4 minute read
SOUTH KOREA
Jeju shows operators some love
South Korea’s honeymoon island, Jeju, has not always been a bed of roses for the operators lured there by the potential of its strong China tourism base, though recent news suggests an improving trend.
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The island off the southern coast has a cluster of foreigner-only casinos and has attracted significant investor interest given its proximity and connections to Mainland China, as well as its visa-free arrivals policy.
However, political tensions between Seoul and Beijing, coupled with shifting local sentiment towards the gaming industry and cultural differences have created a challenging operating environment.
Still, projects are moving ahead and companies are reporting improving revenue, even if that top-line growth is not yet always feeding through to the bottom line.
Hong Kong-listed Landing International Development operates the biggest integrated resort on the island, Jeju Shinhwa World. The company reported a widened loss of HK$701.5 million (US$89.4 million) in 2018, mainly attributable to discontinued operations and increased expenses related to the ramp up of the resort.
The group relocated its casino from the Hyatt Regency Jeju to the IR in early 2018 and net revenue jumped to HK$1.5 billion, compared to around HK$179.8 million in the prior year. Segment profit from the Gaming Business was approximately HK$83 million, up from a loss of HK$117 million in 2017.
The gaming area has increased in size to about 5,500 m2, about seven times larger than its previous location, with 155 gaming tables and 239 slot machines and electronic table games.
The group says it will continue to roll out its operations, introducing more non-gaming attractions and organising global and regional baccarat tournaments.
“We believe that visitors from China would grow as long as the relationship between South Korea and China continues to develop positively,” the company said in a results filing. “New routes or additional flights from Macau, Guangzhou and Taiwan were launched from July 2018 onwards, thereby improving the connectivity between Jeju and these regions.”
Bloomberry Resorts, which operates the Solaire Resort & Casino in Manila, also saw an improvement in its Jeju operations. The company bought its property on Jeju in 2015 and expanded and renovated the gaming space, but was forced to close the casino in November 2015 as an administrative penalty relating to the former owners.
It resumed operations in December of that year, with 60 tables and 51 machines, but in 2016, Bloomberry put up the for sale sign. Talks on the transaction fell through and the Philippine operator has since decided to continue operating the Jeju Sun & Casino, as the property is now known.
In its latest results filing, the Jeju operations reported a 14.3 percent gain in gross gaming revenue and an almost 16 percent gain in net revenue. Its EBITDA loss narrowed to PHP240 million from PHP258.7 million a year earlier.
Hong Kong-listed New Silkroad is also seeing positive returns from its Jeju business and recently got the go-ahead to begin work on a new IR on the island.
New Silkroad swung to a profit in 2018 and posted an almost 60 percent gain in revenue on sales from its South Korean casino business, the sale ofwine and Chinese baijiu and the acquisition of a P2P financing business in China.
Gaming revenue, which represents just over 22 percent of the group total, saw an 11.9 percent increase to about $106.3 million. Profit attributable to owners of the company was $64.4 million compared with a loss of $70.9 million the prior year.
New Silkroad operates the Megaluck casino and has a 55 percent stake in Macrolink, which was formed in 2014 to develop an IR on a 1.3 million sq.m site, a half hour drive from Jeju’s international airport. The resort will consist of five-star hotels, with about 1,000 rooms, MICE facilities, a spa, retail, villas and condos, according to the company’s website.
“As a result of the improving Sino-Korea relationship and the opening of a new tourist complex, the numbers of visitors to Jeju reached a record high,” it said in a filing to the Hong Kong Stock Exchange. “With effective promotion campaigns implemented, our casino saw the growth of the VIP gaming market.”
The Jeju Dream Tower, a joint venture between China’s Greenland Group and South Korea’s Lotte Tour Development, is also expected to open towards the end of this year.
GKL Q1 sales decline 11.2 percent
Grand Korea Leisure posted an 11.2 percent drop in casino sales in the first quarter of 2019 to KRW108.26 billion (US$95.0 million).
The year-on-year decline was due to a 12.7-percent decrease in table game sales to nearly KRW94.17 billion.
Machine game sales were KRW14.09 billion, little changed from the prior year, the company said in a stock exchange filing.
GKL runs three foreigner-only casinos under the Seven Luck brand.
Paradise City expands nongaming attractions
Paradise City, which is operated through a joint venture between Paradise Co. and Sega Sammy, opened an indoor family amusement park, in March.
WONDERBOX, based on the theme of a night-time fair, includes carnival-style games, a bungee drop and Ferris wheel, along with parades, the company said. “We have strengthened the entertainment side of the theme park to seek art-tainment,” Chang Wyan-ahn, vice president of Paradise SegaSammy, was cited as saying at a press conference.
The new theme park is situated in a two-story building that covers an area of 3,933 square meters.
