FOCUS

It’s more fun in the Philippines

Manila’s integrated resorts are estimated to have chalked up an impressive 27 percent gain in 2017, with Morgan Stanley predicting a surge of 32 percent this year as Okada Manila, the newcomer to the market, ramps up.

The Philippines are benefiting from steady growth in tourism arrivals, which are driving VIP revenue, while the expanding economy is putting more money in the pockets of locals. It’s a winning combination for Manila’s operators, both on the gaming and non-gaming side of their business. In our Philippine focus, we speak to operators on the ground to hear their views on what will be driving the market going forward. The executives will expand further on the theme at the upcoming ASEAN Gaming Summit in March, where they will feature on a keynote operator panel.

Targeted expansion

Solaire Resort & Casino, owned by Bloomberry Resorts, was the first IR to open its doors in Entertainment City. The $1.2 billion property, on an 8.2 hectare site, made its debut in March 2013 and expanded with the opening of the Sky Tower in late 2014. The company is now looking at further expansion with a resort in Quezon City, adjacent to Manila.

The most recent available figures for Solaire have shown strong growth, with record Q3 mass table drop and gross gambling revenue from electronic gaming machines; VIP volumes slipped a bit year-on-year but increased nicely on a sequential basis.

President & Chief Operating Officer Thomas Arasi spoke to AGB about his views on the market and future expansion plans.

AGB: When do you expect to begin construction on the Quezon City resort?

Our design development team has been progressing well with many factors being considered. High on this list of factors is the emerging MICE market in QC. The City has been missing a world class MICE facility. Also domestic tourism should also be considered besides our bullish projections on foreign tourists’ visitation.

With all of these new and important considerations, such as MICE for the IR position that we will bring to QC, we are planning to break ground by late 2018.

AGB: How will it compare in terms of amenities with Solaire?

It will also be “Solaire” branded with the same quality and pedigree. It will have a somewhat smaller land footprint which will necessitate a more vertical massing and design, a more complex design and streamlined public space.

The location in Metro-Manila will be for local guests as well as international clientele from up north; namely the Clark-Subic area. We expect a highly synergistic customer service equation benefiting from the complimentary geographic locations of QC and EC and the sharing of services and amenities of the two “sister” properties.

At present, there is no 5-star hospitality complex serving the 10 million-person catchment area, which Solaire Quezon City will fulfill.

AGB: Do you have any further expansion plans in the Philippines, perhaps Pagcor casinos?

Overall, no other location in the Philippines can match Entertainment City: It is centrally located between the top areas of Metro-Manila to the north and NAIA Airport adjacent to us, immediately to the south. There is superb proximity to NAIA airport, which is less than 10 minutes door-to-door.

Solaire E.C. is in the middle of the nation’s top economic zip codes and next to 130 international flights per day (which partly explains why Solaire has so many international guests). Also, Entertainment City—with 4 world-class Integrated Resorts—has a critical mass, desired by gamers and hospitality/ entertainment patrons, that no other “neighborhood” in the Philippines can ever hope to match.

We would look at the Pagcor casinos for strategic and financial opportunities and arguably will be “well-positioned” to buy. However, our interest will depend on the property by property circumstances and economics and would only be considered if such investment augments our current strategy.

AGB: What about expansion outside of the Philippines?

Our Chairman, Mr. Razon has, in the past, indicated his interest in Japan, Vietnam and Argentina. We will look opportunistically at expansion outside of the Philippines. In the meantime, between Quezon City, Phase 2 in Entertainment City and various “re-purposing” projects within our existing Solaire, Bloomberry has an amazing development pipeline here in our home country…in our own backyard…where we control the land, the assets and opportunities for management synergies and operations “complexing.”

AGB: Pagcor is selling the land Solaire stands on. What advantage would it be to buy it?

Acquiring the land has many strategic and financial advantages for Bloomberry. It strengthens our growth story by allowing maximum discretion/ control in the composition, timing, phasing and permitting of Phase 2 and virtually eliminates future regulatory risks to ownership and title.

Solaire’s unified underlying land ownership, with ownership of the improvements will increase our valuation multiple, long-term.

Entertainment City land prices will continue to increase, thus driving Bloomberry’s economic valuation as owner vs. tenant of our land. It also avoids future land rental expense increases which, ultimately, will be more expensive than the cost of debt.

