(Adds background, analysts quotes, Moody’s)
By Sebastian Tong
SINGAPORE, Dec 8 (Reuters) - Malaysian gambling and leisure group Genting Bhd. (GENT.KL) has won the bid to build and run a $3.1 billion casino in Singapore, a resort for families that will feature a Universal Studios theme park and water attractions.
Genting’s proposal for the resort island of Sentosa, linked to the city-state via a causeway, trumped two other bigger bids from privately held Eighth Wonder and Bahamas-based Kerzner International.
“The proposal reflects our vision for the Sentosa Integrated Resort — a large-scale family resort that boasts world-class family leisure attractions,” Singapore Deputy Prime Minister S. Jayakumar told a press briefing on Sentosa.
The casino, set to open by early 2010 with six hotels and 1,830 rooms, is the second of two planned casino resorts that Singapore hopes will almost double tourist arrivals to 17 million people and triple tourism receipts to S$30 billion by 2015, giving its trade-dependent economy a new source of growth.
In May, U.S. gaming giant Las Vegas Sands (LVS.N) won the bid for Singapore’s first casino along its downtown waterfront — a project that is expected to cost more than $3.2 billion and open by 2010.
“We believe these two IRs (integrated resorts) will bring us closer to the 2015 tourism target,” Singapore Minister of Trade and Industry Lim Hng Kiang said.
He said the 49-hectare Sentosa complex would add 0.8 percentage points to the country’s gross domestic product and create 30,000 new jobs by 2015.
While the Sands project will have facilities to attract business visitors and major conventions, the Genting resort — at more than twice the size — will boast a range of family-oriented leisure facilities including an 8-hectare marine park where visitors can snorkel among 200 different species of aquatic animals including whale sharks.
Genting has also teamed up with theme park giant Universal Studios to build 22 major attractions that include movie-based roller-coaster rides at a cost of $1 billion, making it bigger than Universal Studios’ theme park in Hollywood.
Genting, which bid through affiliates Genting International GNTG.SI and cruise operator Star Cruises Ltd SARC.SI (0678.HK) — the third largest cruise operator in the world — had been seen as frontrunner for the Sentosa casino due to its long presence in Asia.
In a bid to turn itself into a global gaming giant, Genting is already in the process of acquiring British casino operator Stanley Leisure SLY.L, which operates 45 casinos across Britain. Its unit Resorts World Bhd RWBW.KL runs a casino resort in Malaysia’s hill-town of Genting.
Genting said it had an agreement with Universal that prevents the entertainment giant from building another theme park anywhere in Southeast Asia for 30 years.
“We are confident that by 2010, Resorts World at Sentosa will attract 15 million visitors,” International Chairman Lim Kok Thay said in a statement about the project.
Singapore said bilateral relations with Malaysia were not a factor in its decision. The countries have deep economic ties but diplomatic relations are often testy, with the two bickering over everything from water issues to the new design of a bridge between the two countries.
“Having a company with a proven track record makes it a more straight forward case for the Singapore government,” said Song Seng Wun, an economist at CIMB-GK Research, adding that the decision would likely help improve ties.
And Moody’s affirmed Genting’s debt ratings and a ‘stable’ outlook after the deal. Lead analyst Kaven Tsang said, “Moody’s believes that the increased risk profile is manageable in view of Genting’s track record...”
Analysts say the two projects will help Singapore shake off its staid image and capture part of Macau’s success as a gambling centre for Asia’s increasingly wealthy and mobile middle class.
According to Las Vegas-based consultancy Globalysis, casino revenues in Asia will hit US$13 billion this year, driven by explosive growth from the tiny Chinese city of Macau — which already rakes in more gambling revenues than the Las Vegas Strip.
“The Singapore economy will be the big winner,” said Citigroup analyst Chua Hak Bin, who said the projects could boost Singapore’s economy by as much as 0.3-0.5 percentage points in 2010.
Singapore’s decision to scrap a ban on casinos last year has helped fuel interest among some other Asian countries to liberalise their own gaming rules.
Japanese lawmakers are in discussions to legalise casino gambling while South Korean officials are considering liberalising their rules to encourage foreign investment. (Additional reporting by Mia Shanley and Goh Guiqing)