Philippines-China dispute could affect Pagcor’s casino revenue

pagcor china ph standoffAny kind of grandiose plan is bound to meet some roadblocks along the way. The same case can be made for Pagcor’s ambitious Entertainment City project and its current casino revenues, except that this is the kind of problem that could end up becoming bigger than previously thought.

The rising tension between China and the Philippines because of the two country’s maritime dispute over the Scarborough Shoal could end up being a huge roadblock for Pagcor’s attempt to attract the millions of affluent Chinese visitors that are currently flocking Macau.

The potential problem was raised by former Philippine senator Miguel Zubiri who said that there could be a huge decline in Chinese tourists visiting the country, some of whom are the kind of deep-pocketed gamblers that Pagcor has welcomed to play in their casinos.

The problem between the two countries stem from a territorial dispute over the Scarborough Shoal, a rich fishing ground in the West Philippine Sea that both China and the Philippines are claiming as theirs.

Effects of the clash have already been felt in the Philippines as China issued a travel advisory on the country last month, advising its citizens to avoid visiting the country. As a result of the advisory, a lot of Chinese tours to the Philippines have already been cancelled with the Philippine unit of Air Asia likewise being forced to delay its planned daily flights between Manila and Macau.

In the grander scheme of things, Pagcor certainly has a lot riding on this matter. Chinese nationals are the fourth largest foreign visitors in the country, next to South Korea, the US, and Japan. Even more important is that a lot of these visitors are part of the country’s growing middle class, a sector of the Chinese social class that has recently shown a growing penchant for traveling and gambling in the past few years. While they didn’t release any specific numbers, it’s entirely plausible that a big chunk of Pagcor’s recent record run of revenues could be attributed to this market.

We only need to look at how Macau has done in recent years to see just how important Chinese visitors to the Philippines are. And if this territorial dispute between China and the Philippines continues on, it’s possible that the travel warning issued by China to the Philippines could end up becoming a travel ban that will prevent that potential tourist goldmine from even entering the country.

Nobody wants to see that happen, especially a government agency like Pagcor that relies on strong tourism from a country like China.