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The Appeal of Integrated Resorts.

By Michael Ayling

Imagine a small “township” totally dedicated to providing luxury accommodation, first class entertainment, food and drink, fitness and wellness centres, adventures and playgrounds for the children, golf courses, spas, shopping, boat tours to beautiful islands, large international events, lush gardens, and, if you live outside of Thailand, a casino.

Add to this a large local work force, untold millions of baht in revenue generation for the surrounding economy, good infrastructure, close access to an international airport and the benefits of having such a “township” in an area---and you have an integrated resort.

Thailand’s first such resort is Laguna Phuket, 1000 acres of all of the above, but minus the casino because of Thailand’s laws against gambling. And that is an important point. Integrated resorts elsewhere are primarily based around a casino complex such as the Marina Bay Sands and Resorts world at Sentosa in Singapore. In the United States very large players such as MGM Mirage; Harrah’s Entertainment and Las Vegas Sands all vie to develop integrated resorts where casinos, in fact, generate less revenue than non-gaming, but are the revenue generators that “drive” the business model.

In Asia integrated resorts are growing rapidly in places like Vietnam, Taiwan, Singapore and Malaysia, as well as Thailand. The Laguna Phuket integrated resort is, however, still one of the iconic examples of how to holistically create and grow a “family” of properties and  services into literally a lush, tropical garden development rising from the barren and unforgiving land and waterways that once housed a tin mine.

Another example of how an integrated resort can transform an area is the Crown Entertainment Complex on the Yarra River in Melbourne, Australia which changed a largely derelict and abandoned industrial area into one of Melbourne’s most attractive commercial and residential areas.

It is worthwhile to follow the progress of such resorts to assess the economic benefits to a region, such as Phuket in this case, of an integrated resort’s development. It starts with the construction contracts and related employment opportunities over two or three, or even more years; the placement  of prestigious brand names in the area, such as Banyan Tree, Dusit Thani and Sheraton ; the building of an golf course and retail shopping area; the growth of small businesses to service the resort and, use of Thailand, or even Phuket, sourced materials for use in construction and furnishings.

Once operating the integrated resort becomes a “township” employing thousands of “citizens.” The “township” grows with more and more properties and services being added while the internal structure of the resort matures into a holistic entity in its own right. Consumable items required for hotels, restaurants and villas/condos, operating costs, maintenance, marketing and the cost of goods sold will be mainly sourced locally or regionally, adding to the benefits to a region derived from the resort. In Laguna Phuket’s case we also took a strong environmental approach because of the location on a series of lagoons created by tin mining, which was once Phuket’s main industry. The regenerative power of such resorts is further evident in the infrastructure upgrades that occur around them, such as in roading, landscaping and service industries.

Within Asia the competition for the integrated resort dollar is accelerating. The two Singapore resorts, with their casinos, are set to change the landscape as will Laguna Hue, one of the first truly integrated, first class resorts in Vietnam being developed by Banyan Tree to recreate the Laguna Phuket business model. Malaysia’s Genting Highlands resort outside Kuala Lumpur has more than 10,000 rooms and has developed in a more organic, less structured way than other Asian resorts. Macao, the gambling mecca of Asia, also has American backed resorts.

The interesting development now in the traditional casino backed resort these days, is that  less than half the income is from non-gambling sources in most of the large resorts. For example places like Sun City in South Africa, a huge integrated resort, gets 70 percent of its total revenues from non-gaming sources.

In Laguna Phuket’s case, because we cannot have a casino, we have used events as a major locomotive to generate returns through such respected international events as the Laguna Phuket Marathon and Laguna Phuket Triathlon, plus many more local events. Their success is possible because of the ability to not only accommodate large numbers of overseas visitors, but also the resort has the human resources readily at hand to organize and implement such complex events.

This Op-Ed piece originally appeared in the Bangkok Post. Published on January 9, 2010.
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Michael Ayling is Managing Director of Laguna Resorts & Hotels, Phuket, Asia’s first integrated resort




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