PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR) BACOLOD CITY BRANCH

SWOT ANALYSIS By: Rex M. Nicoyco Sr.

INTRODUCTION

The Philippine Amusement and Gaming Corporation (PAGCOR) is a government owned and

controlled corporation created thru Presidential Decree 1067A in 1977. Its primary

purpose is to generate funds for the government. In 1983, Presidential Decree 1869

(PAGCOR Charter) was issued to consolidate all laws with regards to PAGCOR. In June

2007, Republic Act 9487 was issued for the continuation of its operation for 25 years.

The Bacolod City branch of PAGCOR has provided the local populace and tourists with

entertainment and gaming experience for thirty years. The branch enjoys the support and

patronage of the people because it also supports the local government unit with a monthly

share of its income. We have had our banner years when we had surpassed every annual

targeted income.

These past three years however, I have noted that customer attendance, specifically the

number of customers playing in gaming tables have decreased by an average of 43,000 per

year when compared with the average for the last ten years. This translated to an average

decrease of $837,000.00 per year of income in the last three years. In this regard, this

analysis is undertaken.

The following section, the Description Section will tackle the corporation’s strength as well

as the weaknesses which might have caused this decline in customer attendance and

consequently its effect on the table games income. The opportunities which might offer the

solutions to this problem will also be tackled in this section as well as the threat that is

posed by the private casinos in Manila. The Discussion Section will tackle in detail the

possible solutions to the above mentioned problem. This will be followed by the

Conclusions Section and the Recommendations Section.

DESCRIPTION

PAGCOR BACOLOD CITY BRANCH SWOT MATRIX

PAGCOR is a government owned and controlled corporation mandated by law (Presidential

Decree 1869) to operate and regulate casino gaming in the Philippines. This being so, the

Bacolod City branch or any other branch for that matter can open new branches without

STRENGTHS

1. PAGCOR Bacolod City Branch has no competition in the city.

2.It does not need to secure permits from other government agency to open new branches.

3.Collaboration with the tourism industry players is mandated by law.

4.It is very familiar with the local gaming culture.

WEAKNESSES

1.The Marketing Department of the branch is ineffective.

2.Procurement of supplies and services is done thru a very tedious and time consuming process to satisfy the law.

3.Inferior facilities when compared with the private casinos in Manila.

OPPORTUNITIES

1.Local and foreign tourists flock to the city every first to third week of October for the "Masskara Festiva".

2.A Korean Golf Tour group regularly comes to the city twice a month.

3.The popularity of social media as means of communication.

THREAT

1.Private casinos in Manila conducted marketing sorties in the city.

securing any permits or licenses from other government agency. The only factor that

matters is profitability.

One of the mandated tasks of PAGCOR is to promote Philippine Tourism as such

collaboration with the tourism industry players can easily be undertaken.

PAGCOR Bacolod City branch is the sole casino operator in the city for thirty years. Thus, it

is now very familiar with the local gaming culture. The direct competitors are private

casinos in Manila, 700 kilometers away.

Thru personalized service and interaction with its customers, PAGCOR personnel have

been dubbed as “Asia’s Friendliest”

ANNUAL TABLE WIN/LOSS AND OCCUPANCY

YEAR WIN/LOSS OCCUPANCY

2006 $3.51M 333,678

2007 $5.01M 311,884

2008 $5.78M 315,704

2009 $5.18M 302,417

2010 $5.15M 323,839

2011 $6.93M 302,032

2012 $7.40M 290,777

2013 $4.66M 273,692

2014 $4.15M 233,088

2015 $4.3M 241,960

AVERAGE $5.207M 292,907

In the last three years, as shown in the table above, the figures in our customer attendance,

specifically the number of customers playing in our gaming tables decreased by 19,215 in

2013; 59,819 in 2014, and 50,947 in 2015 when compared with the average for the last ten

years. This translated to a decrease in income of $547,000.00 in 2013; $1.057M in 2014,

and $907,000 in 2015 when compared with the average income for the last ten years.

This decline in attendance and consequently in our income can be attributed to the

following factors:

Firstly, many of our VIP’s and high limit regular customers have died or are too old or

sickly to play in our casino.

Secondly, the old entertainment district at the south edge of the city has been renovated

and was revitalized by opening attractions such as bars and restaurants in 2013. This move

has eaten a portion of our market.

Lastly, not having any direct competitors for thirty years have rendered our branch’s

Marketing Department ineffective. They were not able to develop new markets and were

not able to attract new customers.

This decline in our customer attendance might be arrested by the opportunities that are

unique in our city.

Firstly, there is this yearly festival in the city- the “Masskara Festival” every first to third

week of October, where tourists flock to the city.

Secondly, there is a twice a month Korean golf junket where Korean golfers come to the city

to play golf for a week.

Thirdly, Bacolod City and the province of Negros Occidental host national conventions for

many groups all year round.

Lastly, new developments in communications, specifically the social media, such as

Facebook, Twitter, and Instagram can be used to promote upcoming events in the casino

such as entertainment shows and gaming tournaments.

Since their opening last 2013, private casinos in Manila, have conducted marketing sorties

twice in the city to entice our branch’s VIP’s and high limit players.

Despite this threat from private casinos in Manila, I would like to focus on the problem of

declining customer attendance attributed to the newly revitalized entertainment district at

the south edge of the city and to the lacklustre efforts of our Marketing Department.

