SINGAPORE - The Malaysian ringgit's fall to 17-year lows against the Singapore dollar will limit the city state's mass-market gaming revenues even after the opening of Genting Singapore's new hotel close to Malaysia's border, analysts said.
Like its rival Las Vegas Sands' Marina Bay Sands, Genting is trying to improve its appeal to mass-market players as it battles a slowdown in its high-roller business amid weakness in the Chinese economy.
But whereas the Chinese are the major players in Singapore's VIP gaming business, Malaysians and Indonesians are its top mass-market foreign gamblers, and this sector is being hit by the regional currency fluctuations.
The Malaysian ringgit and the Indonesian rupiah both slumped to their lowest points versus the Singapore dollar since 1998 in January and December respectively, eroding how much gamblers from those countries can wager.
"These two countries are significant contributors to Singapore's mass-market volumes," Macquarie analyst Somesh Kumar Agarwal said.
"The weakening of those two currencies further negatively impacts the tourist arrivals and hence the revenue potential from the mass-market in our view."
Agarwal expects Singapore's mass-market volumes to grow 5 per cent this year compared with 6 per cent in 2014. Volumes typically refer to the bet amounts placed.
Singapore's casinos derive roughly half their annual gaming revenues - amounting to about US$6 billion (S$8 billion) in 2013 - from mass-market visitors, who gamble a few hundred dollars in a sitting rather than thousands of dollars a hand like VIP guests.
Genting's 550-room Hotel Jurong will open from next month, offering a free shuttle service to the company's integrated casino resort, Resorts World Sentosa (RWS), about 25 minutes away.
The hotel would "form an important part of the business strategy to drive greater visitation to Resorts World Sentosa," RWS said in an email to Reuters. RWS did not comment on the impact of regional currency movements.
Indonesia, Malaysia and China are the top markets for Singapore tourism, and the city-state recorded a fall in visitor arrivals from all three countries in 2014, when annual tourism fell for the first time since 2009.
The Singapore Tourism Board has highlighted currency fluctuations as one of its challenges this year. "Middle-class tourists are always looking at what their purchasing power is in the country they are visiting," said Jonathan Galaviz, a partner at consultancy Global Market Advisors.
"If the value of their currency is going down fast comparatively to where they want to visit, they will opt for cheaper destinations or even simply just stay home."