Supplier News

Malaysia – Genting to invest RM3bn in mountain top makeover

By Phil - 14 June 2013

Malaysian operator Genting is investing RM3bn (US$958m) in renovating its mountain top Genting Highlands casino resort as the group looks to bring it in line with the standards set at the group’s newer operations in Singapore and The Philippines.

The aim is to double the profit at the 42-year-old venue. Genting Malaysia announced a profit of RM1.4bn for 2012, representing a decline of 1.8 per cent from 2011 when profit came in at RM1.43bn. Revenues for last year showed 7.1 per cent year-on-year decline to RM7.89bn.

Chairman Tan Sri Lim Kok Thay told local media: “The RM3bn is just a ballpark figure. Plans are still being finalised but we want to share our thoughts with shareholders. The idea is to double our profit. Plans are still being finalised and the board still needs to approve the plans. We’ve been investing substantial amounts overseas and it is now a good time to also invest here back home. We’ve received some feedback on how other people would like things to be improved and we will do our best. We will make an announcement once everything is finalised.”

Analysts welcomed the investment with CIMB Research analyst Lucius Chong commenting: “It’s a lot of money but it’s not entirely unexpected and it is long overdue. This is definitely a catalyst. In the gaming industry there is a constant need to revitalise one’s offering and they are running at about 96 per cent occupancy on 10,000 rooms so their growth was capped.”

The first quarter of this year saw Genting Malaysia record a total revenue of RM1,862m in 1Q13 compared to RM1,903.8m in the preceding year.

In Malaysia, the group reported RM1,343.9m in revenue, a three per cent increase from a year earlier primarily contributed by higher volume of business and hold percentage in the premium players business.

Genting hopes that the redevelopment work will help it tap into the expanding regional gaming market and continue to grow the international premium players business. “The Group will also develop strategies to build on the domestic and overseas premium mass market to improve the Group’s performance,” it stated. “Along with these strategies, ongoing properties and facilities upgrades will enable the Group to meet the demands of its discerning customers.”

The group stated: “The global economy continues to register growth amidst the challenging economic environment. The year 2013 started positively, notwithstanding fiscal and economic concerns still remaining in Europe and US. Asian economies have registered growth and remained resilient. Similarly, the leisure and hospitality industry outlook is expected to grow though competitive pressures in the regional gaming sector continue to intensify. The group is cautiously optimistic on the overall outlook of the leisure and hospitality industry.”

Revenue from the United Kingdom operations meanwhile slumped by a further 23 per cent on last year’s first quarter figures, down to RM263.5 due to lower hold percentage and volume of business in its London operations.

It explained: “In the UK, the economic recovery is still tentative in light of the government’s austerity measures and the wider Eurozone issues. Notwithstanding, the Group is heartened with the increasing awareness of the Genting brand, and has broken ground with its development of Resorts World Birmingham. The Group will also continue its London and provincial casinos refurbishment programme and build on its premium players business.”

It was boosted though by the continued success of its Resorts World New York City where revenue increased by four per cent to RM226.2m.

“The group is pleased with its growing brand presence in the US gaming industry.

RWNYC’s performance improved notably, whilst marketing and loyalty card membership programmes had been rolled out to enhance visitations to the resort. In its third year of

operations, the resort is now firmly established at the forefront of the New York state gaming  industry. The group continues to remain positive with its US expansion plan, which will gather momentum with the opening of Resorts World Bimini, Bahamas in 3Q 2013.”