Manila Bay entertainment district take shape with the opening of City of Dreams Manila
City of Dreams Manila started small with its soft opening last December, with just the mass gaming floor unveiled along with a handful of food and beverage outlets. But the property’s elevated stage at the casino entrance, three international hotel brands and two famous name nightclubs say the first Macau casino operator in the Philippines aims to make a big splash.
“It’s the only casino here that resembles Vegas or Macau,” Manuel Gana, executive vice president and chief financial officer of property co-owner Belle Corporation said, noting the entertainment factor and accent on flashiness and fun. “Quality-wise, it’s on par with Solaire,” the first casino resort in Manila’s bay front Entertainment City casino district that opened in March 2013 and began rolling out its Phase 1-A expansion in November. City of Dreams Manila, “the gateway to Entertainment City,” as it styles itself, occupies 6.2 hectares at the city end of the burgeoning integrated resort cluster, where two more IRs are expected to open by 2018.
The sneak preview attracted an estimated 13,000 people to the resort with the slogan “Where everything is above all else.” And above all else in the center of the main casino floor sits the high-wattage Center Stage Bar featuring Philippine crooners, European dancers and lighting panels above that change color and can descend to envelop the stage, which also can rise and descend. The rectangular ground-level main gaming floor surrounds Center Stage, and is home to 120 of the facility’s 166 table games with minimums ranging from 300 to 3,000 Philippine pesos and most of the property’s 1,700 gaming machines. (PHP1 = US$0.02).
The roughly 5,000-square-meter gaming floor layout is spacious, the orientation is simple and the signage ample.
The casino’s upper level, featuring a 12-table poker area, links to the developing retail mall, DreamWorks indoor theme park and nightclub impresario Michael Van Cleef Ault’s Pangaea and Chaos, all expected to open before Chinese New Year. Also coming soon, the premium-mass Signature Club, an understatedly luxurious members-only space off the main floor, and VIP gaming areas.
Nobu, Hyatt and Crown Towers hotels with a total of around 900 rooms are all due to open by mid-February. The Nobu restaurant, featuring chef Nobu Matsuhisa’s signature dishes, did a lively business on opening night. The Nobu Hotel in Manila will be the star-studded group’s first in Asia, after Las Vegas and Riyadh. Hyatt began registering guests during Christmas week.
Melco Crown Entertainment operates the new resort, its first project outside Macau, where it owns the original City of Dreams resort, casino hotel Altira, Mocha Club slot parlors and expects to open Studio City Macau next year. Through a Philippine-listed subsidiary, the company jointly owns City of Dreams Manila with property developer Belle Corporation, part of the SM Group controlled by the family of the Philippines’ richest man, Henry Sy.
In 2012, Melco Crown agreed to team with Belle on the casino side of the planned Belle Grand resort. “If we continued with our plan and built Belle Grand, it would have been five-star but not the unique facility we have now,” Gana said. “No one in SM Group ever operated a casino. That’s what Melco Crown brings to the table.”
In October 2013, Philippine regulator PAGCOR revised its formula to determine the number of gaming tables and machines permitted in licensed resorts based on hotel room count and room area, giving credit for lodging quality as well as quantity. The Belle-Melco Crown resort’s allotment jumped from 242 tables and a combined 1,450 slot machines and electronic table games to 374 tables, 1,695 slots and 1,695 e-tables. The change prompted Melco Crown to rebrand the resort as City of Dreams Manila, up the partnership’s combined investment to about $1.3 billion and take over operations.
“Quite simply, City of Dreams brings nearly a decade of Macau gaming know-how to a market that needs more international operators to set up shop in order to raise the profile of Philippines as a gaming destination,” said Grant Govertsen, managing partner for Union Gaming Research Macau. “That said, it isn’t clear that it will have an overnight impact. It’s important to remember that building a VIP business takes time and a lot of elbow grease. Mass market is not a slam dunk either, as other properties—especially Resorts World Manila—have a many year head start on capturing what is a fairly significant pool of local customers.”
