Fitch Ratings has painted a rosy picture for the Philippine casino industry as it predicts the local market to see high single-digit revenue growth this year.
In its report “Eye in the Sky Series: Philippines,” the global debt watcher pointed out that the initial results of the first three casinos operating under the licenses granted by the Philippine Amusement and Gaming Corp. (PAGCOR) are “encouraging” relative to the investments made.
The growth of the Philippine gaming industry, however, will be restrained by a tough competition from other Asia-Pacific gambling hubs, according to Fitch.
“We expect high single-digit gross gaming revenues in 2017 driven by the opening of the $2.4-billion Okada Manila and the continued economic growth in the Philippines,” Fitch Ratings said. “Longer term, competition from Macau and other APAC (Asia-Pacific) countries will restrain growth (junket-sourced VIP business makes up about one-third of the private casinos’ gross gaming revenues).”
The debt watcher estimated aggregate gaming revenues of Philippine casinos was close to $2.5 billion for the nine months to September last year, of which PAGCOR accounted for more than a third.
In January, PAGCOR announced that its revenues jumped 17 percent to PHP55 billion (US$1.11 billion) revenue for 2016 compared to PHP47 billion (US$945.96 million) for 2015. Industry-wide, Fitch Ratings expects gross gaming revenues to continue growing, after Tiger Resort, Leisure and Entertainment, Inc. commenced its casino operations in late December.
Tiger has invested $2.4 billion for the development of Okada Manila’s first phase, which covers 21.55 hectares of the 44-hectare property awarded by PAGCOR to the company within the Entertainment City in Parañaque City at the foreshore of the Manila Bay.
Fitch, however, noted that the greater Manila market is showing signs of maturation with Resorts World Manila — the first privately owned resort — showing steep declines amid the ramp-up of the newer resorts.
Data showed that Resorts World Manila operator Travellers International Hotel and Gaming, Inc. chalked up relatively flat gross gaming revenues of P18.92 billion (US$379.24 million) in the first nine months of 2016. The 2016 record is higher than the P17.95 billion (US$360.17 million) for the same period in 2015.
Travellers attributed the increase of its gaming revenues to the increase in volume across all segments despite lower win rates.
Aside from the stiff competition, Fitch believe that potential escalation in geopolitical tension with China and possible legislation or executive orders against land-based casinos will also put a dent on the growth of Philippine casinos.