The questions we’re getting about whether to buy the land seem to have a quarterlyresults perspective. In my 4½ years of working for Mr. Razon, he is very demanding about quarterly results…. But, never by sacrificing long-term, smart, strategic decisions. Buying our land is of great long-term benefit and very, very strategically well-founded.

It will be financed with a combination of debt and equity. Solaire has a very strong balance sheet and borrows at attractive cost of capital in actual terms as well as being attractive compared with the expected future strong rate of land appreciation in our underlying land. The company valuation multiple increase, solidification of our development growth story and land appreciation will strengthen our balance sheet over the strategic horizon.

AGB: Q3 results showed solid growth in all metrics in the Philippines, is there any area you would like to see an improvement?

Yes, we had an outstanding Q3 as well as YTD 2017. We’ve shown very strong growth in volumes, revenue and profits. Our brand is strengthening and our footprint is growing briskly. We are a Forbes 5-star property. Areas of improvement? Well, yes – EVERYWHERE! Part of our brand and Mr. Razon’s drive is to compete with ourselves, striving for perfection and for greater results. So, we need to improve in everything that we do.

AGB: Do you see any risks to the immediate outlook...renewed political tension with China?

We do not. In fact, it’s probably the most stable and predictable during our five years of existence. As to China, our visitation has increased and continues to grow robustly. Nothing on the horizon leads us to conclude that the political and operating environment going forward won’t be at least as attractive as has been recently.

AGB: How do you see the market evolving next year?

The locals market will continue growing in line with the growth presently characterizing the Philippines economy, but international visitation will continue to outpace domestic growth as the Philippines and Solaire become better known and “mainstream” to Integrated Resort guests and players globally.

AGB: How fast is international visitation growing and what is the revenue distribution split now between local and international?

We don’t issue precise international growth figures but currently the majority of our revenue in VIP is international. Within mass, international is not yet the majority but is a very large percentage which is growing even faster than domestic revenue. The Philippines is very well positioned to grow international revenue faster than other IR markets in Asia. It has outstanding international air-service connectivity; excellent proximity/central location to the top feeder markets in Asia and the world’s best hospitality…as only Filipinos can deliver!

The English-speaking common denominator helps as well as the fact that all other foreign languages are available through our Team Member population. Filipino culture is a fascinating blend of “east and west” which is a nice travel and gaming experience setting in which to operate a world-class Integrated Resort.

The Philippines and Entertainment City feature world-class properties; strong hospitality and entertainment amenities; excellent, state-of-the-art gaming tables and slots and a market that responds very strongly to customized promotions and offers based on a patron’s profile and desired experience.

AGB: How do you see that picture changing five years down the line?

International visitation should pick up steam for the reasons above, plus: The Philippines is a magnificent, beautiful and memorable travel destination, though still somewhat unknown, and is nowhere near its enormous potential. This should mean above trend-line growth in international. Domestic patronage and revenue should continue to grow strongly. The Philippines is one of the fastest growing and dynamic economies in Asia. Also, Filipinos are very social and entertainment-seeking which is consistent with the character and attractiveness of Integrated Resorts.

AGB: How is the mix between VIP and mass evolving and do you have plans to sign further junket operators?

Given our current balance between VIP and Mass and the source and nature of those two segments’ growth profiles, we expect the mix to remain roughly the same. Quezon City will be very convenient for many of our existing Metro-Manila guests, VIP and Mass guests as well as non-gamers (MICE, Restaurant, Entertainment, etc.). In Entertainment city, our Phase 2, with its very large scale development potential, numerous additional guest rooms, F&B, amenities, casino, retail and entertainment, in conjunction with proximity to our international airport, will generate lots of international VIP and Premium Mass. So, we should maintain our rough balance between VIP and mass, on the one hand, and slots and tables on the other hand. It’s a fantastic operating and financial model, similar to the two major Integrated Resorts in Singapore.

AGB: Resorts are opening around Asia, is the increasing competition a concern?

Asia is still way under-penetrated in Integrated Resorts. Way under-penetrated. There are only two caveats to that: It must be very high quality to make the successful Integrated Resort model work and justify the investment, and there may be short term “blips” in performance as major new properties open until the point at which the supply is absorbed. But, in Macau, Singapore and Las Vegas, we’ve seen how the demand is there, especially for high-quality properties and strong operators.

