Inside Asian Gaming

INSIDE ASIAN GAMING JANUARY 2018 20 COVER STORY include their own gaming room with a table, and the wall between those gaming areas can be removed. Naga says it will encourage VIPs to occupy entire floors. MOVING UP The VIP tower culminates a typically measured effort that began in March 2013 to expand high roller play using junkets. “We were able to increase table limits, bringing a little bit higher quality players though revenue share agreements where they received a percentage of the win but they also were responsible for some of the loss,” McNally explains. “That gave us a managed risk approach.” In 2012, as a self-proclaimed “low-end VIP destination,” NagaWorld reported VIP roll of US$3.8 billion and VIP revenue of US$94.5 million. That represented 34% of total revenue and 17% of gross profits. After four years of enhanced incentives and upgraded facilities, the 2016 figures were US$8.7 billion in roll and US$225.7 million in revenue, representing 42% of total revenue and 19% of gross profits. For the first half of 2017, in a rising regional VIP market, roll rose 71% over the first half of 2016 to US$7.8 billion and revenue rose 89% to US$210.5 million, growing to 52% of revenue and 23% of profits. VIP growth slackened to 58% in the third quarter, according to Union Gaming, probably because some high rollers deferred trips awaiting Naga2. Even before the formal soft opening, high roller action was brisk in open suites and other new VIP areas, though initial Macau junket promoter response has been mixed. “We have no major reaction towards the Naga2 opening and [continue] business as per normal, pending players patronage requests,” Suncity Group President for Marketing Strategy YM Choong says. After visiting ahead of the Naga2 opening, Rich Goldman CEO Nicholas Niglio says, “They accommodate people the way they should be treated. It can be one of the top three places in the region outside Macau.” Niglio notes though that, “Our relationship is in the infant stage.” Overall, Union Gaming co-founder Grant Govertsen, a longtime NagaCorp bull, expects upside to its second half revenue estimate of US$6.8 billion and its full 2017 EBITDA call of US$284 million. The boutique investment bank sees EBITDA of US$392 million in 2018 and US$429 million in 2019. “CHINA READY” Much of the new growth will likely come from China. “With that wave of consumerism coming from China, there’s a lot of energy and we are on the doorstep of China,” Dr Chen, a Naga2’s Elixir of Life Spa