NEPAL

Tiger Palace ramps up

Silver Heritage Group’s Tiger Palace resort in Nepal appears to be recovering from its development hiccups to ramp up fast, turning positive on a property EBITDA level in August after less than a year in operation.

The group points out the marker was reached despite Nepal being in the grip of the monsoon season, which makes access to the resort along potholed roads extremely difficult.

The Australia-listed company said propertylevel EBITDA for August was $175,000, while revenue generated at the property in the first two months of Q3 was equal to 97 percent of revenue for the whole of Q2.

Tiger Palace held the grand opening for its casino in March this year, though the hotel began operations in September last year. The resort features 100 five-star rooms, two luxury villas, Nepal’s largest swimming pool, as well as entertainment and MICE facilities. The casino is operating 45 tables and 216 electronic gaming machines.

The property is situated near the Indian border and Silver Heritage is counting on the large and rapidly growing middle-class population there to populate its gaming tables. Casino gaming is only legal in two states and one union territory in India and none of the facilities currently available are of a worldclass standard.

Silver Heritage said all statistics show significant traction into the third quarter despite the traditionally slow monsoon period. It has seen 11 percent compound monthly growth in table drop with 15.5 percent growth in total gross gambling revenue. It says about 60 to 70 percent of its visitors are return customers.

The growth has come despite the fact that key transport infrastructure has not yet been completed.

A 24km highway that will connect Northern India to Nepal’s main East/West highway is scheduled for completion in December this year and will pass close to the resort. While a domestic airport just 10km from the property is being extended and upgraded to become the second gateway to Nepal.

The expanded airport, which is scheduled for completion in July next year, will be able to accommodate wide-bodies jets and is forecast to account for 30 percent of inbound traffic.

Silver Heritage also operates The Millionaire’s Club and Casino in the capital Kathmandu and the Phoenix Club in Vietnam. It says the current GGR per table per day at the Tiger Palace is about $252, but that it’s “entirely possible” that figure could rise to match the $5,353 being generated per table in the Phoenix Club.

In August, the company confirmed it has managed to complete the purchase of a second plot of land in Jhapa, East Nepal, for a second integrated resort. The company had initially intended to purchase 115,134m2 for about $4 million, but was unable to raise the financing to complete the purchase. It subsequently came to an arrangement with the vendor for a smaller sized 74,500m2 plot for $3.2 million. The parcel is about the same size as the one the current Tiger Palace is built on.

Although the Tiger Palace now appears to be moving in the right direction, the group has had a patchy first half, reporting that its group loss ballooned to $9.9 million. It recently raised A$5.2 million from a retail entitlement offer, although the bulk came from underwriters.

CEO Mike Bolsover told Finance News Network that the capital raising and renegotiation of bond terms had put the group’s balance sheet on a firmer footing.

“We’re very confident again moving forwards that we’ll be able to both service the debt and also make additional earnings over and above that to fund expansion or for whatever strategies that we end up deciding as a board,” he said.

Nepal tourism peak season starts with arrivals jump

Nepal started the peak Autumn tourism season with an almost 34 percent jump in arrivals in September, led by China and India, according to the Nepal Tourism Board.

Arrivals from India nearly doubled to 16,345 in September compared to the same month last year. Arrivals from China soared 55 percent to 12,947. The number of tourists from Sri Lanka surged to 8,807, up 57.1 percent. For the year through to end-September, arrivals gained 20 percent year-on-year to 772,798 visitors.

GDP tipped for 6 percent growth

Gross Domestic Product in Nepal is expected to grow on average by six percent for the next three years, according to a World Bank report.

The service sector has been a key driver, contributing 3.6 percentage points to growth, with more than 60 percent coming from trade and hotels. The number of foreign tourists is expected to increase as the country has launched the Visit Nepal 2020 campaign.