The Okada Manila presents healthy competition

Despite local industry’s fears, the Okada Manila hasn’t cannibalised other local IR’s gaming revenues so far.

Philippines.- The Okada Manila seems to be fitting in just right in the Philippine capital city, according to Morgan Stanley. A note by the financial services firm revealed that the venue hasn’t cannibalised the gaming revenues of neighbouring integrated resorts (IRs), with a rise on gross gaming revenue (GGR) of 20, 28 and 13 percent quarter on quarter in 17Q2.

As reported by AGBrief, Morgan Stanley analysts aren’t concerned about [a so far non existing] cannibalisation and commented: “Strong tourist arrivals and NAIA Expressway have brought in more Chinese and Filipino mass customers from cities outside of Manila respectively.”

Whilst the Okada Manila hasn’t affected IRs performance, its operations have been limited as 20 to 30 percent of its mass tables, which are all running, have been affected by day-to-day construction on the floor, AGB quoted the financial firm. Furthermore, junket operations aren’t operating at full capacity, as they started in the third quarter and will continue to expand during the next few months.

Morgan Stanley also noted that, whilst IRs’ GGR rose, their operating costs also did, going up 13 percent quarter-on-quarter in the second period of 2017.

“This was driven mainly by two factors, 1) higher advertising expenses, and 2) higher rebates/one-off bonus and incentives to junkets (happens in 2Q every year). Thus, strong GGR growth may not fully translate into similar EBITDA growth or margin expansion,” firm analysts said.

The slow ramp of Okada will allow IRs’ EBITDA to grow sequentially during 2017 and 2018, said the brokerage.