Singapore IR success not easily transplanted

A PALL has been cast over the casino industry in Asia. In the old adage, when the US sneezes, the world catches a cold. In this case, when China sniffles, the casino market contorts into a coughing fit. Macau, the world's casino capital, has been suffering double-digit declines for the best part of two years with no sign of ebbing. The anti-graft campaign driven by Chinese President Xi Jinping has seen even senior Politburo cadres brought to justice and thousands of convictions of officials, many of whom were known to squander millions in Macau casinos. Since the crackdown began, the spigot of high rollers started to dry up.

In its early years, the heady days of Macau's casino boom piqued the interest of neighbouring Asian countries, with Japan and Thailand speculated to be the next to hop on the bandwagon. Instead, it was Singapore which stole the thunder. In its usual cool and efficient manner, the Singapore Inc machinery walked the talk and remodelled casinos into a more culturally palatable concept of an "integrated resort" (IR). Stressing that an IR is quite different from Macau or Las Vegas casinos, they portrayed spaces for leisure, entertainment and business integrated into a large-scale iconic lifestyle product which would enhance Singapore's repute as a premium "must-visit" destination. In vindication of the government's vision, both IRs here today rank among the world's most profitable casinos. The three hotel towers of Marina Bay Sands and its Skypark are now world famous and synonymous with the Singapore skyline.

But signs that all is not so well have begun to surface. The initial euphoria of the Singapore IRs' success, which had commentators predicting they would outstrip Las Vegas, did not happen. Revenue flattened and tourism arrivals reversed course and declined for the first time last year since the IRs opened in 2010. Also last year, many thought Macau's casino revenues would exceed US$50 billion - but they dipped instead to US$44 billion.