Integrated Resorts and the Production of Emptiness – Casino Urbanisms

Integrated Resorts and the Production of Emptiness – Casino Urbanisms

Okada Manila is the latest, and largest, Integrated Resort to open in Entertainment City, Manila, after Solaire Casino and Resort and City of Dreams. Its opening was delayed by almost two years. Originally planned to be completed by Mar 2015, it only started casino operations in Dec 2016. Yet, when I visited the property on 16 January 2018, it was, once you move beyond the lobby, still largely a construction site. This brief note collects my thinking about this strange juxtaposition of opulence and debris, something I am trying to frame as the production of emptiness.

Okada Manila has two hotel wings – Pearl and Coral – and only the former was in use while I was there. Pearl Wing primarily services the casino while the Coral Wing houses most of the hotel operations, meeting rooms and ballrooms. I was led by a guide and according to her, the hotel was currently almost fully occupied. As one might expect from casino-resorts, the “wow” factor is concentrated in the porte cochere-hotel lobby-casino entrance, a contiguous space dedicated to impress visitors with opulence and a recognizable brand (in this case, a plum-coloured floral theme). As is common practice as well, there is a separate smaller lobby for VIP guests with exclusive access to the members-only gaming areas. Both the VIP and mass casinos were fully in operation, as were buffet and dining options that surrounded the gaming spaces. However, this mirage started to peel away once we walked deeper into the complex. Other hotel facilities like the gymnasium, spa and pool were available, but these were only temporary as the actual facilities had not yet been built. The Okada massage spa was still only a boarded-up station located next to the Fountain, which was, at the time of my visit, under repair (apparently it broke down after the New Year celebration). Along the retail corridor, there were numerous vacancies (shielded by advertisement boards or booths selling knick-knacks) and shops that had moved in only in name and nothing else. Bored salespersons sat in their barely-renovated shops amidst a dreary display of half-unpacked merchandise. Marks and Spencer looked like a warehouse filled with expired goods.  Next to it, a shop was used to store bags of cement (this was later boarded up in my subsequent visit). A peculiar-looking blue palace sat lonely across the Fountain (according to my guide, they had no plans for it though Jollibee was one potential tenant). The ballrooms and theatres were not yet accessible to public. Everywhere in the half-finished development, workers could be found cutting pieces of marble, sanding tiles and painting walls, a jarring reminder of the innumerable menial tasks necessary to complete the illusion.

I strive to record this experience because it reveals a certain aspect of casino development that is well-known in the industry but not analysed critically – the relationship between core and tandem activities. The half-completeness of Okada is testimony to the segmented and hierarchical nature of the casino complex as a business model. At the center of this business model is the casino as the main revenue generator which is supported by necessary supporting facilities – dining and hotel primarily and usually one large public spectacle to draw in the crowds. These are accordingly the most completed parts of the Okada casino. All other activities are extraneous and could be stripped away without affecting the core business, as indeed, the Okada casino seems to be working quite well without them. The selection of such tandem activities appear formulaic, but generally, the least profitable ones like the ballrooms, theatres and museums (especially) are completed last (if at all).

CORE
Casino (VIP and Mass)
Dining options (from buffet to fine dining to 24hr food court)
Hotel
Hotel Guest facilities
Money changing/Credit/Pawn facilities

 

TANDEM
Entertainment (a major public spectacle and those located in casinos)
Retail
Entertainment (non-casino related, such as clubs, theatre, amusement parks etc)
Meetings, Incentives, Conventions and Events (MICE)
Museums, galleries and other cultural institutions

The relationship between core and tandem does not only reflect the constituent parts of business and their relative importance – it also debunks the myth of the so-called “Integrated Resort”. Though one can dispute when and how the Integrated Resort came about, or argue that the casino-resorts of 1990s Las Vegas were already “Integrated Resorts” (as self-proclaimed by Las Vegas Sands about its own casinos), these “origin stories” miss the point. Today, the label of “Integrated Resorts” is used by governments and industry pundits alike to signify a model of casino development that promises many other benefits beyond gaming revenue itself, such as urban regeneration, cultural revitalization and tourism. While such promises are hardly new in the chequered history of casino development (see, for example, the case of Atlantic City), the current hype is underpinned by the promise of “diversification”. This label was energetically pursued by the Singapore government as a way to justify the legalization of casino gambling after decades of criminalization and moralization, and by the Macau SAR after pressure from the central government to reduce its reliance on gaming revenue. The label has caught on in the industry as can be seen in the number of panels dedicated to understanding the Integrated Resort in the annual gaming conferences as well as Japan’s attempt to emulate Singapore as it moves towards an “Integrated Resort Implementation Bill” in 2020.[1] In the jurisdictions of Singapore and Manila, the objective of diversification has been translated into specific conditions that control the size of the gaming space, either as an absolute figure or as a percentage of the total floor area of the development. In Macau, the casino regulatory authority controls instead the total number of tables and machines per concessionaire. The Singapore government suggested as well that an Integrated Resort should earn only about 50% of its total revenue from casino gaming, referring to Las Vegas where the revenue of casino-resorts generally reflects this proportion.

