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Monday, February 15, 2010

Resorts World Casino - An Analysis 35 comments

This is meant to be an analysis of the casino demand dynamics --- not the IR. As far as I'm concerned, the centerpiece of both the developments is the casino, and everything else, including the convention centres or Universal Studios, are but secondary. The casinos are meant to subsidise all the other developments, so if they fail, the peripheral IR developments will be in trouble.

So there're "crowds and crowds of people queueing to enter the RWS casino", according to our mass media. Let's sieve out the opinions and go for the facts.

The consistent number that was reported is that there were 6,000 visitors to the casino as of 6 in the evening yesterday. The casino openeded at 12 noon. At first glance, it's hard to get your mind around this number to gauge whether that's sizeable. I read earlier that RWS was planning to open about 500 tables at opening. Assuming that all 6,000 visitors stayed inside the casino over that period of time, that would mean a maximum number of 12 at every table. But hold on --- from my experience at other casinos eg. Genting Highlands, at least half, maybe three-quarter, are likely gambling at the jackpot machines or the computerised gambling machines (you can play roulette, tai-sai, bacarrat etc at these gaming terminals with a central dealer manning the counter) --- this means maybe a likely average of 5 per table instead. Now everyone who's been to a casino will know that 5 at a table is pathetic or at best average.

And that's on the casino opening day with so much inbuilt hype.

For some more perspective.
Case 1: Genting Highlands. According to Wikipedia, in 2006, the resort had 18.4 million visitors. Assuming all are visitors to their casinos, it would mean 50,000 visitors per day or 13,000 over the similar period of 6 hours --- double RWS's numbers yesterday. And this for a casino that is decades old, with no more novelty value, and situated inconveniently at the top of a mountain.

Case 2: The Venetian Macau, of a similar scale to the RWS casino and belonging to Las Vegas Sands tycoon Sheldon Adelson, drew 114,000 people over the first 24 hours of operations in August 2007. That's nearly 30,000 over 6 hours --- 5 times RWS's numbers.

If you think about it, the qualitative economic factors underlying the RWS casino are inferior to that of Genting Highlands, from the operator's point of view. A punter to Genting Highlands is a captive customer to the overall resort development. Lim Goh Tong was brilliant in his conceptualisation of a mountain casino resort because a punter winning at the casino is likely to spend his table winnings at the variety of restaurants, retail outlets, theme park etc available in the resort --- he is likely to be emptied of his pockets no matter whether he wins or loses at the casino. RWS offers no such captive money because the psychology will be different ---somebody winning at the tables is free to take his money out, catch a cab and spend it elsewhere in Orchard Road etc. There are no natural obstacles to him doing so unlike the seclusion of Genting Highlands. More so if it's a local punter .... he can come in bermudas, punt a few rounds at the table, and catch a transport back home if he manages to recoup that atrocious levy.

If the opening reception is an indication of things to come, it might be soon when the operator will turn to the authority for concessions. Whether it is abolition of the $100 levy for the local retail audience or relaxation of controls for junket operators marketing to foreign high rollers, there will be some social tradeoff in the process.

And that's not forgetting that in 6 months' time, there is imminent competition from the rival LVS operator at Marina Bay. Good luck to Genting punters --- those in the stock, more than those at the casino, will need it.

Last but not least, happy Chinese New Year!

Sources:
1) Genting Highlands link: http://en.wikipedia.org/wiki/Genting_Highlands
2) Venetian Macau link: http://www.lvrj.com/business/9612252.html

 

 

35 Comments:

Anonymous sgdividends said...

Hi,

I have a different perspective though i think yours broadened mine!

I think most ppl will not want to go to the IR on the first days since most of the facilities are not opened yet. ( correct me if im wrong).

About genting highlands being captive, agree with you. However, i think people ( or at least me) will be damn sian to travel all the way up a hill to punt, though once im there, yeah i will spent. I think when the full features of RWS is up, its ease to reach there will be a great pull.

Just my 2 cents worth and my gut tells me RWS will be a hit.

Owning some insignificant shares of genting though!

Sgdividends

2/15/2010 2:41 PM  
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