Inside Asian Gaming

Asian Gaming 50 – 2011 That may help when it comes to GKL lobbying for access to the new gaming opportunities at home. Grand Korea currently operates under the Seven Luck brand with three venues in two of the most lucrative markets in the country. It has two properties in the country’s capital Seoul and one in Busan. Its nearest competitor, Paradise Group, has five properties, but only 41% of the foreigners- only market by GGR. GKL’s gross revenue grew by 25% year- on-year in 2009 (admittedly off a somewhat depressed base in 2008 following the global downturn) to hit KRW532 billion (US$500 million). The company’s 2010 results had not been confirmed at the time Inside Asian Gaming went to press, but CLSA Asia- Pacific Markets said in a special report on Korean tourism, published in February, that it expected GKL to have registered a 9% yearon- year expansion in GGR to KRW578 billion (US$543.1 million) in 2010, and projected a 15% increase on that in 2011. Grand Korea has a better balance of higher-margin mass market players versus VIP players than Paradise. GKL’s split, This has been a milestone year for Pansy Ho. It was the year when in the minds of the public she moved from being ‘Stanley Ho’s daughter running a Macau casino’ (MGM Macau), to a major figure in the industry in her own right. That process began with the official retirement from business of her father, Dr Stanley Ho, in December last year. For years, Ms Ho has been earmarked by the local and regional media as the heir- apparent to her father’s extensive business interests in Macau. In Chinese business culture, such transitions are generally more complicated and more opaque than that—not least because there may be many princelings and princesses (and in Dr Ho’s case, many wives) jockeying for position. In any case, China also tends to have a much more consensual, group-focused culture than societies in the West. That applies to business as well as politics. Stick your own metaphorical neck out too far, and you may find your metaphorical head gets according to the most recent available data collated by CLSA, is 80% VIPs and 20% mass. GKL states that around 85% of its high rollers are the most profitable kind—direct players brought in by the company’s in-house marketing team. Recently, however, GKL has also done deals with Macau junkets to bring in more Chinese VIPs. Paradise has 90% VIPs and only 10% mass customers, although it has a higher proportion of direct high rollers than GKL—around 90%. In 2009, GKL posted pre-tax profit of KRW158.1 billion (US$148.5 million at current exchange rates). In the same period, Paradise Group had pre-tax profit of only one quarter that amount—KRW40.1 billion. The South Korean authorities say that the licensing for at least one new venue catering for domestic players will take place in or soon after 2015. The most likely location for such a venue seems to be Incheon, near the capital Seoul. The Seoul metropolitan area is home to 24.5 million people—nearly half of South Korea’s entire population. Incheon sits inside that area. It is also home to the capital’s air hub—Incheon International Airport; one of the best connected and busiest airports in the world. At least one international- standard integrated resort will be located in Incheon, identified by the government as an economic development zone. There was a previous plan in 2005 to build a US$1.12 billion IR there, but the plan was effectively killed off by the 2008 financial crisis. Some industry observers suggest an expensive new casino resort at Incheon would only be viable if it were open to local players. But the government has thus far not said whether that IR could also double as a venue serving domestic players. Grand Korea could be in the running for involvement in one or both of these new opportunities.The last time anew foreigners- only licencewas issuedby thegovernment— in 2005—it went to GKL. Given that GKL and Paradise Group are probably the only South Korean casino operators with the level of operational experience and depth of foreign business contacts to be able easily to attract foreign joint venture partners, they must be front runners for integrated resort licences and/or domestic licences as and when the government makes its move. 10 (10) Pansy Ho Chui-king Chairman, MGM China Holdings Director, STDM Managing Director, Shun Tak Holdings chopped off. Ms Ho looked for a fewweeks at the turn of the year as if she were heading in that direction when she made a pre-emptive swoop for her father’s controlling shares in STDMwhile he recuperated from his lengthy illness at home. It earned not only a public rebuke from Ho père , but for a while legal action by Dr Ho and other members of the family. After two months of wrangling— some of it via recorded video statements posted on YouTube—a truce was called that effectively split the influence in the family empire between Ms Ho and her allies, and Dr Ho’s fourth consort Angela Leong and her children. Ms Ho remains a director of STDM (the umbrella business for Dr Ho’s Macau investments), while Ms Leong was given a guaranteed role as Executive director of SJM (the Hong Kong-listed unit of STDM that also has a Macau subsidiary responsible for casino operations) for six years. The torturous process of drawing up a family truce was evidence of the value of alliances and consensual working. Not that Dr Ho fought shy of being tough during his own long career. But what he understood was that when toughness is required it must be applied dexterously, with all the skill and speed of a surgeon—preferably before the patient even knows he’s being operated on. Dr Ho was a master at this after nearly five decades’ practice. Western-educated Ms Ho is no dummy. She understands the theory from her own experience and from watching the master at work. But on occasions she’s also had to learn the hard way where the boundaries are regarding charm versus brute force. INSIDE ASIAN GAMING | September 2011 24