IR vs IR - It's A competitive World!

By Donn Richard
August 2008
Singapore

How does one handle competition in that most competitive of businesses, the resort/casino business? Consider Las Vegas. From the 1960’s hipster style (Frank Sinatra, the Rat Pack, etc.) to today’s ultra-modern mix of circuses, theme parks and yes, casinos. During each decade there was intense competition between the casinos, each vying for the top spot through more and more famous celebrity entertainers, spectacular shows, free drinks, et all. Also, as previously mentioned, there has been competition over time. The 60’s punter would not recognize today’s mini canals of Venice and various family-friendly attractions. The lesson? Adapt or fall. There is always someone ready to move into your place.

Speaking of which, the Ministry Trade and Industry is considering the possibility of developing the Southern Islands into a world-class holiday resort that would include Singapore’s 3^rd casino. That said, the government has introduced a 10-year moratorium on casino licenses. Good news for the two IRs, a guarantee of no competition from a third casino until 2020!

As of yet there is no confirmation from the government that there will even be a third resort/casino. The topic has been discussed in light discussions. And if one is built, the likelihood is that its target market will be for the jet set crowd who need purposely built marinas for their yachts. This is not to mention the assorted other luxuries beyond the means of the everyday Joe or Jane.

If the 3^rd license is granted and a third IR is permitted, it will most likely be on a much smaller scale than the currently under-construction IRs, RWS and MBS. The buildings will all be low rise and probably built on reclaimed land. The islands that have been named as possible IRs and casino grounds are Kias, Lazarus and Renget.

Will this type of resort succeed in bringing in the dollars when there is such an ample choice of attractions nearby? Thailand and Malaysia already have a loyal following and international reputations. There is also the unattractive matter of the proximity of the horribly polluted international shipping lanes. This remains to be seen.

Singapore's position as a business-oriented and family-friendly destination is known globally and rightfully so. But how will its Integrated Resorts fare against other regions of Asia, particularly Macau? The spearheaded industry in Macau is gaming and it is growing and modernizing using some of the best talent in the business. Very different from Singapore where the two IRs with their casinos will only serve as one part of a tourism industry that consists of many other amenities and facilities.

And what about competition between the IRs? Can they complement one another? Well, in most ways they can. They both offer exciting entertainment options for the young and old. They both offer great shopping and dining. In contrast, if you want to host over 40,000 plus delegates simultaneously indoors, it is MBS you turn to as RWS will have significantly less space for indoor conference events. However, for theme parks and more child friendly activities, RWS wins hands up. Fun activities are very different at the IRs, each very unique in their ways.

As mentioned above (re: Las Vegas), both IRs need to make reinvestments after the first few years of operation to stay unique and competitive and differentiate themselves not only against each other but also against other IRs based in other tourism hot spots. This is especially true when there are strong possibilities that we will see a Disney Land in Malaysia or Thailand in the future.

The good news is for IR RWS, however, is that Universal Studios Singapore has exclusivity rights for the whole of the Southeast Asian region. This means we won’t see another Universal Studios in this region anytime soon. And this brings up our final point. The IRs need to capably manage visitor volume not just in their casinos but in all segments of their businesses.