Positive outlook for Philippine gaming industry as icy Manila-Beijing ties thaw

Positive outlook for Philippine gaming industry as icy Manila-Beijing ties thaw

A flood of opportunity awaits the Philippine gaming industry as the once chilly relations between Manila and Beijing begins to thaw.

President Rodrigo Duterte is now in China for a four-day state visit not only to offer Chinese President Xi Jingping an olive branch but also to seek billions of dollars in investments from the world’s second-largest economy.

Positive outlook for Philippine gaming industry as icy Manila-Beijing ties thawFor most analysts interviewed by Business World, Philippines’ pivot to China provides a sliver of optimism for the gaming industry that faces oversupply issues.

An improved Manila-Beijing relations will spur an influx of tourist in Mainland China to the island nation as well as Chinese high rollers evading the inconvenience of China’s anti-corruption drive.

In face of a state crackdown on corruption, Chinese VIP players are flying to alternative gaming locations and improved bilateral ties should make them “more comfortable to go to the Philippines to play,” said Julius M. Guevara, head of advisory services at Colliers Philippines.

Government statistical data showed an increase of Chinese tourist arrival in the first month of the Duterte administration. Chinese tourist arrivals rose nearly 23% to 81,843 in July from 66,689 in the prior year, as total inbound visitors grew 14.53% to a record 560,872 arrivals.

The influx of Chinese tourists coincided with an about-face in the Macau gaming sector, posting a 1.1% uptick in gambling revenue in August — the first positive monthly year-on-year rise since May 2014 — buoyed by the opening of the US casino tycoon Steve Wynn’s $4-billion Wynn Palace.

“The number of tourist arrivals is expected to grow as the diplomatic relationship between the two countries is expected to improve, fueling more demand for the casino developments, especially the high-roller market, which has still been lagging behind in growth over the last few years,” said Claro dG. Cordero, Jr., head of Jones Lang Lasalle (JLL) Philippines’ research, consulting and valuation advisory services.

Cristina Ulang, research head of First Metro Investment Corp., is bullish that a warmer relation with China will fortify the already recovering Philippine gross game revenue (GGR).

In the nine months through September, the Philippine GGR see a 21 to 25 percent growth while the average net win rate — or a casino’s win that flows to the revenue line of the income statement — for the integrated resorts at Entertainment City of 2.5% in the same period.

Bloomberry Resorts Corp reported an increase of Chinese tourists in their Solaire Resort and Casino since the landslide victory of Duterte in May polls.

“We have never wavered in our marketing efforts in China or other parts of Asia,” said Bloomberry Resorts Corp. Chief Financial Officer and Treasurer Estella Tuason-Occeña.

Analysts also believe that Duterte’s war on drugs will send a positive signal to tourists that the administration is serious in stamping out criminality in order to make the country a safe place to visit.

“The war on drugs should give a signal to tourists about the administration’s resolve in solving the country’s problem on drugs and criminality. The objective of this drive is to instill law and order and result into a peaceful society, which may help improve perception on the country as a safe and secure destination,” said Jan Paul D. Custodio, CBRE Philippines senior director.