By Luisa Maria Jacinta C. Jocson, Reporter
THE RECOVERY of the Philippine gaming market may be dragged by the slow return of Chinese tourists, analysts said.
In a recent report, S&P Global said that the absence of Chinese junket operators has “rocked some gaming markets and will continue to affect some gaming companies” in the Asia-Pacific.
“Not all gaming revenues in Asia-Pacific markets will recover to pre-pandemic levels (the period between 2017 and 2019), but earnings for most should normalize over the next 12-24 months,” it added.
S&P Global also noted that the return of Chinese tourists to Asia-Pacific markets will be gradual.
“We expect Chinese tourists to take about 12-18 months to return to market more meaningfully. Except for Macau, Chinese visitation to other markets still has a lot of catching-up to do,” it said.
S&P Global said Chinese tourists appear to be preferring shorter trips, and increasingly traveling within China “amid the depreciation of renminbi and government efforts to stimulate the weak economy by promoting domestic tourism.”
“Travelers also have less appetite for spending, in our view, and pent-up demand is likely on a diminishing trend,” it added.
In the Philippines, S&P Global said that they focused their analysis on Melco Resorts & Entertainment’s City of Dreams Manila as this would “reflect the local gaming market.”
“We expect City of Dreams Manila to see its overall gross gaming revenue (GGR) below 2019 levels in 2023-2024, due to softness in VIP. The absence of Macao junkets and fewer Chinese players should drag the property’s VIP recovery,” Aras Poon, associate director at S&P Global, said in an e-mail.
According to S&P Global, the GGR in the Asia-Pacific region has been recovering since 2022. “As of the second quarter of 2023, GGR has recovered to 71% of pre-pandemic levels. Singapore and the Philippines have already surpassed this; other countries continue to steadily recover,” it added.
Data from the Philippine Amusement and Gaming Corp. (PAGCOR) showed that total industry GGR rose by 49% to P136.37 billion as of end-June from the P91.72 billion in the same period a year ago.
Meanwhile, Mr. Poon said it expects City of Dreams Manila’s mass and slot GGR to surpass its pre-pandemic levels by 2024 and 2025 amid “higher exposure” to Chinese players due to the Melco’s presence in Macau. The casino-resort’s growth will also be driven by “solid local demand,” he added.
“This should support the property’s earnings before interest, taxes, depreciation, and amortization (EBITDA) and cash flow recovery,” Mr. Poon said.
Meanwhile, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said that the slow tourism recovery from China could continue to impact revenues of casino-resort operators in the Philippines.
“The absence of Chinese tourists in the Philippines could have a substantial adverse impact on the gaming sector, primarily due to their status as one of the most lucrative spenders within the Philippine casino industry,” he said in a Viber message.
Data from the Tourism department showed the Philippines welcomed 4.04 million visitors during the January-to-September period. Among the 3.7 million foreign visitors during the nine-month period, only 5.1% or 207,932 visitors were from China.
“In my view, the GGR could be at risk of having sluggish growth should demand from the Chinese continue to decline,” he added.
On the other hand, Mr. Limlingan also noted that the weakening peso could counterbalance the slowdown, as this could “attract foreign tourists to engage more in gaming activities within Philippine gaming hubs.”
Antonio A. Ligon, a law and business professor at De La Salle University, said that the recovery of the Philippine gaming market will depend on the government’s regulatory measures and policies on gaming schemes.
PAGCOR earlier said it is planning to let go of its operator role to fully become a regulatory body. The divestment of its gaming operations is expected to be complete by 2025.
The Department of Finance has said it is ready to privatize PAGCOR’s gaming operations once it begins its transition.
