Inside Asian Gaming

FEBRUARY 2016 inside asian gaming 25 “Imperial Pacific wants to partner with Korea’s Hanwha Resorts for a US$2 billion project on 16½ hectares, featuring 1,200 hotel rooms, 500 serviced apartments, a conference center, performance arena and a 15,000 square meter shopping mall.” An artist’s rendition of Imperial Pacific’s proposed “Pacific Palace” property being built in Yeongjong’s Midan City which, targeting mass-market, is not seen as a competitor. A director of Pacific Palace who declined to be named says the reaction to the downturn in Macau’s VIP segment has been overdone. “It’s just a correction of an unhealthy market; back to business as normal, which is still very good,” he says. “We will not be targeting Koreans or the mass-market. We will concentrate on what is in our hand, and what is in our hand proves we can be really successful providing VIP service to the highest standard in the world.” Imperial Pacific recently opened a casino on Saipan after obtaining a 40-year gambling monopoly there. The Pacific island is 4½ hours by plane from China. According to the executive, profits from the casinos 50 tables averaged US$195 million in each of its first two months of operation, November and December. That’s more than half the total for all 16 foreigner-only casinos in Korea. The executive says the super-rich Chinese who patronize Saipan go there for its pure, unpolluted environment. Imperial Pacific sells to them through part-ownership of Macau junket promoter Hengsheng. After Korea, it is looking to develop one or two more IRs around the Pacific, to achieve synergies in marketing to Chinese, Russian and Japanese high rollers. “Our Korean offering will be more urban and modern than Saipan’s sunshine and clear air and water,” the Imperial Pacific executive says. “Local companies don’t have our experience in marketing to Chinese, so it’s a natural fit.” Imperial Pacific wants to partner with Korea’s Hanwha Resorts for a US$2 billion project on 16½ hectares, featuring 1,200 hotel rooms, 500 serviced apartments, a conference center, performance arena and a 15,000 square meter shopping mall. The project’s indoor theme park will be “not Disneyland, not international” but rather focused on Korea’s strong contemporary pop-culture. “Korea has a lot of famous artists in cinema, television and music, but they’ve never used them to create a theme park,” says the executive. “We have a very strong background in entertainment. We are going to create something that has never been seen in Korea before.” Will MCST be convinced by all of this? According to analysts, neither Mohegan Sun nor Imperial Pacific have good connections within the Korean government. Mohegan Sun lacks experience in the Asian market. Imperial Pacific does not have a proven track record in managing large resorts. “I don’t believe any candidate will be selected as a new player in the current bidding process,” says Yang Il-woo at Samsung. “Perhaps the only qualified is Mohegan Sun, but they don’t have any relationship with the Korean government, so the possibility is quite low.” Brian Lee at CLSA says, “The Korean government was very aggressive to introduce these casino resorts in 2013 and 2014. In those days the overall market was very good and there was no kind of regulatory issue from the Chinese government. But overall conditions have deteriorated. In my view the whole process could be postponed or fall through.” At Seoul National University, economics professor Pyo Hak-gil made a study of the case for building new IRs in Korea. His initial estimate of demand for more than two has been scaled back to “1.2 or 1.4 after accommodating the China shock.” “I don’t think the government can cancel the whole plan just because there are only two bidders left,” he says. “Local government is committed to this and killing it would be politically burdensome.” Says Pyo, “On the other hand, the government wants competition so an uncontested process would be an embarrassment. I think it may invite more local bidders and lower its conditions. These things may turn out to be flexible.” In Focus