Singapore’s casinos are suffering a decline in earnings due to the slump in Chinese visitors, with their European and Northern American replacements not as willing to gamble.
The over saturation of the casino market in the US has produced a kind of arms race amongst operators to provide more and more additional attractions with which to tempt visitors. Casino resorts now come with amusement parks, themed restaurants, museums and huge luxury hotels, from Las Vegas to Atlantic City there is an effort to provide ever more reason than just gambling to visit areas in hope that increased visitors means increased gambling and gambling revenue.
Singapore’s Got That Sinking Feeling
• Visitor numbers from China down 29%
• Overall visitor numbers down 3.3%
• Sensible gambling laws in Singapore
However perhaps Singapore’s recent experiences point to there being a tipping point in even this strategy, and as the growth of casino gambling slows and the number of casinos slowly rises the number of attractions can become not a lure for gamblers but a distraction for them. This doesn’t mean that anyone is going to be visiting Vegas for the ambiance alone anytime soon, but there is a distinct likelihood that a fair percentage will be too busy doing other things to hit the tables.
In Singapore despite paying the highest prices per room in the city state, some $488 a night, the Marina Bay Sands is doing a roaring trade in tourists who want to stay in this iconic landmark with it’s skypark and infinity pool 57 stories above the city’s streets. Unfortunately for the owners far too few of them are making use of their stay to gamble in the casino and this has resulted in some pretty alarming figures, and rather worrying prospects for the short to medium term future.
High-stakes gambling revenue at the casino fell by some 34% year on year from 12 months ago, which can’t be excused by the 3.3% fall in tourist arrivals in Singapore lowering visitor numbers to the city to just over 10 million in the eight months till August. Obviously it is not just the Marina Bay Sands that is suffering as Gentings (the other casino operator in the region) also faces a stiff drop in trade. Shares in both entities fell this year, the former by 24% the latter by a worrying 29%. and this doesn’t appear a trend likely to be countered any time soon.
Chinese Crackdown Causes Calamity?
The major reason behind this fall in trade is not a rise of internet betting in Singapore, nor is it because there is sudden and marked competition from elsewhere, but because of the crackdown on corruption within mainland China. Xi Jinping’s new attempt to scythe away some of the truly criminal practices of local officials and their bosses has led to some high-level arrests, a good deal of praiseworthy headlines and a distinct desire for many Chinese gamblers to keep their heads down and limit the spending of cash they can’t quite account for.
There has also been the publicity surrounding the disappearance of Malaysian airlines flight 370 which disappeared over the pacific after departing from Kuala Lumpur International Airport at about twenty to one in the morning of March 8th. There were 153 Chinese citizens aboard and the continued absence of facts concerning this vanishing aircraft, and unending speculation about it, have said to have had an significantly adverse impact on the numbers of Chinese tourists willing to fly to Singapore.
This has meant that whilst overall visitor numbers are down by just that 3.3%, the slump in visitors from China amounts to a fall of nearly 29% in the eight months till August. This figure, you’ll notice, more closely matches the decline in high-stakes earnings at the Marina Bay Sands, and it’s a figure that is more than likely echoed by a drop off in highroller revenue at Genting’s casino too. Not that either establishment is going out of their way to publicize this decline with spokeswomen for both making no comment for the gambling news.
The third quarter of this year is likely to have seen Genting revenues down by a significant degree, perhaps falling to just $107.7 million from nearly $150 million just the year before and this is a trend likely to continue as across the region the casino business suffers. When even a gambling meccas like Macau can see a slump everywhere else better beware. The weakened market has seen earnings fall for these establishments with the Marina Bay Sands understood to be weathering a drop in those earnings of some 5.9% year on year.
Tourists Come To See Not Gamble
Unfortunately for Singapore betting whilst they’re doing quite well in keeping visitor numbers up overall, the replacement of Chinese tourists with those from Canada, Europe and South Korea, has not replaced the gambling revenues as these tourists arrive with a different agenda not based solely around gambling. Their expectations are different and their habits are too. “We didn’t come here for the casino,” says Raik Wernicke, a German tourist staying at the Marina Bay Sands with his family. “We booked this hotel because of the infinity pool at the Sky deck that offers a magnificent view of the city.”
And although casino floor managers might wince a bit at the sentiment at least Mr. Wernicke managed to get a room, unlike South Korean engineer Jeong Hoon Moon who was told the hotel was full when he arrived. “We wanted to stay in this hotel because it’s a Singapore landmark, but we were told there are no available rooms.” he complained without much rancor, highlighting an odd imbalance between the gambling and the hotel guest list.
Occupancy at the 2,561 room hotel has consistently hit 99.4% in the third quarter which compares very favorably with the groups other gaming hotels such as the 92.6% in Macau and just 91.9% in Las Vegas, and indeed is even more remarkable when you notice the overall occupancy rate for hotels in Singapore doesn’t even top 86.1%. The problem is not that there aren’t visitors, the problem is they’re just not gambling enough once they’re there. Mr. Wernicke and his family were off to the zoo, and perhaps that says it all.
Singapore was listed as Lonely Planet’s number one country destination for 2015 even citing the Marina Bay Sands complex as part of the attraction, but whilst this is likely to boost the numbers of Europeans and North Americans willing to visit this exotic city state, it is doubtful that they will be aiding in the recovery of gambling revenues. Of course Chinese crackdowns on corruption don’t last forever, they have come and gone before, but the longevity and severity of this one is rather taking the sheen off the glittering spires of Far East gambling.