Alliance Global looks to expand casinos beyond Manila

ALLIANCE Global Group, the investment company of Philippine billionaire Andrew Tan, is looking to expand its casino resort venture beyond Manila to tap into fast-growing areas outside the national capital. 

“We are actively looking at some of the key tourism hubs all over the Philippines as potential expansion sites,” chief executive officer Kevin Andrew Tan said during the company’s annual general meeting (AGM) on Thursday (Jun 15). He is the son of founder Andrew Tan.

The group is betting that the tourism sector will rebound along with a pick-up in global travel; the country may also benefit from China’s crackdown on Macau, which has left a cloud hanging over Asia’s pre-eminent gambling hub. The Philippines’ gaming sector is also undergoing a broader overhaul, with the government considering the sale of state-owned casinos. 

Travellers International Hotel, Alliance’s gaming venture, returned to profitability in 2022 with a net income of 1.1 billion Philippine pesos (S$26.4 million) as gross-gaming revenue hit a record and non-gaming earnings continued to recover.

Alliance Global has earmarked about four billion pesos of this year’s 70-billion-peso planned capital expenditure for ongoing expansion of Travellers’ Newport World Resorts casino complex. Alliance Global last month bought out Genting Group, its casino venture partner. 

To sustain the strong growth trajectory, Travellers wants to increase the share of premium mass-market gamblers to half of gross-gaming revenue, Kevin Andrew Tan said. It will also expand VIP junket operations, which in 2022 posted revenue more than double that of pre-pandemic levels.

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Shares of Alliance Global fell 1.5 per cent in Manila trading, set for a sixth straight daily loss in the longest run of declines since September. 

Other highlights from Alliance Global’s AGM:

• Megaworld, the group’s property arm and biggest contributor to net income, is reducing its foreign exchange exposure to minimise the impact of currency volatility.
• Higher interest rates are having little impact on profitability, as only 20 per cent of the group’s borrowings have floating interest rates.
• While work-from-home arrangements cover about 30 per cent of the workforce of the business process management and outsourcing office tenants of Megaworld, there has been increasing demand for office space coming from the information technology and business process outsourcing sectors.
• Megaworld’s office occupancy rate is at 90 per cent.
• Emperador, the group’s distillery venture, will spend six billion pesos of its seven billion peso capital expenditure this year to expand its whisky facility and infrastructure in Scotland, and will pursue other growth opportunities.
• Alliance Global’s restaurant venture, through which it holds the Philippine franchise of McDonald’s, will resume aggressive expansion this year. Most of its new stores will be in faster-growing areas outside Metro Manila. BLOOMBERG