AGB: Are you participating in proxy betting?

Industry observers throw around terms loosely. To me, “proxy” betting is phone betting in which we do not participate.

AGB: Are you seeing any emerging trends on the casino floor?

The constant product innovation and guest impact in the EGM space is amazing. The slot manufacturers seemingly reinvent, improve and push the envelope a-la Apple. It is, though, so darn expensive; hard to keep up! As a sector, ETG’s continue to gain traction in most markets, including the Philippines.

AGB: What do you see as being unique about the Philippine gamer?

It’s perhaps not “unique” but rare. The Filipino gamer has a high incidence of going out and playing in groups—fellow family members; college friends; social circles, etc.; is highly social and has a good time; not quite as serious as the play you see in Macau. There’s a great balance between tables and slots; more crossover players as most other markets’ players are almost exclusively “table-dominant” or “slot dominant.”

AGB: How much potential is there for non-gaming attractions?

“Resort,” as we call non-gaming, has historically been relatively small but its growth rate has been even higher than the gaming revenue growth rate. As I mentioned, we are a Forbes 5 star and so Solaire’s quality is becoming more recognizable and more “institutionalized” and accepted and that has really been paying dividends. Five years ago, when we were marketing Resort-customer rooms and invited people to Entertainment City, we would get blank stares. Now—if we only had more rooms! Our restaurants have really picked up. Recently 3 of the top 5 Trip Advisor-ranked Metro-Manila restaurants (of more than 6,500 restaurants) were Solaire’s—Yakumi (numerous times #1); Finestra and Lucky Noodles.

The Theater at Solaire is unquestionably the nicest Theater in the Philippines and one of the top in Asia. Our theater has huge momentum and is doing a lot to enrich Filipino culture while attracting both locals and foreigners to our programming. For example, Aliw Awards, the prestigious award-giving body for promoting Filipino music, has chosen The Theatre at Solaire to be the recipient of a special award for our efforts to support and promote OPM (Original Pilipino Music)

In my opinion, we have the best collection of luxury shops in the Philippines at The Shoppes at Solaire. Our luxury collection is anchored by Louis Vuitton which we opened earlier this year and which is the first new Louis Vuitton in the Philippines in more than 20 years.

Gaining strength from adversity

Resorts World Manila (RWM) is owned by Travellers International Hotel Group Inc. (TIHGI) – a publicly listed company wherein Alliance Global Group Inc. (AGI) and Genting Hong Kong (GHK) are majority shareholders. It was the first integrated resort (IR) to open in the Philippines and is the only one not located in Entertainment City, but opposite the country’s primary international airport. The property is currently in the third phase of its expansion, which will consist of a further three hotels, more gaming and other amenities, and is scheduled to be completed by 2018. Further down the road, it will open the fourth and final IR planned for Entertainment City.

In June last year, the casino was attacked by a lone gunman, who set fire to casino facilities, resulting in the death of 37 guests and employees, as well as the gunman himself.

Chief Operating Officer Stephen Reilly speaks to AGB about the recovery from the tragedy and optimism for the future.

AGB: What security measures has RWM taken since the incident?

PAGCOR came to us as they wanted to make sure that RWM was ready. We hired directly from the Philippine National Police and invited Generals to join our team. We have some of the biggest heads at the table from a security and safety standpoint. We engaged Black Panda which is one of the best security firms worldwide. They are still with us and engaged for another year.

A lot of our renovation work is to build security bunkers. We have had to redefine the industry standards as you can’t settle for just a regular door and dog sniffing the back of cars. We have to make it as pleasant as possible for the guest, but you also need to consider that the world is changing fast, therefore we try to do things with the end in mind.

We now have security bunkers and a double layer of security around the property. It’s very expensive, but it’s something we must do. PAGCOR reviewed our plans and I believe what you see at the other IRs today is a result of what Travellers presented to PAGCOR.

AGB: How close to completion is Phase 3?

