Casino Resort on the east coast at Manila Bay opened in March of 2013, presenting Resorts World with its first formal competition. Then in December 2014, the long-awaited City of Dreams Manila casino held its grand opening.
“Gross gaming revenues from the three Philippine integrated resorts grew by 18 percent year-on-year to PHP70.1 billion [USD $1.51bn] in 2015, mainly due to the PHP13.6 billion in fresh contribution from… City of Dreams Manila,” Tamase said.
However, “With this fourth entry into the local gaming space, the market’s bigger concerns would be on how quickly demand can match the new supply, and which existing operators will be taking the biggest hit in market share,” wrote Tamase.
“While still profitable at year-end,” the analyst continued, “Resorts World Manila’s net income was down 26 percent year-on-year to PHP4.0 billion after its GGR dropped by 15 percent.”
Further compounding matters is Resorts World’s stated commitment to integrate a second Manila casino destination, Resorts World Bayshore, where phase 1 of the USD $1.1bn project is already being erected just south of Solaire Casino Resort on Manila Bay. The company’s flagship, Resorts World Manila, is also undergoing an expansion.
According to company briefs, between the three existing casino resorts, visitors are privy to a grand total of 4,600 slots/electronic gaming devices, and 964 table games. If the new Manila Bay Resort installs its previously projected machines, those numbers would rise to 7,600 slots (40% increase) and 1,464 table games (34% increase).