Airlines, gamers up on ban lift

Shares of Singapore Airlines Ltd, Asia’s most profitable carrier, and Raffles Holdings Ltd, owner of the city’s oldest hotel, made gains after the government lifted a four-decade ban on casinos to bolster tourism.

The government will allow two casinos, in downtown Singapore and on the island of Sentosa, Prime Minister Lee Hsien Loong said on Monday.

The removal of the ban paves the way for companies including Las Vegas Sands Corp and MGM Mirage to compete for the right to build entertainment complexes in the city.

Singapore Airlines shares gained as much as 1.8 per cent to S$11.30 at 11:25 am local time yesterday. Raffles Holdings rose as much as 2.1 per cent to 71.5 Singapore cents.

Singapore’s plan to build two so-called integrated resorts, which may include hotels, entertainment centers, convention space and theme parks, may help lure tourists to the island, where the economy is forecast to expand this year at half the 8.4 per cent pace of 2004.

Tourism accounts for about 5.5 per cent of Singapore’s gross domestic product.

“The integrated resort, assuming it’s unique and well-executed, will likely be a tourist attraction and therefore improve our traffic,” Singapore Airlines spokesman Stephen Forshaw said.

About 8.3 million visitors spent S$9.6 billion (US$5.8 billion) in Singapore last year, according to the government. The city wants to triple tourism revenue to S$30 billion by 2015.

‘Losing attractiveness’

“We’re losing attractiveness as a tourist destination,” Lee said in his speech to parliament. “Our market share is declining. Tourists are spending less time in Singapore.”

Singapore’s share of tourism in the Asia Pacific region dropped to 6 per cent in 2002 from 8 per cent in 1998, Lee said. Tourists now spend an average of three days in Singapore, compared with four days in 1991. That compares with four days in Hong Kong, five days in London and almost a week in New York city.

The casinos “should offset any reduction in travel from Singapore to destinations overseas by people who are travelling purely as casino clients,” Forshaw said.

The region’s discount airlines, including Valuair Ltd, Thai AirAsia Co and Tiger Airways Pte, have signaled their support for Singapore’s casino plan.

“Whatever the nationality of the potential gamblers, this will certainly boost traffic for us,” said Tassapon Bijleveld, chief executive of Thai AirAsia Co. Thai AirAsia is a venture between Asia’s biggest low-cost carrier AirAsia Bhd and Thailand’s Shin Corp.

Valuair, the first low-cost airline to start operations in Singapore in May last year, said the integrated resorts will enhance Singapore’s appeal.

“We feel low-cost airlines such as ourselves will benefit greatly from this decision and we look forward to being able to bring in more tourists from the region,” Valuair spokesman Nilesh Pritam said.

Discount airlines accounted for 7 per cent of passenger traffic at Singapore’s Changi Airport last year. The airport, Asia’s sixth busiest, handled a record 30.4 million passengers in 2004. Less than a third of passengers passing through the airport enter the country, with most flying on to other destinations.

Changi Airport is trying to increase traffic by cutting airport fees, introducing more companies to handle ground services, adding a third terminal, and luring budget carriers by building a dedicated, lower-cost facility.

Starwood hotels

Hotel operators including Starwood Hotels & Resorts Worldwide Inc, the world’s largest, expect Singapore’s casinos to augment demand for rooms and lead to an increase in rates.

“The yield of each hotel room here has not been on par with other gateway cities like Hong Kong and Tokyo,” Miguel Ko, president of Starwood Asia Pacific, said yesterday. “We think we will see rates improve double-digit.”

Singapore property stocks including CapitaLand Ltd and Keppel Land Ltd also gained on optimism the plan to build two casinos will encourage development and raise property prices.

CapitaLand, Singapore’s biggest developer by assets, rose 3 cents, or 1.2 per cent, to S$2.48 as of 11:19 am. Keppel Land, the third largest, added 1 cent, or 0.4 per cent, to S$2.41.

CapitaLand and Keppel Land are counting on the casinos to increase earnings in a city where property prices have gained just 1.9 per cent in the past year. The resorts, which will be completed by 2009, may cost S$5 billion to develop, Lim Hng Kiang, minister for trade and industry, said yesterday.

Proposals made

Harrah’s Entertainment Inc, Wynn Resorts Ltd and Melbourne-based Tabcorp Holdings Ltd are among companies that have submitted 19 proposals. The government will seek detailed plans from developers, Lee said on Monday.

Other bidders include Hong Kong-based Melco International Development Ltd, controlled by Macau casino tycoon Stanley Ho, and Malaysia’s Genting Bhd, which is teaming with its Star Cruises Ltd unit and the theme-park unit of Universal Studios.

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