Such claims come apart once we look at actual performance rather than promises. Based on a 2016 Morgan Stanley report[2], non-gaming revenue for the Integrated Resorts in Entertainment City, Manila, contributes about 8% of the gross revenue. In Macau, it is about 16%. In Singapore, company data shows that about 25% of gross revenue at Marina Bay Sands was derived from non-gaming activities during the first three months of 2014 and 2015.[3]  This low percentage is primarily due to the large untapped gaming market in Asia and half-hearted attempts by developers and regulators to act against their own interest by reducing gaming profits. As such, a dramatic dip in gaming revenue occurred in 2014-5 only because of capital control and anti-corruption measures embarked by the PRC, rather than any specific gaming-related policies. It should be clear therefore that the “Integrated Resort” as a business model is not static, but adapts to the market opportunities in the context of its operation. Casino-resorts in Las Vegas turned to non-gaming businesses in the 1990s in response to intense competition within and between jurisdictions as well as the saturation of the gaming market across the US. In Asia, such conditions do not yet exist, and there are no severe disincentives not to capitalize on “first-mover” advantage to capture as much of the market share as possible before new players arrive. This scramble to penetrate the Asian gaming market is exacerbated by the short leases of casino licenses as well as monopolistic privileges often attached to these licenses.

Integrated Resorts in Asia are thus not “resorts with a casino”, as one industry pundit puts it, but “casinos with a resort”.[4] As a signifier, it has become a way to smuggle casinos into jurisdictions, communities and cities that have historically been leery of large scale commercial gambling. In this migration, a strange phenomenon has occurred – casino developers are bound contractually to build massive developments with shopping arcades, convention halls, museums and theatres that remain underused most of the time. In jurisdictions where casino space is pegged to a percentage of the total floor area of the development, the developer is further incentivized to oversize tandem spaces. The irony therefore is that the attempt to create a diversified development model by limiting gaming space has led to the production of empty space.

The emptiness of Okada is not a temporary situation that will be “rectified” once the development is fully in operation. Solaire Resort and Casino, for example, was the first Integrated Resort to open in Entertainment City, Manila in 2013. Five years into operation, the same distribution of emptiness can be found here. While the casino, hotel and restaurants are full of activity, tandem spaces such as retail, theatre and MICE are just as vacant as Okada’s, the only difference being that the emptiness is compounded by marbled silence rather than construction noise and debris. On the days that I toured the development, I witnessed what must surely be the happiest kid in the world enjoying a large empty playroom all to himself, a rifle range fully equipped with targets and guns but no customers, and an entire storey of empty plush sofas since the next box office show, “Lion King”, was two months away. The retail corridor, tucked to the back of the development, was full of untenanted space which had been boarded up with advertisements or used for art exhibitions.

How can we think about this production of emptiness? What value is emptiness in the urbanization process? And what can this tell us about the spatialities and aesthetics of “casino urbanism”?

I am inclined to locate this emptiness in the same category as the emptiness of luxury residential properties in London held by foreign absentee landlords, or the ghost cities of China where thousands of apartment units sit vacant in anticipation of investors and middle class consumers. So part of the story has to do with speculative urbanism where the financialization of land has become a source of revenue for governments and transnational capitalists. In such spaces, the value of land is future-oriented and divorced from existing conditions of use and inhabitation. Yet, while the emptiness of London’s Knightsbridge and China’s Ordos indexes the rent gap between current and future value, the emptiness of Integrated Resorts indexes the time gap between Las Vegas and Asia. Transplanting a development model that emerged in Las Vegas in the 1990s to Asia today meant that the business strategy changed within a static physical shell. The empty spaces generated has no actual or even potential economic value in and of itself. Rather, its value is as collateral, a necessary effect of the inflated promise that Integrated Resorts bring to all hosting cities in Asia-Pacific.

I am also inclined to explore this emptiness phenomenologically as a kind of “ruin”. Okada was in a state of ruination, but not in the sense of an obsolete building eroded by time. Rather, a ruin in the reverse chronological sense, of a building born prematurely, still hooked up to a mess of cables and equipment like exposed innards. This premature birth is not accidental but a result of several factors. Casino developments are massive in scale and built in compressed time, usually financed by debt through bank loans or the sale of bonds to the public and legally obligated to open for business by a specific date or suffer severe penalties. In some jurisdictions, developers are required to complete part of the non-gaming businesses before the casino can begin operation. These financial and legal conditions push developers to stage the construction of the Integrated Resort so as to prioritize the core spaces while fulfilling minimally the requirements for tandem spaces. In the case of Okada, already fined $2.2M by the Philippines government for delays, this meant a drastic contrast between the opulence of the casino and the debris that is everything else. Yet, it is this jarring juxtaposition that lends itself to a demystification of what “Integrated Resorts” really are.

The following gallery is a record of the production of emptiness in two Integrated Resorts, Okada and Solaire. Each set is opened by a classic image of the casino lobby, the face of luxury and fantasy, as a frontispiece into the emptiness that it conceals.

OKADA MANILA

SOLAIRE RESORT AND CASINO

IMG_1686 IMG_1693

 

 

[1] A panel description in the 2017 G2E gaming exposition reads: “”Future Focus: The Next Generation of IRs The development of the first integrated resorts (IRs) in Las Vegas was a quantum leap for the gaming industry. They allowed casinos to capture different segments of the market and so much additional revenue that it now surpasses gaming earnings on the Strip …”

[2] Morgan Stanley (2017) Philippines Gaming: Repeating the Success of Macau and Las Vegas, pp. 28

[3] Las Vegas Sands, Quarterly Report, 2015.

[4] Cohen M, 16 June 2016, “Reinventing the integrated resort” in Inside Asia Gaming. Accessed 23 Feb 2018.  http://www.asgam.com/in-focus/item/2787-reinventing-the-integrated-resort.html

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Author: Gregory Garcia