Inside Asian Gaming

INSIDE ASIAN GAMING | April 2014 18 In a recent report to investors, the Seoul office of UBS Securities said the government may select “three or four” foreign operators to join Caesars at the special resort district the government is sponsoring at Yeongjong, which lies about one hour’s drive from Seoul.  and shield some of Caesars’ better-performing assets from the possibility that its bondholders might move on them. Caesars, which is struggling under $20 billion-plus in debt, recently bought itself some additional room to maneuver by selling four casinos to CGP for $2.2 billion—which, incidentally, is the amount of total investment contemplated in the Yeongjong Island resort at full build-out, which will occur over several phases. The first phase is expected to cover 4.3 hectares and 150,000 square meters of developable floor space encompassing three hotel towers with 760 rooms and suites and non-tourist amenities that include entertainment venues and a stand-alone convention center. Caesars and Lippo hope to have the resort open in time for South Korea’s hosting of the 2018 Winter Olympics. “It’s going to change the landscape of Korean casinos because it’ll be the first integrated resort-style foreigners-only casino,” D.S. Kim, a Hong Kong-based analyst at BNP Paribas Securities Asia told Bloomberg News . “The existing casinos in Korea are like gambling dens which do not offer any non-gaming amenities such as spas, restaurants or entertainment shows. They simply cannot cater for large groups of visitors.” Caesars Chairman Gary Loveman said, “We are excited about the opportunity to expand our network and brands to Asia. Foreign visitation to South Korea has grown significantly, and we look forward to creating a world-class destination to further support Korea’s economic growth and tourism goals.” Those goals envision casinos as integral to raising South Korea’s appeal as a destination for Asia’s booming travel market, particularly the Chinese segment, which accounted for 36% of foreign visitors to the country last year and 41% of casino visits, according to official data. Bloomberg reports that the government is looking to more than double China’s contribution to the economy from 4 million or so visitors currently to 10 million by 2020. “Korea is the optimal location to draw Chinese bettors,” Song Hak Jun, a professor in the hotel and convention management department at Pai Chai University in Daejon, told Bloomberg . “Everyone’s competing to absorb China’s outbound tourist demand. Witnessing the soaring fortunes of LVS and Wynn in Macau, Caesars in 2007 made a vain attempt to gain a presence there by paying an astounding US$577 million for a loss-making local golf course which it eventually disposed of last year for $438 million. In Focus