It looks like a massive construction site, but a lot of it is completed. The first to open will be the Hilton Hotel. We’re looking for that to open up by late May 2018. Then we are going to have the Sheraton Hotel Manila, which is now a Marriott brand, and lastly we are going to have Hotel Okura. Altogether, these are the three international hotel brands to add to what we already have. The first gaming component will be the ground floor, which will be as big as the floors we have here within the Garden Wing. It will, in a way, replace the capacity we lost on the second floor, and then we’ll also have the new second and third floors. We will phase them in rather than just open it all in one go.

The gaming component will be open early in the first quarter.

AGB: What about the plans for Westside City?

It will open in 2020. When we look at Entertainment City and we see what everyone else has already done, we’ve found ways in which to create something that fits in the City, but also introduces a different experience. We have drafted the builds numerous times. We are going ahead and we’re doing it, but we’ve changed it many, many times to be something that’s quite unique.

AGB: What is RWM’s unique selling point in the Philippines?

I think one of the things we have is that we understand the local market. If anyone understands business in the Philippines from a retail and property perspective that’s Dr. Andrew Tan (head of Alliance Global). He understands what the market really requires. His finger is on the pulse and he has taught us how to get it as well by opening our eyes and helping us think out of the box and focus on the consumer market.

AGB: What segment of the market does RWM focus on?

Premium mass was something we actually started. VIP business at the time was volatile with credit risk, though premium mass and mass were doing very, very well and was a stable base, so we are still focusing on this.

We are not going to turn VIPs away and we are signing new junkets all the time. Of course, when there are new properties and it’s all shiny, the junkets like to shift, but we still have our base for our VIPs and it’s growing. We are very, very careful with our credit.

The Philippine market is getting used to luxury goods, but sometimes things are too big and too quick. For some of the domestic market, they feel intimidated. You have to tap into that market and understand what they want. Some of the restaurants we opened up initially were fine dining, because we thought the market would adapt very quickly. But no, they want to have their rice with a fried egg on top. So we cater to demand.

Locals are our core market. About 80 percent of our market is domestic. The revenue stream is different. Half of the revenue is international and 12 percent non-gaming.

AGB: Where do you see the market five years from now?

There is potential for growth. The market is growing at 12 to 15 percent per annum and the tourism industry is growing rapidly. The infrastructure is not quite in place, but people really want to come to the Philippines, even more so with the relationship between the Philippines, China, and SE Asia having recently improved.

AGB: How much potential is there for expansion outside of Manila?

There are an awful lot of tourists coming in who do not go through Manila and go through Cebu instead. There are also direct flights to Caticlan which is the gateway to Boracay. They can come in from southern China and other parts of Southeast Asia.

People don’t think of coming to the Philippines for gaming first. It’s a destination and people look at what the destination has to offer. The huge market here now is diving and surfing. Both have exploded and become extremely popular. A lot of our hotel rooms are taken by divers. If you look at the Korean market, they love golf and you can golf all year around. The Korean, Japanese, and now the Chinese market love to come to the Philippines for both golf and diving. There are not many places in Southeast Asia with pristine waters and multiple dive sites without overly developed islands.

AGB: Does RWM entertain proxy betting?

Not at this moment. We are studying it carefully since we acknowledge that this is an area that is growing around the world. But of course, we have a brand to protect and recognize the risks involved.

AGB: What’s different about the Philippines in terms of gaming preferences?

You have to make sure you keep the latest product line for slots. I love slot machines. They turn up to work on time, we don’t have to feed them too much, they don’t need much supervision. They are absolutely great, but make sure you have the latest technology. The Philippine market loves slot machines. The area for growth is big. Table games will shrink just like in Las Vegas eventually. It is only a matter of time. If you look at the middle income earners, it’s growing and they will go into the electronic side of gaming, so it will grow.

We have added a sports book through MSW, and they have been extremely happy with Resorts World, where they have gotten a lot of traction. Tennis and basketball are big and people bet a lot. Also cock fighting, which is very popular here in the Philippines, and is just one of the many things that makes this country a unique destination not just in Southeast Asia, but the entire world.

Destination as a revenue driver

Okada Manila, owned by Japan’s Universal Entertainment, is the new comer to Entertainment City, holding a soft opening for the resort in late 2016. At 44 hectares, the property is by far the biggest in the complex and the rollout of hotels and other facilities is continuing. At its completion of Phase One, Okada will have 994 hotel rooms and operate 500 tables and about 3,000 slots. Its centrepiece is the world’s largest coloured fountain, as well as a giant inner city beach complex, known as “Cove Manila”.

