NORTH ASIA 16
RUSSIA
Junket demands force VIP policy rethink Summit Ascent Holdings says it’s seeking cooperation with new junkets, in particular those from Macau, after its current agents began demanding higher rebates.
T
he Hong Kong-listed company, which runs the Tigre de Cristal integrated resort in the Primorye gaming zone, said it had been under increasing pressure from agents since the beginning of the year. Instead of giving in and accepting an erosion in its profit margin, Summit Ascent said it had decided to focus more attention on developing its premium mass business. In its interim report, the company said the results so far had been “quite encouraging,” although VIP business took a hit in the first half, with rolling chip turnover dropping 23 percent to HK$6.5 billion as a result of its policy. VIP revenue net of commissions dropped 45 percent. However, mass market revenue jumped 47 percent to HK$83.5 million compared with the first half of the prior year, marking the first time this sector has outperformed. During the initial ramp up period the resort struggled to attract the mass market, and in particular locals, due to rampant illegal gambling and poor infrastructure links. It had instead been heavily reliant on mainly Chinese VIPs. “On a positive note, we remain of the view that our unique competitive advantages and location will attract new agents, particularly those from Macau, to work at our property in
the near future,” it said. “We therefore remain sanguine about the prospects of our rolling chip business.” Tigre de Cristal opened in autumn 2015 and was the first of several planned investments for the zone in Russia’s Far East, close to Vladivostok. Progress on other projects has been slow, though activity now appears to be ramping up in tandem with increasing tourism and flight connections. Summit Ascent said as of June 2018 there were almost 50 percent more direct flights than the same time a year earlier and tourism has been growing at an annualized rate of more than 33 percent in the past five years. The company is now planning to forge ahead with the second stage of its development, which is slated to include more shopping and an indoor beach. It says Phase II will be geared to both “foreign mass and rolling chip customers,” with extensive dining and entertainment facilities, anchored by a premium outlet mall. It says Phase II has been delayed until the second half of 2020 due to changes in shareholding at the group level and subsequent alterations in the design. In December 2017, Macau tycoon Lawrence Ho sold his shareholding in the company and stepped down as non-executive director and chairman to be
positive note, we remain of the view “thatOnoura unique competitive advantages and
location will attract new agents, particularly those from Macau, to work at our property in the near future.
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Asia Gaming Briefings | November 2018
replaced by Kuo Jen Hao of Taiwanese shipping firm First Steamship. Shortly thereafter the Taiwanese company became the largest single shareholder in Summit Ascent. It says it’s now finalizing the design and financing options and hopes to begin construction in the first half of next year. Given that other planned projects appear to be accelerating, the company expects to gain the benefits of a cluster of resorts as early as 2021. Cambodian casino operator NagaCorp’s Naga Vladivostok is scheduled to open next year, while a third resort being developed by Russian group Diamond Fortune Prim is also expected to open next year, known as the Selena resort. Russian businessman Maxim Smolentsev, who heads Shambala, presented its plans to the governor of the Primorye Territory Andrey Tarasenko earlier this year. He plans to invest RUB 8 billion, (US$128.6 million) in a resort with a casino with 500 EGMs and 50 gaming tables, as well as a five-star hotel with 270 rooms and a spacious nightclub. More recently, K International, a South Korean company, outlined plans for a possible RUB18 billion entertainment project, with a casino, a shopping centre and a Duty-Free area.
