Progress at Genting’s Singapore casino puts pressure on Sands

October 23, 2009
Singapore Democrats

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Jonathan Cheng
The Wall Street Journal

Resort World Sentosa (Reuters photo)Malaysian gambling concern Genting Bhd. is on track for a partial opening of its Singapore casino-resort by Christmas, stealing the lead on a competing project by Sheldon Adelson’s Las Vegas Sands Corp.

Officially, Genting hasn’t strayed from its target date of early 2010 for the opening of its US$4.4 billion Resorts World on the holiday island of Sentosa. But despite its cautious public projections, the developer has quietly been preparing for an earlier ramp-up, and a consensus is emerging among market-watchers that Resorts World will open ahead of Sands’ Marina Bay Sands project in the heart of Singapore’s business district.

Beating Sands to opening day would allow Resorts World to capitalize on the excitement around Singapore’s long-awaited entry into gambling. Singapore’s government for decades resisted allowing casinos, but reversed that policy in 2005. Morgan Stanley estimates Singapore’s gambling industry could generate between US$3 billion and US$3.7 billion of revenue in its first year of operation.

Singapore’s casinos are also well-placed to tap a deep reservoir of interest in Southeast Asia, and could take business from Macau casinos.

An earlier opening by Genting would be a setback for Sands, which won approval from Singapore’s government to open a casino six months ahead of Genting and had for years been widely expected to open as Singapore’s first casino.

Under Singapore law, local residents will be required to pay an entrance fee of 100 Singapore dollars (US$72) per casino visit or an annual membership fee of S$2,000 for each casino. That gives whoever opens shop first a chance to stake out a strong position in the marketplace, according to Praveen Choudhary, a Morgan Stanley analyst.

A spokesperson for the Sands’ Marina Bay Sands project declined to comment on Resorts World’s timetable, but maintained its stated position that the Marina Bay project was “targeting to open” in the first quarter of 2010, though with only about 1,000 of its 2,600 hotel rooms ready, as well as most of the convention center, the casino and up to half of the retail shops completed. “The rest of the attractions will open progressively throughout the year,” the spokesperson said.

Since Sands won its bid in May 2006, construction delays and high-level management changes have bedeviled the ambitious $5 billion project. As the credit crunch threatened Sands’ financial health last fall, Mr. Adelson issued several news releases to reaffirm the company’s commitment to the Singapore project.

One particularly challenging feature of the Sands project is its SkyPark, a 7,000-ton cantilevered floating garden that perches atop the project’s three 55-story hotel towers. Sands says the public observation deck will be longer horizontally than the Eiffel Tower is tall.

In its official statements, Genting is delicate about the timing. Lim Soon Hua, who is marketing Resorts World in four mainland Chinese cities as well as Taipei and Hong Kong, said in an interview Wednesday in Hong Kong that the project was “moving very fast,” with rollercoasters and rides at the casino project’s Universal Studios project undergoing testing.

“We are on time, and [Sands has] said that they are delayed,” Mr. Lim said. “As to which will be first, that’s the $100,000 question—no one knows yet.” But, he added that anyone who went and “took a look” would see the difference.

Over the summer, Genting announced a three-day charity benefit concert for mid-December at Resorts World, which analysts say indicates a late 2009 “soft opening” of the casino-resort.

Aaron Fischer, who covers the Asian casino business for CLSA Asia-Pacific Markets, said he believed Genting “is well on track for a late December opening,” though he expected the opening to be restricted to high-rollers and loyal Genting clients ahead of grand opening in mid-February 2010.

Genting, which has a gambling monopoly in its home market of Malaysia, bought a 3.2% stake in MGM Mirage Inc. in June.

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