Managing Director Steve Wolstenholme spoke to AGB about the progress of the rollout and his optimism about nongaming opportunities in the Philippines.

AGB: Facilities at Okada Manila were gradually opened throughout 2017, how happy are you with progress so far?

Okada Manila is an enormous multi-billion dollar resort, and when you develop a resort of that size there are always going to be some challenges when you first open. I’ve been involved in a number of pre-openings and this one no different, however in many respects it has been a very successful opening. We are extremely happy with the results.

It is not only massive, the design is particularly intricate which needs to be continually refined to ensure the powerful statement that it clearly exudes.

We are not fully operational. We have two towers with extremely large standard rooms that start at 55 sq meters. We have some villas that go up to 1,400 sq meters. Right now, we have most of one of those towers completed and we sell those rooms and also give complimentary rooms to our casino customers. For the other tower, the infrastructure is there and we are just doing some finishing touches. We expect to finish that tower during 2018.

AGB: What does Okada Manila bring to Entertainment City?

If you look at IRs, there are many around the world. Las Vegas is the birthplace, but we now see them in Asia -- in Macau and Singapore specifically. If you look at Okada we have taken it to the next level. This IR is not just a hotel and entertainment complex with a spa and retail and all the things you would expect to find. It has gone one step beyond and I think a testament to that is our Cove Manila. It’s not only colossal, I think it’s a game changer. With these kinds of amenities and this type of spend, it’s not just going to put Okada Manila on the map, but also Entertainment City and Manila in general as a global entertainment destination as well as a business destination.

AGB: How important will non-gaming be in the Philippines?

There is a broader range of non-gaming amenities here. When designing this property, we built it with the future market in mind. We see great opportunities on the non-gaming side and Okada Manila was developed as an all-encompassing resort. If you look at the Philippines, the culture is quite western in many respects and if you look at that western model, visitors don’t just come for gaming. They come for great restaurants, world-class chefs, worldclass entertainment. We’re not suggesting that Okada or Manila will predominantly be a nongaming destination like Las Vegas, but from a local standpoint, non-gaming presents a huge amount of opportunity. Whereas from a regional standpoint, gaming is a very important part of the entertainment.

AGB: How is Manila evolving as a destination?

If you think of Manila, the first thing that often comes to mind is congestion and traffic. But with all the infrastructure spending we’ve seen, such as the Skyway for example, you can get to Entertainment City from Makati or the airport in 15 minutes when previously it used to take an hour. The experience has changed and I think that will be very important for the development of Manila as a tourist destination.

You don’t have to stay within Okada Manila. There are great shopping and cultural experiences in Manila. With all the infrastructure spending that the administration is doing, there are great opportunities for people to come here and enjoy those things as well.

The current administration is very probusiness. The relationship with Mainland China to ensure arrivals is going to make the destination more attractive to tourists. We have seen substantial increases in gaming revenue in the market, but we’ve also seen a strong rise in visitation. In Manila, we only have about 4.5 million tourists a year, and that is a big opportunity. If we look at some of the other more established regional destinations, such as Bangkok, they do many, many times more visitors and I think that alone is an enormous opportunity, as the brand perception of Manila continues to be refined. I think where we have established ourselves is that the Filipino people are associated with hospitality. We have hired 6,500 people and they are very aware of the unique Filipino hospitality that we strive to give.

Manila in many respects is a stepping stone to some of the beautiful islands, but we want it to be more than a stepping stone. So, they come here and go to the islands, but they don’t just come here and wait at the airport. They come and spend two or three days here in Entertainment City before spending time in the islands.

AGB: What about future expansion for Okada?

Right now we have a lot of work still to do here at Okada Manila, and we have multiple phases, but having said that we are extremely bullish on the Philippine market in general and not just here in Manila.

Japan is an interesting market for us. We have Japanese DNA, our parent is listed on the Tokyo Stock Exchange. However, we are very focused here, but it’s up to our parent company whether they want to participate in the Japanese market. One thing we see as a differentiator for us is not only our building, but that we do have that Japanese DNA. Japanese tourists will feel very comfortable in a Japanese-centric property with exceptional Filipino hospitality.

