Wednesday, October 9, 2013

Sri Lanka Targets Wealth in Singapore-Style Casino Push

Louise Fernandez has visited Sri

Lanka
about five times in the past decade, drawn by its white

sandy beaches, tea plantations and historic temples. The South

Asian island is about to give her more reasons to return.


Sri Lanka’s parliament is due to approve in coming weeks a

tax amnesty for the island’s first foreign casino venture, a

$350 million investment backed by Australian James Packer’s
Crown Ltd. (CWN) The 400-room waterfront project will join a growing

lineup of luxury Colombo hotels, including a $400 million

beachfront Shangri-La, the Taj group’s upgraded five-star

Samudra Colombo, and a John Keells Holdings Plc. gaming resort.


“I’ve been coming back to Sri Lanka for its beaches and

cultural heritage sites,” Fernandez, a 42-year-old Mumbai

resident, said while shopping with her daughter and husband at

Odel, a department store in a wealthy Colombo enclave

recommended by the Lonely Planet as a place to shop with the

glamorous. “Casinos will be another reason.”


For decades a destination for backpackers, religious

pilgrims and beach lovers, Sri Lanka is building high-end hotels

and casinos to woo wealthier tourists from India and China as it

seeks to emulate the success of Singapore and Macau. The push is

part of a drive to spur an economic revival after the government

ended a 26-year civil war against the separatist Tamil Tigers in

2009, and takes aim at the growing affluence of Asian travelers.


Lawmakers Debate


Sri Lanka’s lawmakers will debate and pass an order to give

a 10-year tax exemption to the Crown venture in the D.R.

Wijewardena Mawatha waterfront area close to the capital’s

financial district, according to the parliament office, which

had earlier said the decision was due today. A gazette on the

project was submitted to the legislature yesterday and a date

for the debate will be set later, said Anil Hewawasam, principal

officer of the parliament’s table office.


Australian billionaire Packer’s gaming resort, which will

also include fine dining restaurants, could almost double Sri

Lanka’s tourism revenue to $1.7 billion a year, according to

Capital Alliance Ltd.


“This is what Sri Lanka tourism needs: mega projects

bringing in a new brand of tourists,” said Sanjeewa Fernando,

an analyst at CT Smith Stockbrokers Pvt. in Colombo. “Tourism

revenues will be driven up and it’ll bring in relatively richer

tourists. Just like with the casinos in Singapore, the Crown

project will bring Sri Lanka tourism to a new phase.”


There is a growing market. Wealth among Asia-Pacific

millionaires may top North America’s as soon as next year,

according to a report published last month by Cap Gemini SA (CAP) and

Royal Bank of Canada. Asians with at least $1 million in

investable assets are set to see their riches climb to $15.9

trillion by 2015, the 2013 Asia-Pacific Wealth Report says.


Beach Front


Hong Kong-based Shangri-La Asia Ltd. is building an

upmarket resort on Colombo’s main “Galle Face” beach front.

Taj Hotels Resorts and Palaces is spending $21 million to

upgrade the Samudra Colombo to be on par with its luxury brand

of hotels, according to Sujit Samant, director of sales in Sri

Lanka.


The government in July offered tax concessions for a more-than $650 million integrated resort by John Keells, Sri Lanka’s

biggest diversified company. Located across the Beira Lake from

the Crown project, it will include a luxury hotel as well a

shopping mall and gaming and entertainment facilities, according

to a government gazette. The tax breaks are also due for

parliamentary approval in the coming weeks.


Sri Lanka (SNGPYOY) was, on account of its problems, off the radar,

and now it is on the radar,” Vikram Madhok, managing director

of luxury travel company Abercrombie Kent India Ltd., said in
New Delhi. The company has entered a joint venture in Sri Lanka.


Risk Averse


Sri Lanka is a latecomer compared with other Asian

destinations, after years of conflict put off risk averse

visitors and hampered infrastructure development.


Macau, which is half the size of Manhattan, earned $38

billion in casino revenue last year, six times more than the Las

Vegas Strip
. The city is the only place in China where casino

gambling is legal and it gets two-thirds of its gaming revenue

from high-rollers.


In Singapore, Las Vegas Sands Corp. (LVS) and Genting Singapore

Plc (GENS)
poured more than $10 billion into the two gaming resorts

that opened in 2010 after the country lifted a casino ban. The

nation’s economic growth surged to a record of almost 15 percent

that year.


Sri Lanka isn’t alone in planning to follow Macau and

Singapore. A Japanese lawmakers group plans to submit a bill

with the aim to legalize casinos.


Falling Behind


The South Asian nation risks falling behind if its tourism

projects are delayed, said Bimanee Meepagala, a Colombo-based

analyst at NDB Aviva Wealth Management Ltd.


