Inside Asian Gaming

The Asian Gaming 50 – 2013 The top job at South Korea’s Grand Korea Leisure had been vacant for much of this year following the departure of Ryoo Hwa-sun, who was appointed president of a prominent women’s college in January. Lim Byoung- soo, who headed the Gyeonggi Tourism Organisation, was named his successor only last month, taking over at a time when GKL is in critical need of leadership. Because come 2016, rival Paradise Group is scheduled to open a KRW800 billion (US$730 million) integrated resort at Incheon that will dwarf all of the country’s current small-scale, foreigners-only gaming venues. GKL, on the other hand, has no new venues on the horizon. Another problem for GKL is its heavy reliance on Japanese players, who make up the majority of its customers, whereas Paradise derives the bulk of its revenue from Chinese, and they’re the country’s fastest-growing inbound visitor group. The number of Japanese visitors to GKL’s three Seven Luck brand casinos in Seoul and Busan fell sharply in the second quarter of 2013, down 19.5% year on year, while the number of Chinese visitors to the country surged 24.2%. GKL is a semi-private owner and operator that was set up by the government in 2005, through the Korea National Tourism Organisation, to boost tourism and generate income to fund tourism infrastructure and other government projects. In November 2009, GKL floated 30% of its equity on the Seoul Stock Exchange, and there 40 Lim Byoung-soo President and Chief Executive Grand Korea Leisure knows well. He’s a former vice chairman of eSun Holdings. At one time, he co-headed investment banking for Asia at Merrill Lynch. At the age of 33 he founded his own firm, Amida Capital Group. For all his ambition, though, he has yet to secure Louis XIII its all-important gaming license. Reports are that 66 VIP and premium-mass tables are planned, but the company doesn’t talk much about it or the casino operating agreement it has dating back to 2008 with an unnamed “concession or subconcession” believed to be Melco Crown Entertainment. Melco has a longstanding relationship with PYE, which did work for Altira Macau and is involved in the construction of Melco’s Studio City resort on Cotai. Mr Hung has connections of his own with Sociedade de Jogos de Macau. He’s vice chairman of Rio Entertainment Group, operator of the Rio Hotel & Casino, an SJM satellite on the Macau peninsula. has been talk of more stock being sold to private investors, but the company is still majority-owned by the government. Paradise had dominated the foreigners- only market for almost four decades before GKL opened and, to its credit, began snapping up share. Now, GKL and Paradise Group together command around 93% of foreigners-only revenues and are locked in a close-run contest for the lead in market share. But Mr Lim has his work cut out for him formulating a development strategy to keep GKL on an equal footing. He certainly understands that China is where the growth is and the company announced earlier this year that it would be doubling its Chinese VIP marketing staff from 29 to 60. If current trends continue, Chinese will constitute the largest group of players at GKL by 2014. Already, their growing numbers are bolstering the company’s revenue, which rose 4.5% in the second quarter to KRW133.0 billion. EBITDA was up 11.6% to KRW40 billion. He also faces the difficult task of obtaining government approval to build a new casino. His political contacts should aid him in that regard, as will his track record in promoting tourism- boosting initiatives, which is no doubt what GKL will be presenting its planned IR as. Looking further ahead, there is the expiration of Kangwon Land’s domestic market monopoly in 2025. Authorities say that licensing for at least one new venue catering to Koreans will take place soon after, and GKL and Paradise are the clear front-runners to obtain one of them. Whether GKL succeeds will depend a lot on how Mr Lim manages to position the company over his coming three-year term as president and chief executive. 49 September 2013 | INSIDE ASIAN GAMING