“After Resorts World Manila and Solaire, City of Dreams brings a third far superior gaming bricks-and-mortar experience relative to the government-owned and -operated PAGCOR casinos located in the Metro Manila area,” added Dean Macomber, president of Macomber International. “Perhaps less obviously, it brings a short-term burst in generic credibility for the Philippine gaming market in general and, specifically, to the two remaining Manila Bay projects not yet opened. The sustainability of this credibility infusion will be determined by the success of City of Dreams Manila.”
By taking over the project in midstream, Melco Crown had to work with Belle’s basic building structure already in place and perhaps not what Melco Crown would have constructed from scratch. “Being a real estate developer, we don’t think like an integrated resort developer does,” Gana said.
The gold-sheathed structure features a two-story base with six 10-story towers clustered in pairs along its periphery, plus the dome called the Fortune Egg that will house the nightclubs. The roof of the base has hotel swimming pools and will feature dining. Each hotel occupies a pair of towers and has its own lobby at ground level.
“I do like the access,” said Laurence Hawke, deputy chief financial officer for Tiger Resort. “It’s easy to drive up to the casino entrance or the hotel entrances and be a few steps from the casino.” Tiger, controlled by Japanese pachinko tycoon Kazuo Okada, is developing the $2 billion Manila Bay Resorts at Entertainment City, aiming for its own soft opening late this year. Hawke also likes the Center Stage Bar as a focal point for the mass floor: “The Philippine market needs some entertainment,” he said
PAGCOR Vice President for Licensing and Development Francis Hernando said the regulator’s board members making their walk-through inspection found the result “pleasantly surprising” given the challenge. “How they could turn that structure into something that relates to the Melco Crown brand is impressive.”
Hernando said the opening details were left to Melco Crown, but the operator had initiated the process to begin casino operations months ago, eyeing a debut date as early as October. “At that point, rather than PAGCOR getting caught up in business judgments, we agreed we’d work on a permit valid to open by 31st December,” Hernando explained.
“We’re leaving the sequencing to them” regarding VIP operations, hotels openings and other project elements, he added. “We’ll give them slack until Chinese New Year.” Melco Crown has said the property’s grand opening will take place ahead of the holiday falling on Feb. 19 this year.
MASSING IN MANILA
Other Manila operators enthusiastically welcome their new rival to town. “The opening of City of Dreams should expand the market. They’ll be bringing in a whole new set of players,” said Patricia May Siy, group chief of corporate planning for Travellers International Hotel Group. A joint venture of Genting Hong Kong and Philippine billionaire Andrew Tan’s Alliance Global Group, Travellers owns Resorts World Manila near Terminal 3 of Manila’s Ninoy Aquino International Airport, currently undergoing significant expansion, and has broken ground on Bayshore City Resorts World in Entertainment City, expected to open in late 2018. “The Philippines is gaining ground as an alternative to Macau,” she said.
“The more here, then critical mass sets in, the more business for everyone,” Tiger’s Hawke said.
“We’re good complements for each other as we all look to grow Entertainment City,” added Thomas Arasi, president and chief operating officer for Solaire.
“The attractions are very different,” Hernando said of Solaire and City of Dreams Manila, about one kilometer apart along ASEAN Avenue, which public- and private-sector planners hope to develop into Manila’s version of the Vegas Strip. Solaire has a Broadway-style theater but no nightclubs; City of Dreams will have two world-class clubs but no theater. “There seems to be complementation, not duplication,” Hernando observed.
With two resorts plus other attractions in the Manila Bay area, including Mall of Asia, its adjacent 16,000-seat indoor arena and a nearby convention center, it’s time to “weave the elements into a destination,” Hernando said. He expects PAGCOR and Entertainment City licensees to begin work on streetscaping based on a Paul Steelman plan for the district, initiate shuttles and make other improvements through their joint council to oversee Entertainment City.