Koreans are a definitely a big market here. We see a continued interest from S Korea, but where we see the biggest opportunity is promoting Japanese tourism and I don’t see any threat from Japanese IRs, as this is a very different experience.

AGB: There has been talk of a market listing. Is this on the cards?

That’s at the discretion of our parent company, which will decide when it’s the right thing to do, or if it’s the right thing to do. Certainly we are very bullish on the Philippines and we think it would be the right thing to list here should that decision be made. There’s no immediate plans to do that but ultimately, it would be likely to happen.

AGB: What progress has been made in signing junkets?

We have started junket operations. They are limited at this time, as we are building complete our offerings. We are not just opening the doors to any junket operator who wants to come here. We are very selective and want to ensure that we give a very good customer experience, so that we have longevity in that side of the business. We have started and through Q1 we will continue to introduce new junkets. By the end of Q1, we will have established a good portion of our junket operations.

AGB: What is the current split between VIP and mass?

Right now our split is approx 60/40 in favour of mass because we don’t have the full complement of junket operations. In the course of 2018, as more junket operations come on board we expect that to reverse to be more like 60/40 in favour of VIP. Having said that, there is significant opportunity in that mass market and non-gaming market, which we see as being a great contributor to our bottom line.

We are an enormous resort and if you look at it from investment size, it’s twice that of other IRs in Entertainment City. With that in mind our market segmentation is quite broad. We have the largest multi -coloured fountains in the world and that attracts a lot of foot traffic. A lot of those are local people, but we are also hoping to make the fountain a check box, must-see destination. Some of those people will game, some will just spend money on food and some quite honestly will just come to see the fountain and we’re ok with that, because we want to ensure that our awareness is broad and it’s across all market segments both locally and internationally at all ranges of availability.

AGB: What is the visitation mix between locals and tourists?

If you look at foot traffic it’s going to be dominated by local guests and if you look at revenue it’s going to be the reverse. We expect 70 percent of our customers ultimately to be local, but we see approximately 70 percent of revenue being from international visitors. We see local as a great opportunity, but more of an entertainment opportunity. Whether that is to spend money on a slot machine or whether it is to dine, or visit the cove or just come and have a look.

The real opportunity from a locals standpoint is the Philippines is growing at nearly 7 percent in terms of GDP and that has an enormous ripple effect throughout the whole population. We have 6,500 people and 98 percent are local and that too stimulates the economy. Those people have more money to spend on entertainment and we are going to continue to see that stimulation with regards to the economy and this kind of interest in entertainment.

AGB: Has growth come at the expense of other resorts?

Even since we’ve been open, we have seen growth in the market. It hasn’t been the cannibalization that everyone expected, so I think critical mass is important.

AGB: What trends are you seeing on the floor?

At this time we do not offer video streaming. Ultimately that is an area, under the direction of Pagcor, in which we see opportunities. However, I reiterate that we don’t want to be reliant on any sector of gaming or non-gaming. We have seen the experiences in the market and they are very positive when it comes to video streaming and as we evolve our junket business we will look at that with an open mind.

We are here in Asia and traditionally that is a very table games-oriented market. We currently have 2,700 slot machines and we will have 3,000. That’s a lot of slot machines in an Asian market. We have a market here that is, from a local standpoint, quite Western-centric. Slot machines align themselves with the entertainment side of gaming. Having said that many of our regional clients like to experience that table games market.

AGB: How has the smoking ban affected business?

There was an era when the industry looked at smoking and gaming and how a ban affected revenue, and it was quite drastic. I think that quite honestly that has changed. There is definitely an adverse effect on revenue, but it is certainly not as drastic as has been seen in the past. Our casino is a smoking casino...there are non-smoking areas. Our property is non-smoking property in alignment with the regulation. Coming here people can at least understand that we are being respectful to our employees and to those who don’t smoke, but we also recognize that some people like to smoke and we have areas where people can smoke.

AGB: How comfortable are you with the current regulatory environment?

Pagcor is an operator and a regulator that gives them a broad understanding. There is some suggestion that they may privatize, but even if they go through the privatization process, the fact they have been an operator gives them a different perspective and it’s a very positive perspective from an operator’s standpoint. We have, as do the other IRs, a good relationship and it’s a working relationship. We meet with them on a regular basis. We want to be competitive from a regulatory standpoint and we feel we are competitive from a regulatory standpoint, predominantly for the reason mentioned.

