Genting Group’s Malaysian casino resort might not be as attractive to Asean gamblers as it used to be due to stiff regional competition, according to research house Affin Hwang Capital Research.
In its homeland, Genting operates the Resorts World Genting integrated resort, which is located in a mountainous region less than an hour’s drive from the capital Kuala Lumpur. The property is home to numerous attractions as well as to Malaysia’s only legal casino.
For a very long time, Resorts World Genting had almost zero gambling competition in the region, which guaranteed its popularity among Asean gamblers. However, the widespread casino expansion in the region has resulted in intensifying competition for the luxury resort in the mass market and premium-mass market segments.
According to a note from Affin Hwang Capital Research, new casinos in the Philippines, Vietnam, and Cambodia have emerged as the “biggest competition threat” for Resorts World Genting in both the mass and premium-mass segments. All three countries have seen the development and launch of a number of new gambling properties and are expected to further expand their industries in the coming years.
In addition, Myanmar recently moved to legalize casino gambling in a bid to boost its tourism industry, which leaves Thailand and Brunei the only two countries in the region where casinos are still illegal.
As a result, Resorts World Genting might have lost some of its lure to Asean gamblers, Affin Hwang Capital Research pointed out.
Competitive Complimentary Perks
In its recent note, the research house pointed out that Asean players (premium mass and VIPs) “might also be tempted to try out the new regional casinos offering better complimentary perks and rebates.”
Affin Hwang Capital Research added that the mass market segment is not likely to be that badly impacted as minor tweaks and reductions in the complimentary packages are still acceptable, with those involving higher rolling volume for rooms and meals.
The mass market segment accounted for 50% of the overall gambling volume last year, according to official data.
The research house also dwelt on the fact that Genting Malaysia is now competing with businesses in countries where gambling taxes are lower. Late last year, the Malaysian government approved a proposed increase in gambling tax rates and annual license fees that locally licensed operators are required to pay.
Under the country’s new taxation regime, Genting is required to pay an annual casino license fee of MYR150 million, up from MYR120 million. The company’s casino is also taxed at 35% on gross gambling revenue.
According to Affin Hwang Capital Research, Genting will need to sacrifice a significant margin in order to be able to offer competitive rebates and complimentary perks to its customers.
The research house pointed out that the recent reduction of rebates and complimentary perks implemented by Resorts World Genting was not accepted well by VIP players, as their rebates are based on the percentage of each customer’s overall bet.
Affin Hwang Capital Research noted that while the integrated resort’s non-gambling offering had helped it increase overall visitations for the mass segment, the VIP segment volume had declined significantly after the rebates reduction.
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