Saturday, December 06, 2008

Alliance Global Inc. chair and CEO Big Bets

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This year, Alliance Global Inc. chair and Chief Executive Offiver Andrew Tan made two big bets—on casinos and in tourism. They will make him the biggest hotelier in the Philippines, in addition to being the biggest business process outsourcing office developer and the second biggest mid-income high-rise residential and office developer.
Tan, 59, is chairman and CEO of Alliance Global Group Inc., his holding company, and chairman, president and CEO of Megaworld Corp., his property development company.
Alliance is one of the Philippines’ leading conglomerates, with interests in the food and beverage industry, real estate development and quick service restaurants.
Tan, who doesn’t gamble, is investing at a dicey time when many casinos are in financial doldrums and attendance has dropped. At the same time, high-end hotels are having problems drawing top tourist dollar.
Tan thinks hotels and entertainment are revenue-drivers of the company in the future.
Andrew is one entrepreneur who looks beyond the passion and mood of the moment. He didn’t become rich by being daunted by present-day obstacles and challenges.
Tan has partnered with a unit of Genting, the Malaysian gaming company, to build two mega resorts and casinos—one across the NAIA Terminal 3 and the other on reclaimed land along Manila Bay.
An Alliance Group subsidiary, Travellers International Hotel Group Inc. (Travellers), has ventured into tourism-oriented development. It will invest at least US$1.55 billion in two large-scale tourism projects to be developed in various phases over the next few years.
The project includes the building of 5,000 hotel rooms which will make Travellers the largest hotel owner in the country.
With the growth in the global tourism industry and the positioning of Travellers as a major player in this sector, it is expected that Travellers will be a major contributor to Alliance Group, the company says.
On June 2, 2008, the state Philippine Amusement and Gaming Corp. issued Travellers the first provisional license to participate in Pagcor’s ambitious project, a leisure and entertainment complex which includes the development of the Bagong Nayong Pilipino Entertainment City and Resort Complex on Manila’s famous reclaimed bay area.
Travellers has also set development in another tourism site—the Newport City Integrated Resort located across the Ninoy Aquino International Airport Terminal 3 in Pasay City—where it will build three hotels and a themed shopping and entertainment center.
Alliance Group has concluded a deal with Star Cruises Limited of Hong Kong whereby Star Cruises will eventually acquire 50-percent (direct and indirect) interest in Travellers.
Star Cruises, the third largest cruise operator in the world, is a member of Malaysia-based Genting Group, one of the largest leisure and entertainment companies in the world. This partnership will transform Travellers into a major growth driver for Alliance Global within the next few years, the company says.
For 2008, of the 17 new residential projects scheduled for launch, 16 have already been launched and substantially pre-sold. Total potential revenues from the 17 are P26 billion to be realized over time.
For BPO office, 50,000 square meters has been completed and over 90 percent leased. The remaining balance of 50,000 square meters of BPO office space schedule for completion this year is about 40 percent pre-leased.
On the retail side, 45,000 square meters of retail space was recently completed and is now about 80 percent pre-leased. These developments are expected to enhance RE (real estate) results.
Likewise, more McDonald’s restaurants will be opened during the year and a number of existing ones re-imaged to boost QSR income.
New alcoholic beverages have been pipelined plus a customer activation program put in place as well. In September, EDI launched a consumer promo, “Tagumpay Sa Negosyo,” that gives out enterprise fund for the winner to set up his own business. All these aim to achieve the profit goal for the year.
Tan is the first developer who saw the potential of once sleepy Libis in Quezon City as a prime property. He developed Eastwood City.
He predicted the huge demand for call centers considering the Philippines’ English language skills and strategic location. He put up call centers, becoming its biggest developer.
He sensed the strong demand for housing from cash-rich Filipino workers. He developed housing projects for them.
By so doing, Tan became big almost overnight, a stirring rags-to-riches story.
Gifted with visionary entrepreneurship—and the proverbial Midas touch—Andrew is at the top of his game, presiding over a business conglomerate with a workforce of more than 4,000, total assets of P111 billion and equity of P77.65 billion.
Alliance Group has three major operating units:
• Real estate, which includes Mega­world and Travellers International Hotel Group, Inc.,
• Food and beverage which includes the (1) distilled spirit manufacturing, marketing and distribution, presently with Emperador and Generoso brandy labels, (2) operations of the foreign-based subsidiaries that handle the manufacture and international distribution of food products, (3) glass container manufacturing business that produces flint glass containers primarily for internal requirements, and (4) distribution of consumer products under international labels
• Quick service restaurant business (QSR)—operates under the McDonald’s brand, in accordance with a master franchise agreement with McDonald’s USA. Golden Arches Development Corp. represents this segment.
Emperador is the world’s best-selling brandy. It helped that the Filipino aspirational taste shifted from gin to brandy.
Brandy actually financed Tan’s acquisition and expansion during the difficult years after the 1997 Asian Crisis. The business was giving him profits of P1 billion annually, enabling him to undertake feverish construction during the real estate slump and reaping the benefits of recovery.
Megaworld Corp. is the largest developer of space for business process outsourcing (BPO). It is the second biggest in the mid-income high-rise residential condominium development.
In less than 20 years, the Megaworld Group has developed and completed 50 residential, office and commercial projects.
Founded by Tan in 1989, Megaworld is one of the leading property development companies in the Philippines.

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