The Paradise-Sega Sammy joint venture has started construction of its US$1.1 billion Paradise City integrated resort on South Korea’s Yeongjong Island near the country’s main international airport at Incheon.
The partnership between the country’s leading casino operator and the Japanese machine gaming giant is planning a July 2017 opening for a destination that will look to parlay a boom in Chinese travel to the country with a wave of interest across Asia in Korean pop culture.
That latter element, “Korean-ness,” as Paradise Sega Sammy CEO Choi Jong-hwan terms it, will be a key thematic driver.
“Korea is a hot place right now,” he has noted. “The main content that we will be showing to the Chinese VIPs will be Korean culture.”
Plans call for a 700-plus-room luxury hotel, a casino with a projected 130 table games and 400 machine games, shopping, dining and entertainment attractions and meetings and exhibition facilities.
Paradise City is the first of two destination-scale casinos approved for a special government-backed resort zone at Yeongjong, which lies about 45 kilometers from Seoul, and there could be more, as Korean officialdom is warming to gaming as an economic development tool and the policy now is to actively seek foreign investment in tourism and leisure.
It’s a new position for a government that historically has been hostile to the industry—16 of the country’s 17 casinos are still restricted to foreign passport holders—and a clear sign of it came recently with approval for a consortium led by US casino giant Caesars Entertainment to include gaming as part of a $2 billion resort complex the group plans to open in phases at Yeongjong beginning in 2018. The first phase calls for an $800 million, 500-room hotel, a projected 100 table games and 150 EGMs, a shopping mall, a stand-alone convention center, and an array of dining and entertainment attractions.
The country’s popular tourist island of Jeju, currently home to eight foreigners-only casinos, two of them owned by Paradise, is also attracting interest from the likes of Genting Singapore, which is heading a consortium with Chinese partners in plans to develop a resort casino there.
Investment bank Standard Chartered believes the combination of these developments herald a “new era” for a market that enjoys better proximity than Macau to the big cities of northern China.
“Korea casinos, particularly [foreigners-exclusive] leaders Paradise and [Grand Korea Leisure], are ideally located to benefit from structural growth in outbound-China tourism,” analysts Philip Tulk and Tyler Ahn wrote in a recent client note.
They forecast Chinese visitation nationwide will grow 15% annually through 2016 and gaming revenue at Paradise and GKL to respond with annual revenue growth of 11%.
Paradise’s five casinos saw their combined gaming revenue grow by 22% last year, as Chinese tourism nationwide surged 52% to 4.3 million. Through the first half of 2014, China generated 40% of all foreign tourists to the country, and in the market’s foreigners-only casinos they’ve surpassed the Japanese as the principal revenue engine.
Mr Tulk and Mr Ahn forecast Chinese VIP visitation to grow at a 15% annual clip and foreigners-only gaming revenue to more than triple through 2020.
“New IRs are likely to be key growth drivers,” they said.
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