DISCUSSION

1. The Entertainment District

The entertainment district at the south edge of the city enjoys a boom due to the relocation

there of many establishments such as girly bars, karaoke bars, discos and restaurants. Since

many of our regular customers are also habitués of these establishments, I believe opening

a satellite casino branch with four tables in that district is one of the logical solutions to our

declining customer attendance.

Here are the particulars for 4 Baccarat Tables:

Average annual income per Baccarat table operating on 2 shifts

(Based on actual average annual income for the last ten years : $202,000.00

Projected Annual Income for 4 Baccarat tables : $804,000.00

Manpower requirement for 2 shifts with provision for day-off: 14 dealers and 3 pit officers

Annual Fixed Costs:

Manpower:

Dealers: 14x$15,000.00 : $210,000.00

Pit Officers: 3x$20,000.00 : $ 60,000.00

Rent and Utilities : $ 20,000.00

Estimated Annual Variable Cost: Food and Beverage : $ 80,000.00

TOTAL $370,000.00

Projected Annual Net Income:

Income from 4 gaming tables : $ 804,000.00

Total Costs : $ 370,000.00

Net Income : $ 434,000.00

2. Marketing Department

Our Marketing Department have relied solely on monthly entertainment shows and weekly

raffle draws to increase or maintain customer attendance. Very few new customers have

been lured by these activities. It has been observed that after each show, very few patrons

stray to the gaming tables. While only the regular customers can join the raffle draws. Our

Marketing Department has not taken advantage of opportunities that is unique in our city

such as:

The Masskara Festival

Our host city, Bacolod City is celebrating its founding anniversary every first to third week

of October. They call it the“Masskara Festival”. During this period all the hotels, motels and

pension houses in the city are fully booked.

We can take advantage of the influx of tourists in the city by giving away free bet coupons

to the tourists who check in some of the select hotels in the city. We can give away 1000

pieces of the $20 denominated free bet coupon certificates to be changed to actual free bet

coupons at the concierge section. The concierge section will then enrol the claimants of

these free bet coupons and issue them casino membership cards. This way we will be able

to monitor how many tourists came and played in our casino, how much is their capital or

bankroll and if they won or lose. Assuming that out of the 1,000 pieces of free bet coupons,

30% were used during this period, the cost will be $6,000.00. If each of the 300 tourists had

a minimum capital of $100.00, their total capital will be $30,000.00. The potential earnings

for this three week event will be $24,000.00. After the Masskara Festival, the actual figures

will show if this marketing project is successful or not and if successful, this can be fine

tuned for the next year’s event.

The Korean Golf Junket

Twice a month, a Korean Tour group brings to the city at least 10 Korean golfers to play

golf and to enjoy various tourist attractions in and around the city. By sponsoring a

welcome cocktail party in the casino for these Korean golfers and by giving each of them a

$100 denominated free bet, we will be able to lure them to play at our gaming tables.

Historically, we have observed from previous walk-in Korean golfers who had played in our

casino that they carry an average minimum capital of $1,000.00 each.

Assuming that there will only be 10 Korean golfers in our welcome cocktail night, the

estimated cost of the food, beverage and entertainment will be $500.00, and the cost of the

free bets coupons will be $1,000.00, for a total cost of $1,500.00. The potential earnings for

this activity will be ($10,000.00-$1,500.00) $8,500.00. Again, their play will be strictly

monitored by the Gaming personnel so that actual figures can be derived. These will be

used in the accurate evaluation of the project.

The National Conventions

All year round, Bacolod City and the Province of Negros Occidental host many national

conventions for different groups. These conventions usually last to a minimum of three

days to a week. Our branch Marketing Department should coordinate with the city and

provincial tourism boards to obtain the schedules and venues of these conventions. Once

this information is secured, a marketing project similar to that being proposed for the

“Masskara Festival” should be planned and undertaken. The same strict monitoring should

be implemented so that actual figures can be derived for accurate evaluation of the project.

Social Media

Facebook, Twitter and Instagram are around for a few years already yet our branch have

not taken advantage of this development in communications. We should create a social

media team of the branch. This will be composed of one Marketing staff and one I.T. staff.

They will be tasked to create an account for Bacolod City branch in each of these social

media outfits. There they will post schedules of upcoming events in the casino such as

entertainment shows, gaming tournaments, etc.

These posts should include the instruction to proceed to the concierge section and apply

for a casino membership card to avail of $10 free bet coupon. The claimants will be

monitored in the same way as the “Masskara Festival” tourist.

CONCLUSIONS

The decline in our customer attendance and consequently in our income has prompted me

to conduct this SWOT Analysis. Although we are both the regulator and the lone casino

operator in the city, we are not able to maintain a desirable customer attendance,

specifically our table occupancy, this past three years. Through this analysis, it has been

established that this decline in attendance is due to two main factors, the boom of the

entertainment district at the south edge of the city and the failure of our Marketing

Department to capitalize on the unique events in our city and to the developments in

communications, specifically in social media. If given due attention and support the

findings and recommendations in this analysis might arrest this decline in customer

attendance.

RECOMMENDATIONS

It is therefore my recommendation to:

Open a satellite casino with four tables which will operate on two shifts (16 hours)

at the Goldenfields Entertainment District.

Give away 1000 pieces of $20 denominated free bet coupons to the guests of the 3-

stars hotels in Bacolod City during the “Masskara Festival”.

Host a welcome cocktail party in the casino for every Korean Golf Tour group that

comes to the city.

Coordinate with the Bacolod City and Negros Occidental Province Tourism Boards

for the schedules and venues of the national conventions which will be hosted by

the city and province.

Create a social media team for the branch.