Other landowners in the area are also likely to begin complementary projects in the 120-hectare area, including hotels, retail and housing. “City of Dreams is accelerating interest to develop,” Hernando said.
With a new toll road from the airport directly to Entertainment City due to begin operating by the end of this year, Hernando said, “Everything is there. We don’t need to wait two more years.”
Caesars in Asia: The Empire Resets
You have to think Caesars Entertainment CEO Gary Loveman spares more than the occasional thought imagining what a different company he’d be running with a destination-scale casino in one or more of East Asia’s key gaming markets.
Of course, these days he’s doing a lot more than daydreaming about it, and as the company looks ahead to breaking ground in South Korea this year on its first Asian IR, it’s clear that no matter how events unfold for the debt-laden giant in U.S. Bankruptcy Court, the region is seen as integral to its future.
After famously declining to bid for a Macau concession in its former life as Harrah’s Entertainment, Loveman & Co. later tried to get in through the back door and burnt $577 million on a golf course on Cotai in hopes a gaming license would be forthcoming.
When the next opportunity came around, this time in Singapore, Harrah’s did pull the trigger but failed to make the cut in the intense competition that ensued for one of the two IRs that eventually went to Las Vegas Sands and Genting Group.
So to be chosen as the first Western operator to develop in South Korea is clearly a coup. Not that it’s been a smooth ride either. Caesars was welcomed initially as an asset to the government’s tourism growth goals, only to be rejected for reasons that were never publicized, although concerns about its industry-leading $25 billion of debt doubtless factored into it. Then at the end of 2013 the company was invited to apply again, and in March of last year won approval to include a foreigners-only casino as part of a megaresort complex on Yeongjong Island.
Yeongjong, which lies about 50 kilometers west of Seoul, comprises the heart of a special economic zone the government has fashioned around Incheon International Airport for the express purpose of cashing in on China’s outbound travel boom. A second resort on a similar scale is also going up there, co-developed by Paradise Group, the leader of the country’s foreigners-only casino market, and Japanese machine gaming giant Sega Sammy.
The Caesars project, a joint venture with Indonesian conglomerate Lippo and Singapore property developer OUE, covers 4.3 hectares encompassing 150,000 square meters of developable floor space.
The partners want to have the first phase open in time for the country’s hosting of the 2018 Winter Olympics and plans call for an initial expenditure of around $800 million—the whole is priced at $2 billion at full build-out—for 500 or more hotel rooms together with entertainment venues, a shopping mall, a stand-alone convention center and a casino with 100 table games and 150 machine games.
The company has even more ambitious plans for the Philippines. It’s a market that U.S.-regulated operators have yet to come around to trusting, and perhaps because of that Caesars spies a lucrative opportunity in an environment where the government is also looking to resort gaming for an economic lift and, as in South Korea, might be open to accommodation for the sake of burnishing its efforts with a globally recognized Western brand.
That hasn’t panned out so far. President Benigno Aquino leaves office in 2016, and the industry regulator, the Philippines Amusement and Gaming Corp. (PAGCOR), which operates as a direct arm of the executive, says it prefers a more prudent stance—or a safer one politically—of waiting to assess the impacts of the four IRs already approved for a special tourism zone on Manila Bay, two of which are up and running, the remaining two slated to open in 2016 and 2018.
Caesars doesn’t want to build there, however. It has selected a site next to Manila’s Ninoy Aquino International Airport and has upped the ante by bringing in experts to advise on a redesign and expansion of the country’s main international gateway in concert with its plans.
Its offer to invest $1 billion or more in the combined projects, together with the promise of 20,000 jobs, has piqued enough interest to gain Loveman and company executives an audience with President Aquino and meetings with PAGCOR officials.
—JAMES RUTHERFORD, INSIDE ASIAN GAMING MAGAZINE