To achieve US$1.56 billion in revenue each, both will have to attract a combined total of 31 million visitors annually.
CAN the integrated resorts count on Singaporeans to gamble enough to make them profitable? Citi has doubts.
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| UNDER QUESTION The $100 entrance fee is a sticking point as it could prevent both casinos from developing strong, recurring local mass market clients |
In a report on the prospects of Las Vegas Sands (LVS), which owns Marina Bay Sands (MBS) here, Citi said that assuming MBS contributes 20 per cent of LVS’s total Ebitdar in its first full year, every eligible Singaporean will have to go to the casino five times a year and spend more then the average visitor to Macau.
Every visitor to Singapore will also have to visit once a year.
‘We liken the current sentiment towards the integrated resort to the Macau gaming boom in 2006/07 and urge investors to not be left holding this parcel when the music stops,’ added Citi analyst Anil Daswani.
Mr Daswani acknowledges that his forecast of 20 per cent Ebitdar from LVS’s Singapore operations is about 30 per cent below consensus. But he also added: ‘If current market estimates are believed, then the Marina Bay Sands will be the most profitable casino in the world in its first full year of operations despite Singapore being a fledgling gaming market.’
Singapore is an untested market as far as gaming goes. Whether Singapore leans towards the Las Vegas model (which counts on non-gaming revenue) or the Macau model (which relies on VIP gamers), will have a significant impact on revenue generators here, and ultimately, the success of the IRs.
Forecasts for gaming revenue at the IRs so far range between US$1-2 billion in the first year.
Based on Citi’s analysis, to achieve US$1.56 billion in revenue each, both IRs will have to attract a combined total of 31 million visitors annually.
This implies that 3.2 million eligible Singaporeans (over 21 years) will have to visit either casino a total of five times. An additional 1.4 million visitors from Johor will have to visit either casino twice a year and 12.2 million tourists will have gone at least once with everybody betting and losing at least US$100. Continue reading
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