“Sri Lanka is facing tough competition in this spectrum,”

she said. “We’ve got to get the product out fast, as our

economy can’t afford delays.”


The government is pushing ahead even as local newspapers

reported criticism for the Crown-backed project from the main

opposition party, which is cited as being against tax breaks for

gaming operations.


Services accounted for about 59 percent of Sri Lanka’s

gross domestic product in the second quarter. The nation’s $59

billion economy is forecast by the government to grow 7.5

percent this year.


Visitor Boost


Elsewhere, Australian consumer confidence slipped in

October, a private report showed today. Industrial production in

the U.K. fell from a month earlier in August. In the U.S.,

President Barack Obama will nominate Federal Reserve Vice

Chairman Janet Yellen to head the central bank, a White House

official said in an e-mailed statement.


Integrated resorts like Singapore’s can help Sri Lanka

attract more tourists, according to Purasisi Jinadasa, an

analyst at Capital Alliance in Colombo. The Crown project could

help the island attract a targeted 2.5 million visitors by 2016,

he said.


A market is close at hand in India, where laws limiting

gambling make Sri Lanka an attractive venue for tourists like

Fernandez.


Tourist arrivals in Sri Lanka, one of Conde Nast

Traveller’s destinations to watch in 2012, rose 17.5 percent to

a record 1 million last year. Arrivals climbed 14 percent to

711,449 in the eight months through August from a year earlier,

according to the tourist board. Visitors from India, Sri Lanka’s

biggest market, increased 29 percent in August from a year

earlier, and those from China jumped 74 percent.


Jetwing Travels, a unit of the island’s biggest resort

operator, started employing Chinese nationals as tourists from

the East Asian nation surged, said manager Tharindu Punchihewa.

Some of these visitors are arriving on private jets, he said.


“We have seen a development in the individual travel

segment, with families that don’t want to join groups, but are

willing to spend more for better hotels and comforts,”

Punchihewa said. “With branded hotels and the casino project,

Sri Lanka can tap the high-end traffic.”


To contact the reporter on this story:

Anusha Ondaatjie in Colombo at

anushao@bloomberg.net


To contact the editor responsible for this story:

Stephanie Phang at

sphang@bloomberg.net



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Beach in Colombo


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Brent Lewin/Bloomberg


People stand on a beach in Colombo. For decades a destination for backpackers, religious pilgrims and beach lovers, Sri Lanka is building high-end hotels and casinos to woo wealthier tourists from India and China as it seeks to emulate the success of Singapore and Macau.


People stand on a beach in Colombo. For decades a destination for backpackers, religious pilgrims and beach lovers, Sri Lanka is building high-end hotels and casinos to woo wealthier tourists from India and China as it seeks to emulate the success of Singapore and Macau. Photographer: Brent Lewin/Bloomberg



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John Keells’ Gaming Resort


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John Keells Holdings Plc via Bloomberg


An architectural model of John Keells Holdings Plc’s gaming resort on Beira

Lake in Colombo, is seen in this undated handout photograph released to the

media on Oct. 9, 2013.


An architectural model of John Keells Holdings Plc’s gaming resort on Beira

Lake in Colombo, is seen in this undated handout photograph released to the

media on Oct. 9, 2013. Source: John Keells Holdings Plc via Bloomberg



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Shangri-La Hotel in Colombo


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Ishara S. Kodikara/AFP/Getty Images


Foreign tourists walk past a billboard advertising the Shangri-La hotel in Colombo. Beyond Colombo, Shangri-La is building a 304-room resort and spa in Hamabantota in Sri Lanka’s south, due to be opened in 2015.


Foreign tourists walk past a billboard advertising the Shangri-La hotel in Colombo. Beyond Colombo, Shangri-La is building a 304-room resort and spa in Hamabantota in Sri Lanka’s south, due to be opened in 2015. Photographer: Ishara S. Kodikara/AFP/Getty Images



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Beach in Colombo


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Lakruwan Wanniarachchi/AFP/Getty Images


Foreign tourists walk along a beach in Colombo. Integrated resorts like Singapore’s can help Sri Lanka attract more tourists and charge higher room rates, according to Purasisi Jinadasa, an analyst at Capital Alliance in Colombo.


Foreign tourists walk along a beach in Colombo. Integrated resorts like Singapore’s can help Sri Lanka attract more tourists and charge higher room rates, according to Purasisi Jinadasa, an analyst at Capital Alliance in Colombo. Photographer: Lakruwan Wanniarachchi/AFP/Getty Images



Sri Lanka Targets Wealth in Singapore-Style Casino Push

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