The environment we are in right now is extremely workable. One thing we do very well, is that we do work together and if we propose some refinement to our business processes we do it collectively as an industry as opposed to individually.

AGB: Have you adjusted security after the June RWM attack?

We have the largest complement of security personnel of any IR anywhere in the world. We are very cognizant of our obligation to ensure that anyone coming here or working here feels safe. We are also very cognizant of the fact that our reputation is paramount. It involves security, it involves surveillance and monitoring and diligence. While we have to be aware of our bottom line and our business, we are not going to do anything that will compromise that security. It’s not the easiest building to come into. It is similar in many ways to going through airport security.

There is a perception out there that doesn’t meet the reality. When someone asks me from the U.S or Europe is it safe in the Philippines, I tell them I feel extremely safe here and enjoy living here.

AGB: How do you see the market in five years?

I have lived and worked in the Philippines for two and a half years has been an interesting and culturally rewarding time. We have seen a lot of growth in the market. If we can fast forward five years I think the destination will be the primary driver of that continued growth. While gaming will always be an important sector of this market, it’s more about entertainment and gaming as it relates to entertainment as opposed to bringing in that high roller. The high roller is going to be important but...also that local component of entertainment seeker is going to thrive.

I’m expat so will not be here forever? My responsibility is to ensure going forward there are more Filipinos in senior positions and quite honestly more Filipino women in those senior roles, as I am a firm believer that diversity builds strength and character.

VIPs drive revenue growth

Melco Resorts & Entertainment launched its first property outside of Macau in December 2014 with the opening of the $1 billion City of Dreams Manila.

It was the second IR to open in the capital’s Entertainment City zone. The resort complex, located on an approximately 6.2-hectare site at the gateway to EC. features about 380 gaming tables, 1,700 slot machines and 1,700 electronic table games. The resort also has three luxury hotel brands - Nuwa, Nobu Manila and the Grand Hyatt and includes a family entertainment zone developed with DreamWorks.

The DreamPlay center is a first-of-its-kind environment where kids can play and participate in a wide range of creative activities and experiences with the characters of DreamWorks Animation’s world-famous films, including “Kung Fu Panda,” “Shrek,” “Madagascar” and “How to Train Your Dragon.”

Q3,2017 results showed strong growth momentum at the property despite the additional competition from the opening of Okada Manila. Adjusted property EBITDA in the period rose 27 percent.

Net revenue at City of Dreams Manila was $148.2 million compared to US$131.0 million in the third quarter of 2016, driven primarily by the VIP sector. Rolling chip volume almost doubled to $3.0 billion benefiting from a rolling chip win rate of 2.5 percent, compared with 4.0 percent in the third quarter of 2016. The expected rolling chip win rate range is 2.7 percent-3.0 percent.

Mass market table games drop increased to $174.1 million for the third quarter of 2017, compared with US$146.8 million in the third quarter of 2016, while the gaming machine handle was $757.3 million, compared with $597.0 million in the third quarter of 2016.

Total non-gaming revenue at City of Dreams Manila was $29.2 million, compared with $26.3 million in the third quarter of 2016.

Analysts at Morgan Stanley are optimistic about the company’s future growth prospects and maintain an overweight rating on the local stock. The firm sees gross gambling revenue in the Philippines growing by 32 percent this year, up from 27 percent in 2017, outstripping other regional markets.

“We think investors are overly concerned about Okada; the market is underpenetrated in our view, and existing casinos (excluding Okada) were still tracking 17 percent GGR growth in the first 11 months of 2017,” it said in a recent note.

Belle Corp, Melco’s joint venture partner in the Philippines, has indicated that the company may be considering expansion. On the sidelines of a shareholder meeting last year, Vice Chairman Willy Ocier said the resort was operating at full capacity and had begun to look for additional land, though Melco played down the remarks.

Analysts say any such move would likely be a good catalyst for further growth.

Melco itself is lobbying hard for a license in Japan and also has plans to open a City of Dreams Mediterranean on the island of Cyprus by 2021. It will be the company’s first foray outside of Asia and the complex it’s proposing will be the biggest of its kind in Europe.