Inside Asian Gaming

inside asian gaming September 2014 50 Both figures surpass growth rates at the sole casino open to Korean citizens, Kangwon Land, in the remote northeast of the country. In each of the past two years, revenue at foreigners-only casinos has overtaken Kangwon Land’s, last year by about US$60 million in a $2.7 billion market. Chinese tourists lead the casino growth story. Last year, 1.35 million Chinese visited Korea’s casinos, almost half of total visits. The Japanese, formerly frontrunners, now comprise 26.1% of visitors, a number deflated in part by political tensions, including offshore territorial disputes between the two governments. GKL belatedly shifted its focus from Japanese to Chinese players at its three Seven Luck brand casinos, two in Seoul and one in Busan. In the second quarter, Chinese were a record high 47% of GKL’s total visitors, but overall visitor numbers fell 14.4% from a year earlier. Table game volume rose 3.1% in the second quarter, but gaming revenue decreased 13.8% to KW113.5 billion on low hold. GKL’s quarterly net profit tumbled 69.1% to KW9.3 billion after a 9.3% rise in the first quarter. Profit margins, generally tops in the local industry, plunged into the single digits. While consistently attracting a majority of casino visitors owing to its prime Seoul locations, GKL hasn’t parlayed that advantage into gaming revenue. Its Seven Luck casino at the Millennium Seoul Hilton attracts nearly twice as many visitors as any other casino in Korea, nearly 1 million last year. But its KW182.8 billion in casino revenue was barely one-third of that at rival Paradise Group’s flagship Seoul casino, Walker Hill, due mainly to Walker Hill’s dominance of the VIP sector. Since the start of 2013, GKL has retreated from running neck and neck with Paradise in market share by revenue into a firm second place. Over the last six quarters, GKL’s share has bobbed in percentage terms in the mid-30s to low-40s range, compared to Paradise’s mid-40s to low-50s. The gap is likely to widen when Paradise launches Korea’s first integrated resort, slated to open near Incheon in early 2017. GKL hopes to counter that by expanding its Seoul Gangnam branch within the next two years. Management is also pursuing approval to operate casino cruises. In August, the Ministry of Culture, Sports and Tourism announced it would streamline the approval process for new casino projects to boost tourism and spur economic development. That could be a signal for Mr Lim to lead GKL into the IR business. The work-to-rule action at Grand Emperor Hotel & Casino on 24th to 25th January marked the beginning of a wave of protests by gaming floor staff across Macau demanding improved wages and benefits. The end result was an effective doubling of the annual bonus paid to the casino’s employees. The prospect of rising wage costs may appear to augur ill for Grand Emperor at a time of weakness in the city’s VIP sector, but, surprisingly, the property derived 76% of its gaming earnings from the mass market over the past year—a far greater proportion than other so-called satellite casinos operating under the license of Sociedade de Jogos de Macau—and is striving to further increase its appeal to main-floor players. The 288-room Grand Emperor opened in 2006 in downtown Macau and features actors at the front doors arrayed in the red tunics and bearskin hats of Britain’s famed Coldstream Guards and real gold bars recessed in the lobby floor—seemingly kitschy features that nevertheless delight mainland Chinese visitors in search of snapshots. The property recorded a 10.5% increase in gaming revenue to HK$2.05 billion (US$264.5 million) in the 12 months ended 31st March, accounting for 90.5% of the total revenue of Hong Albert Yeung Chairman Emperor Group Kong-listed Emperor Entertainment Hotel, a subsidiary of Albert Yeung’s Emperor Group. Emperor Entertainment also expanded its capacity in Macau in March with the HK$900 million acquisition of the 262-room Best Western Hotel in Taipa. Starting out with a single watch shop, Mr Yeung has built a diversified empire with holdings in entertainment, property and finance and has accumulated a net worth of US$1 billion, according to Forbes magazine. Prior to building his own casino hotel in Macau, the 70-year-old entrepreneur had held interests in two VIP rooms at Casino Lisboa, the erstwhile flagship property of Macau gaming tycoon and Mr Yeung’s friend Stanley Ho.