Singapore Slowdown

Like its neighbor Macau, Singapore is shifting its focus to mass-market gamblers to boost a slowing casino industry. The decline forced Resorts World Sentosa (l.) to recently lay off 400 employees.

Beijing effect is widespread

The crackdown on corruption that drove VIPs from casinos in Macau has had a similar impact on Singapore. A slump in the city-state’s gaming industry recently resulted in the layoff of some 400 employees from Resorts World Sentosa, a move the company said was necessary to “stay relevant in this challenging market.”

The mandate from Beijing that discouraged high-rolling Chinese gamblers from betting in Macau apparently did not drive them en masse to other destinations. According to the Financial Times, those VIPs have “scaled back their activity” across all jurisdictions in the past two years due to President Xi Jinping’s war on graft and money laundering, as well as the a slowing Mainland economy.

Singapore’s casino industry, launched to great fanfare in 2000, is now facing a long-term slowdown. Marina Bay Sands, a Las Vegas Sands property, has seen revenues decline on a year-on-year basis for the last five quarters. Genting Singapore’s Resorts World Sentosa has posted declines for seven full quarters.

In addition to the VIP exodus and sluggish economy, Grant Govertsen, analyst for Union Gaming Asia, cited currency weakness from Indonesia and Malaysia relative to the Singapore dollar as a contributor to Singapore’s woes. VIP revenues dropped by about 30 percent year-on-year in 2015 at the two integrated resorts, said CIMB analyst Jessalynn Chen. Resorts World Sentosa has been harder hit because it is more reliant on Chinese VIP customers.

Back in Macau, gross gaming revenue dropped 10 percent in May to $2.3 billion on a year-on-year basis, down for the 25th consecutive month.

Nomura analyst Tushar Mohata says the Singapore slump has reached its nadir. VIP volume at Genting has stabilized at S$8.5 billion per quarter. And non-gaming revenues at Resorts World were down “only marginally” from S$653 million in 2014 to S$650 million in 2015.

“Genting is doing quite well in non-gaming revenue. Marina Bay Sands hasn’t added any capacity since its hotel opened, but last year Genting opened a new hotel in Jurong—it’s a little further away from Sentosa, but the average room rate is lower and it appeals to the budget-conscious traveler,” he said.

CIMB analyst Jessalynn Chen said Singapore’s casinos, like many in Macau, are redirecting their energies toward mass-market gamblers. “They have been redeploying staff who used to work in the VIP business to the mass-market segment,” she said. “They’re also trying to bring in new customers with promotions such as bringing in Michelin-starred chefs.”

But things are not expected to rebound for the jurisdiction, especially with new competition waiting in the wings, the Times reported. Hong-Kong-listed Imperial Pacific has opened a casino in Saipan, and the industry is also expanding in South Korea and Vietnam.

“There’s plenty of supply coming on,” warned Govertsen. “The pie is not going to get much bigger and it’s going to be cut into more slices.”