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<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published March 31, 2010
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Show me the money!
Analysts: RWS casino operating below expectations
By ARTHUR SIM
WITH crowds at Resorts World Sentosa (RWS) stabilising, a clearer picture is emerging of how the casino industry here is shaping up. And it does not look particularly sanguine.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Place your bet: Crowd size can be deceiving as 80-90% of a casino's revenue comes from just 25% of the players, says one observer </TD></TR></TBODY></TABLE>Citigroup gaming analysts staked out the RWS casino for three days from March 24-26, conducting 12 surveys in four different time slots - 9am, 1am, 6pm and 12pm.
Based on this, it believes that the casino is performing about 5-10 per cent below Citigroup's original estimates - which were about 20-25 per cent below consensus estimates.
However, Citigroup added: 'To be fair to RWS, we went along with the expectation that our estimates could be cut in half - and this was not the case.'
Still, it found that only 215 gaming tables were operating at peak times and 97 tables at non-peak times.
The casino is understood to have the capacity for up to 700 gaming tables.
While the low number of operational tables gives the casino a 'busy atmosphere', visit numbers, according to Citigroup's survey, are 20,000-25,000 a day. It also noted that many visitors are merely watching - not gambling.
=> Bangala effect?
The table crunch has also resulted in 'painfully' slow playing times, Citigroup said. 'On many occasions, we counted Roulette, Baccarat and Tai Sai taking well over 10 minutes to complete one game or hand. In reality, they should be able to complete one game or hand comfortably within four or five minutes.'
Still, Citigroup was 'pleasantly surprised' that table bets were respectable, with 85 per cent of Baccarat tables' minimum bets at more than $200, which is in line with Macau.
Contribution from slots was also higher than expected.
Indeed, Citigroup expects the casino's performance to peak in the first quarter before it faces competition from the Marina Bay Sands (MBS) casino which opens next month. 'We forecast no cannibalisation at RWS, but understand this is highly unlikely,' it said.
Citigroup pointed out that average revenue at Sands Macau fell 22 per cent in the six months after the Venetian Macau opened in 2007.
It also questioned whether the Singapore market has the capacity to grow to its initial estimated size of US$2.8 billion by 2011, which is below the consensus forecast of US$3.5-4 billion).
Gaming and hospitality consultant Ronald Tan has also checked out the RWS casino. And based on the size of the bets that he saw being placed, he said: 'There is no way they can make money.'
This also takes into account the fact that construction costs for RWS and MBS have come in 25-40 per cent over budget.
Mr Tan made his comments at a Singapore Press Club talk yesterday on the prospects for Singapore's casinos.
Also present was Sean Monaghan, managing director of AG Leisure Partners, who agreed that the return on investment for RWS and MBS will be lower than first expected because of 'cost overruns'.
Mr Monaghan is, however, a little more optimistic, and believes that the opening of MBS could help grow the casino market here. 'MBS will cater to a different market,' he said.
The size of crowds can be deceiving too, as 80-90 per cent of a casino's revenue comes from just 25 per cent of the players, Mr Monaghan said.
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Show me the money!
Analysts: RWS casino operating below expectations
By ARTHUR SIM
WITH crowds at Resorts World Sentosa (RWS) stabilising, a clearer picture is emerging of how the casino industry here is shaping up. And it does not look particularly sanguine.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Place your bet: Crowd size can be deceiving as 80-90% of a casino's revenue comes from just 25% of the players, says one observer </TD></TR></TBODY></TABLE>Citigroup gaming analysts staked out the RWS casino for three days from March 24-26, conducting 12 surveys in four different time slots - 9am, 1am, 6pm and 12pm.Based on this, it believes that the casino is performing about 5-10 per cent below Citigroup's original estimates - which were about 20-25 per cent below consensus estimates.
However, Citigroup added: 'To be fair to RWS, we went along with the expectation that our estimates could be cut in half - and this was not the case.'
Still, it found that only 215 gaming tables were operating at peak times and 97 tables at non-peak times.
The casino is understood to have the capacity for up to 700 gaming tables.
While the low number of operational tables gives the casino a 'busy atmosphere', visit numbers, according to Citigroup's survey, are 20,000-25,000 a day. It also noted that many visitors are merely watching - not gambling.
=> Bangala effect?
The table crunch has also resulted in 'painfully' slow playing times, Citigroup said. 'On many occasions, we counted Roulette, Baccarat and Tai Sai taking well over 10 minutes to complete one game or hand. In reality, they should be able to complete one game or hand comfortably within four or five minutes.'
Still, Citigroup was 'pleasantly surprised' that table bets were respectable, with 85 per cent of Baccarat tables' minimum bets at more than $200, which is in line with Macau.
Contribution from slots was also higher than expected.
Indeed, Citigroup expects the casino's performance to peak in the first quarter before it faces competition from the Marina Bay Sands (MBS) casino which opens next month. 'We forecast no cannibalisation at RWS, but understand this is highly unlikely,' it said.
Citigroup pointed out that average revenue at Sands Macau fell 22 per cent in the six months after the Venetian Macau opened in 2007.
It also questioned whether the Singapore market has the capacity to grow to its initial estimated size of US$2.8 billion by 2011, which is below the consensus forecast of US$3.5-4 billion).
Gaming and hospitality consultant Ronald Tan has also checked out the RWS casino. And based on the size of the bets that he saw being placed, he said: 'There is no way they can make money.'
This also takes into account the fact that construction costs for RWS and MBS have come in 25-40 per cent over budget.
Mr Tan made his comments at a Singapore Press Club talk yesterday on the prospects for Singapore's casinos.
Also present was Sean Monaghan, managing director of AG Leisure Partners, who agreed that the return on investment for RWS and MBS will be lower than first expected because of 'cost overruns'.
Mr Monaghan is, however, a little more optimistic, and believes that the opening of MBS could help grow the casino market here. 'MBS will cater to a different market,' he said.
The size of crowds can be deceiving too, as 80-90 per cent of a casino's revenue comes from just 25 per cent of the players, Mr Monaghan said.
</TD></TR></TBODY></TABLE>
