MALAYSIA

Malaysia ops outperform as new attractions draw visitors

Genting Malaysia says it plans to further leverage new facilities at its Resorts World Genting property to boost growth and is seeking opportunities in regional markets.

In a recent presentation to analysts, Malaysia’s only casino operator highlighted the positive impact from the Genting Integrated Tourism Plan (GITP), which it launched in 2013.

The RM10.4 billion ($2.5 billion), 10-year overhaul of its resort in the Genting Highlands is now close to completion with the new attractions helping to boost visitation by 21 percent in the first six months of this year.

As of end June, the company had invested RM7 billion in the project, rolling out new hotel and casino facilities, a cable car ride to the hilltop resort and a premium outlet shopping mall.

Still to come are the attractions seen as likely to be the main crowd pullers, which are a theme park developed with 20th Century Fox and an indoor theme park, as well as more luxury hotels.

The 20th Century Fox attraction has been delayed and is now expected to open in the first half of 2019, with the indoor park expected towards the end of this year.

The resort attracted 12.8 million visitors in the first half, with about 73 percent of the total being daytrippers to the property. Average occupancy across its 10,500 hotel rooms stood at 96 percent, up from 93 percent in the same period last year, with the average rate rising 15 percent to RM105.

The group, which has operations in the U.S., Bahamas, the U.K. and Egypt, still gets about 67 percent of revenue and 83 percent of EBITDA from its Malaysian operations, which outperformed its other geographical regions in the first half.

Overall group revenue gained 7 percent, while revenue from Malaysia was up 14 percent to RM1.9 billion. Adjusted property EBITDA was up 19 percent on a group level and up 23 percent in Malaysia to RM540.2 million.

Genting said it had benefited from higher hold in the mid-to-premium section of the market in Malaysia, while its margin had improved due to lower VIP costs and reduced expenses from the ramp up of the GITP.

However, the momentum slowed in Q2, with revenue up just 10 percent. Research firm Alliance DBS said the decline was likely due to the World Cup and it expected an improvement over the following reporting periods.

Going forward the group said it plans to improve its digital and strategic marketing efforts as well as step up database marketing to pull in greater visitor numbers.

In its overseas operations, Alliance DBS said the company’s results had “not been so inspiring.”

In the U.K. and Egypt, revenue dropped 2 percent and adjusted EBITDA was down 46 percent in the first half. The group attributed the decline to lower business volumes at its land-based properties in the U.K., with visitors down 5 percent.

Revenue at Resorts World New York City and Resorts World Bimini was up 4 percent in the first half, while losses at the Bahamas property narrowed significantly.

The group is also weighing up its options when it comes to a $426.3 million investment in promissory notes issued by the Mashpee Wampanoag Tribe to finance an integrated resort in Taunton, Massachusetts that Genting was to have managed.

On Sept. 7th, the U.S. government ruled that the tribe didn’t satisfy the conditions to have the land in trust for an IR.

“The group is currently deliberating the appropriate course of action by working closely with the tribe to review all options available for the group’s investment in the promissory notes as well as its recoverability,” it said.

RGB eyes HK IPO for technical unit

Electronic gaming machine supplier RGB Asia has confirmed plans to spin off its technical support and management division and list it on the Hong Kong Stock Exchange.

The Penang-based company told The Edge Markets that it was seeking more capital to expand its concession business - in terms of location as well as number of outlets and gaming machines. It said it would keep overall control of the unit after the listing, which would likely be on the main board.

Political tensions hit tourism

The number of Chinese tourists to Malaysia dropped more than 30 percent during the key Golden Week holiday following political and trade tensions between Beijing and Kuala Lumpur.

According to tourism officials, it’s the first time that Malaysia has seen a drop in China visitors during the period.

The country was the sixth most popular destination for outbound Chinese tourism last year, but that’s likely to drop down to about tenth in 2018, local media reports.