Marina Bay Sands suffers same constraints of Resorts World Sentosa

Yes they are competitors, but could it be that Marina Bay Sands is also sharing Resorts World Sentosa’s woes on accommodation constraints and higher credit provisioning?

According to CIMB, like Resorts World Manila, it turns out Marina Bay Sands also worries about accommodation constraints which hamper growth opportunities as well as higher credit provisioning as a reflection of greater caution.

Here’s more from CIMB:

MBS made higher provisions in 4Q11
Recall that Genting Singapore’s provisions for accounts receivables rose to 11% in 3Q (from a historical average of 4-6%), raising concerns over its aggressive direct credit activities. Not unlike Genting Singapore, MBS has also turned more cautious in its provisioning in 4Q by providing for a little over 10% of VIP volumes, vs. an average of 3-7% historically. The higher credit provisioning by both companies could be a reflection of greater caution in light of economic uncertainties.

MBS faces accommodation constraints too
Accommodation constraints have always been identified by Genting Singapore as one of its growth impediments. LVS’s 4Q conference call confirmed this. LVS’s CEO Sheldon Adelson highlighted the problem of high occupancy rates in its Singapore property. As such, LVS is in talks with the Singapore government to acquire more land for the construction of more hotels.

According to him, additional room inventory could help the gaming business. This reinforces our belief that additional accommodation from Genting Singapore’s Equarius Hotel and beach villas should help drive gaming demand.

Not underestimating non-gaming amenities
Another takeaway was the growth potential of the two integrated resorts’ (IR) non-gaming amenities, an aspect not always been given its due attention. MBS’s non-gaming revenue (after promotional allowances) grew 9% qoq, helping to compensate for gaming’s flat revenue.

As such, we are positive on the rollout of Genting Singapore’s more non-gaming amenities such as the Marine Life Park in mid-2011.