The Crystal Symphony, a luxury cruise liner owned by Crystal Cruises, a subsidiary of Genting Hong Kong, was supposed to arrive in Miami on Saturday, January 22. But at 1 p.m. on Friday, the Captain told the passengers that the ship would instead dock in the Bahamas.
The change of plans was so the Crystal Symphony could avoid seizure by the U.S. Marshals. If the cruise liner had docked in Miami, the authorities would’ve taken the vessel as part of a lawsuit filed by Peninsula Petroleum Far East, claiming the company racked up $4.6 million in unpaid fuel bills since 2017.
On Monday, a second ship, Crystal Serenity, docked in the Bahamas to avoid seizure in the U.S., the Associated Press reports.
The fugitive cruise liners are symptoms of the problems plaguing Genting Hong Kong, which is run by Malaysian billionaire Lim Kok Thay.
In early January, Genting Hong Kong’s German shipyard unit MV Werften filed for bankruptcy after failing to come to an agreement with the German government and its creditors. A week later, Genting Hong Kong filed a petition to wind up the company. Lim promptly resigned as chairman and CEO from Genting Hong Kong.
One of Malaysia’s richest men, Lim Kok Thay, has seen his fortune drop 30% since last year. In April 2021, Lim was worth $2.7 billion, making him Malaysia’s 11th richest person. Today, his net worth is $1.9 billion. His $250 million stake in Genting Hong Kong is now worth zero as it goes through bankruptcy proceedings. The share price in Genting Berhad, which Kim owns a 44% stake in, dropped 15% since June and 8.5% last month alone.
But Lim still presides over the Genting Group, a complex organization his father started in the late 1960s. Genting and its subsidiaries own casinos in Egypt, Malaysia, Singapore, the U.K. and the U.S., as well as palm oil plantations and oil and gas operations.
Despite the troubles at the cruise line, and a battering from the pandemic, Genting’s casino empire is on its way out of rough waters.
Erlin Salim, a Singapore-based analyst who covers Genting’s properties in Malaysia and Singapore for Fitch Ratings, says Genting Singapore, which operates the resort casino Resorts World Sentosa, “managed the downturn quite well.”
Thanks to strong demand from local gamblers and cost cutting measures, Resorts World Sentosa is in a positive net cash position and maintains a positive EBITDA of $290 million through the first nine months of 2021.
Last year, Sentosa generated 55% of pre-pandemic revenue—$592 million in gaming revenue, up 16% from the same time last year—and Salim expects the property to generate 75% of pre-pandemic revenue in 2022.
Jennifer Song, a Morningstar analyst based in Hong Kong, says Sentosa is on its way to a recovery because the Singapore government chose to “live with Covid.” But the recovery will require international gamblers—30% of Sentosa’s gross gaming revenue came from Chinese gamblers and 50% from international visitors.
“We think a full recovery will likely be in 2025,” she says.
Maybank Kim Eng cuts its net profit forecast for Genting Singapore by 72% for 2022 and 54% for 2023. The firm believes the company will post “flattish” earnings for another year and face tough competition from Marina Sands, the only other casino in Singapore, for the premium mass market customer.
Resorts World Genting, which is the group’s flagship location perched on a hill outside of Kuala Lumpur in Malaysia, is still struggling to rebound from the pandemic. It was closed between June and September and its revenue is down 78% during the first nine months of 2021 compared with 2020.
The casino has a steep hill to climb. The next six months will be critical as the government decides whether casino and tourism operations can return to normal and if cross-border travel restrictions will stay in place.
“We think slower-than expected recovery will be the key credit risk for the Genting group,” says Salim. “The group’s rating is on Negative Outlook, which signals pressure for downgrade in the next 6 to 12 months if it is unable to improve EBITDA meaningfully in 2022.”
In the U.S., Genting’s strategy is coming into focus but has yet to hit paydirt. In June, Resorts World Las Vegas became the first casino to open on The Las Vegas Strip in 10 years. The sprawling resort, with 117,000-square-foot casino floor, a 5,000-seat concert venue, two clubs, a 70,000-square foot mall, and 40 restaurants, cost $4.2 billion to build.
According to Genting’s third quarter results, Resorts World Las Vegas brought in $175 million in revenue and nearly $27 million in profits during its first full quarter in operations. Hotel occupancy rate for the same quarter was 55%, beating the city’s average hotel occupancy for the year at 42%, according to a report by the Las Vegas Convention and Visitors Authority.
Colin Mansfield, an analyst from Fitch Ratings, says the Vegas property is impressive, but it has not yet hit its stride.
“With big properties like this, in markets that have a lot of competition, you’re not going to open your doors on day one, and immediately be hitting your full potential,” says Mansfield. “It takes a couple of years.”
The property should hit 30% cash flow margins by 2024, he says.
Brendan Bussmann, partner and director of government affairs with Global Market Advisors, who covers the gaming industry, says Resorts World isn’t benefitting from Sin City’s recovery as much as other properties.
“Right now, you see a property that’s still evolving as things progress,” says Bussmann.
For the time being, “they’re doing all the things” a global casino operator should, including owning two of the most coveted licenses in the industry—Nevada and Singapore. “They’re positioned well for the future,” he says.
The Empire State is the heart of Genting’s U.S. gambling empire. Resorts World Casino New York City, which is at the storied Aqueduct, the thoroughbred horse track in Jamaica, Queens, has historically been one of the best-performing casinos in the U.S. In 2019, the casino, which only has video slots and video table games in addition to horse racing, brought in $626 million.
In 2021, Resorts World Casino New York City brought in $480 million in revenue, or 77% of pre-pandemic levels. In states like Nevada, casino revenue has peaked above pre-pandemic levels.
Two hours north of the city in Monticello stands Resorts World Catskills, which opened in 2018 and cost $1.2 billion. It is “starting to do better” after years of lackluster results, says Mansfield.
Today, things have turned around. Despite the pandemic, it is the best performing full casino in the state, according to revenue reported by the New York State Gaming Commission, and is on pace to match or beat pre-pandemic revenue levels.
New York Governor Kathy Hochul has called for the state to award three additional casino licenses, which can be located statewide, including in New York City. Nick Antenucci, a lawyer and lobbyist at Davidoff Hutcher & Citron who has worked in the state’s gaming industry for years, says Resorts World should have a leg up on the competition.
“The Aqueduct facility is a prime candidate to get one of those three licenses,” says Antenucci. “It should be looked at as one of the front runners simply because it’s already there.”
While Genting’s casino empire is still in recovery mode, Mansfield doubts that it is going anywhere but up.
“They’re here to stay in the global gaming industry,” says Mansfield. “Genting is a well-established and recognized global gaming operator with successful properties across the globe and is a formidable competitor with traditional bigger players like Las Vegas Sands, Wynn, Galaxy.”
At 4 p.m. on a wintery Friday, the crowd is heating up near the video slot machines at Resorts World’s casino in Queens. Early bird gamblers, mostly older folks, some nursing cocktails, and others being pushed in wheelchairs, tap buttons on the video slot machines.
Carlos, a 73-year-old retired janitor, says he’s been coming here since it opened in 2011 but he’s been spending a lot more time here since his wife died. “One time I won $13,000, took home $7,000 after taxes, but we all mostly lose,” says Carlos.
In August 2021, the casino opened a $400 million hotel on the property. When asked how he think Resorts World is doing financially, Carlos nods his head towards the direction of hotel.
“There’s so many people losing that they’ve built a hotel,” says Carlos. “This casino is making so much money.”