SINGAPORE

Tourism spending points to promising trend

Singapore tourism arrivals are up just over 7 percent in the year to July, but a closer look at the detailed breakdown provided for Q1 shows that for the second consecutive quarter, visitors spent more on gaming, sightseeing and entertainment than in its glitzy shopping malls.

Singapore welcomed 4.6 million visitors in the first quarter of 2018, however despite a rise in overall numbers, tourist spending fell half a percent to S$6.7 billion (US$4.9 billion).

That was due to a 9 percent drop in spending on shopping; a 13 percent decline in accommodation and a 16 percent fall in F&B.

There was however, an increase in spending on sightseeing, entertainment and gaming – increasing 6 percent year-on-year to S$1.5 billion. That adds to a 2 percent gain seen in spending in the sector in the fourth quarter of the previous year, marking just the third time in the prior eight quarters when tourists have spent more on gaming and entertainment.

China, Indonesia and India remained the biggest source of both visitor numbers and spending in Q1, with almost a million Chinese visitors spending S$1 billion, excluding sightseeing, entertainment and gaming. The Singapore Tourism Authority doesn’t provide a breakdown by nationality of how much was spent on the sector.

In recent reporting quarters, management has struggled to explain why the record number of visitors to Singapore weren’t spending on gaming and entertainment, leaving the resorts to squeeze out EBITDA from virtually flat revenue.

The most recent figures show an encouraging trend, though it remains to be seen whether there will be a boost to growth at Marina Bay Sands and Genting Singapore. The latest results were mixed. Genting Singapore recorded a 3 percent year-on-year rise in net profit attributable to ordinary shareholders of the company in 18Q2, but saw a six percent slide in revenue on bad luck.

Net profit came in at S$177.6 million (US$129.9 million), while revenue reached S$560.3 million.

Bernstein analysts said the revenue, net income and EBITDA all missed analyst consensus, largely due to the low VIP win rate and mass hold.

However, the company said VIP rolling volume showed encouraging year-on-year growth in the quarter, despite bad luck. The company said it continued to extend more credit to VIP players in the quarter, with VIP GGR up 10 percent year-on-year.

Mass table drop was up 11 percent year-onyear and slot handle up 6 percent year-on-year.

“Genting gained VIP share (on poor volumes at MBS) even with low hold, but mass share declined in Q2 as MBS remains a tough competitor in the Singapore market,” Bernstein said.

Results at MBS were also disappointing, coming in below consensus expectations, this time mostly due to poor VIP results, with rolling volume down 35 percent year on year in one of the worst performances on record.

Mass did grow year-on-year gaining 6 percent, though both mass revenue and the slot handle were down sequentially.

According to Union Gaming, management’s explanation for the poor VIP volume was volatility due to a relatively small customer base that does not have consistent visitation.

“The VIP business at Marina Bay Sands is highly concentrated and it’s not uncommon to see large swings in volumes quarter-to-quarter,” it said in a note. “However, 2Q18 volumes dipped to the lowest quarterly level on record, below $6bn. This comes after four consecutive quarters of strong VIP hold at MBS, and it could be possible some of the VIP players could be cooling off after a long streak of bad luck. We expect the VIP business in Singapore will normalize in the coming quarter.”

MBS introduces learning leave

Marina Bay Sands will implement a two-day ‘learning leave’ initiative for its workforce.

The initiative is believed to be a first in the hospitality industry, a scheme which allows all full-time staff to take paid leave to attend courses related to language, communication, service excellence and information technology. MBS said it has spent close to S$12.2 million (US$9 million) on various training initiatives over the years, including learning sponsorships, e-learning courses and internal certification programs.

“Empowering our staff through training and skills development is key to their long-term progression within the company,” said Chan Yit Foon, senior vice president of human resources.

Genting Singapore quietly builds Japan presence

Genting Singapore said it had incorporated five new Japanese subsidiaries as part of its stealth bid to win one of the three IR licenses that are up for grabs now that the IR Implementation Act has become law.

The five new subsidiaries have suggestive names: Genting Japan Co., Ltd.; Genting Tokyo Co., Ltd.; Genting Osaka Co., Ltd.; Genting Yokohama Co., Ltd.; and Resorts World Yokohama Co., Ltd. The clear inference of the subsidiary names is that the company is interested in bidding for major urban markets such as Tokyo, Yokohama, and Osaka.

Genting has been the most tight-lipped of all the major operators interested in the Japanese market, offering no explanations to the media about their purposes and strategies for Japan, but simply issuing occasional press releases. Nevertheless, some analysts have ranked them as major contenders.

In April, a Nomura analysis described Nagasaki as a location where “Genting appears to have the edge.”