Published in: Latest Intelligence
Genting Group has been spending billions of dollars to develop new casino resorts in places ranging from Manila to the Bahamas. The one market that has been so far left behind is, arguably, its home country of Malaysia. That is set to change as Lim Kok Thay, chairman, has announced that Genting will invest around $1 billion to upgrade the group’s original stronghold at Resorts World Genting Highlands.
“We’ve been investing substantial amounts overseas and it’s now a good time to invest here, back home,” he said. “We’ve received some feedback on how people would like things to be improved and we will do our best.”
Though Genting’s gaming empire extends to the U.K. and U.S., Malaysia, primarily Genting Highlands still accounted for 36.5 percent of the group’s M$15 billion ($4.7 billion) in leisure and hospitality revenue last year and 41.1 percent of the segment’s M$6.3 billion in pretax profits.
Lim wouldn’t share much about what improvements he had in mind beyond more rooms and gaming tables, indicating that the Genting board had yet to approve the plan. But he did say the goal would be to double annual revenue, which rose just 1 percent last year to M$5.41 billion ($1.69 billion). The casino has more than 425 tables now. (The company declined to provide current table and slot counts and estimates of its machine count vary widely.)
“We do not want to overdevelop [the place] but we still have quite a bit of land,” he said, suggesting details could come in six months. “There will be more for the family, more shopping.”
Genting enjoys a monopoly as the sole licensed casino operator in Malaysia with Genting Highlands, which is perched on a mountaintop about an hour’s drive outside Kuala Lumpur and opened in 1971. The casino however is barred from admitting Malays, the majority ethnic group in the country, in deference to Islamic prohibitions against gambling.
Other Malaysian gamblers face a rising array of brand new, high-quality gambling options, led by Genting’s own Resorts World Sentosa and Las Vegas Sands Corp.’s Marina Bay Sands, both in neighboring Singapore. Annual visitor growth to Genting Highlands has slowed to the “low single digits”, according to RHB Research.
Resorts World Sentosa, which opened in 2010, includes the first Universal Studios theme park in southeast Asia as well as luxury hotel, restaurant and retail brands such as Louis Vuitton, Bottega Veneta and Michelin-starred Guy Savoy.
Genting Highlands’ theme park and shops are more run-of-the-mill. The complex’s hotels include some 10,000 rooms, including First World, said to have the most in Asia with 6,118, but they operate at near full capacity, with a 95 percent occupancy rate, indicating that the resort could absorb more. HwangDBS, which said “major capex for Resorts World Genting is long overdue as tired properties face rising competition”, anticipates that First World will get another 700 rooms by 2015, even though most visitors are day-trippers.
Genting Highlands can suffer in comparison to some of its regional counterparts in terms of atmosphere. Malaysian JS Chu said he found Macau casinos offer a “classier” ambience and better entertainment in the gaming halls. “More inviting, cleaner and definitely classier,” he said, adding that service in Cambodia also outshined what he has experienced in the Highlands.
On a recent visit, the car parks were dank, dark and dirty and some stairwells and other public areas were smelly and moldy.
“There is a constant need to revitalize one’s offering,” said CIMB Research after news emerged of the Genting Highlands upgrade plan. RHB Research said: “We believe a US$1b facelift would boost visitation to the resort and as well as spark gambler’s interest. These will help to propel earnings growth in the long run.”