South Korean casino operator Grand Korea Leisure (GKL) saw its net sales increase by 38.1% to KRW43.96 billion in February, but rather than painting a rosy picture of recovery the improvement was instead due entirely to an artificially favorable year-on-year hold comparison.
It was the first quarter of 2019 when GKL implemented an aggressive promotion strategy in the VIP and premium mass segments which created a significant boost in table drop but severely hurt win rate and margins, resulting in a 47% fall in profit to its lowest level in seven years.
That promotion strategy has since been scrapped, allowing hold to rise steadily over the past three months to a high of 15.5% in February versus just 8.9% a year earlier.
More telling is GKL’s sequential comparison, with table drop declining 26.3% to KRW284.30 billion and net sales by 19.5% to KRW43.96 billion versus January.
GKL didn’t provide any reason for the decline, although it is likely the mass outbreak of coronavirus across South Korea over the past two weeks played its part with visitation plummeting to just 77,695 from 126,191 in February 2019 and 120,668 in January 2020. Similar levels of decline were experienced across all three of the company’s casinos – Seoul Gangnam Casino, Seoul Hilton and Busan Lotte – and across all gaming segments.
VIP table drop fell 23.4% sequentially to KRW189.88 billion and mass by 31.3% to KRW68.43 billion.
Nevertheless, GKL has so far resisted the temptation to follow the lead of Kangwon Land and temporarily close casino operations. Unique in Korea as the only casino in which locals are allowed to gamble, Kangwon revealed on Friday that it will remain closed for at least two full weeks after shutting its doors on 23 February to prevent the spread of coronavirus.
