- Revenue decline ends, though sustained growth uncertain
- Chinese tourism causes VIP gaming to pick up
Fitch Ratings Inc reports a 10% year-on-year improvement in gaming income alongside a growth in tourism numbers, suggesting that fortunes are turning around for the Asian gaming market.
Period of decline over at Singapore’s casinos
During 2015 and 2016, there was a 30% slump in casino profits in Singapore. One of the region’s two gaming venues, Resorts World Sentosa, had to cut 400 jobs last year due to falling profits. Marina Bay Sands also reported falling profits. Meanwhile VIP gaming fell significantly, as did arrivals from China. Chinese tourists account for much of the two resorts’ annual income, so this was an additional blow to the industry.
At the start of this year, Fitch Ratings released a preliminary report which suggested Singapore’s two casinos would make a flat $4 billion – ending the period of decline. Thanks to the year-to-date revenue figures, the agency has improved its forecast and now predicts growth in 2017, along with further improvement in 2018. However, the agency was cautious in predicting sustained growth beyond the coming year.
Tourism growth helps casinos recover
Figures from the Singapore Tourism Board show that 16.4 million visitors arrived last year, and the board has a target for a 2% improvement on this number. 19% of arrivals to Singapore come from the Chinese mainland, and these Chinese tourists drive a lot of the gaming revenue in Singapore – especially across the VIP sector.
These VIP gamers are also the reason other Asian gaming markets are thriving. Macau’s revenues could rise as much as 8% or 9% in 2018, Fitch reports. Malaysian gaming is expected to remain stable, and Australian VIP profits should level off next year after a dip caused by Chinese regulatory actions.
New casino licenses “unlikely” in 2018
Marina Bay Sands and Resorts World Sentosa currently hold the only two licenses to operate in Singapore. That exclusivity clause expires next year, which could open the market up for other operators if the government chooses to issue more licenses.
As it stands, there are no plans to introduce new operators to the market – leaving the two existing resorts to make the most of blossoming profits. “We do not believe competitive pressures in the Singapore market will increase in the near term as new licences are unlikely,” confirmed Fitch in its analysis.
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