Inside Asian Gaming

JUly 2015 inside asian gaming 17 Strategic Market Advisors Managing Director Matthew Landry believes four IRs can prosper in Incheon. “Before the current challenges in gaming revenue originating in China, I had estimated that the northeast China market could grow by ten-fold between 2014 and 2020. A dramatic cut, say half, still leaves billions in unmet demand. Analysts need to remember that China’s economy continues to grow at a substantial rate, and that can be enhanced easily through the exchange rate. As the [mainland China] economy gains more secure footing, consumer confidence will rise, and the timing should be positive for Incheon’s new facilities.” Some observers have expressed concern about whether the new IRs will function as a cluster such as downtown Macau, Cotai or Manila’s Entertainment City. Except for the potential of two IRs around the airport, even proposed IRs elsewhere on Yeongjong will be double-digit minutes’ driving from each other and from the airport. For example, the Caesars IR will be 10-15 minutes northeast of the airport and the proposed Bloomberry site is roughly the same distance to the southwest. “All clusters are not created equal,” Macomber International President Dean Macomber says. “Stepping out of one casino and being able to walk into another next door or across the street without getting soaked from humidity and/or a rainy season storm is synergistic. Casinos set apart by ‘I’m-not-sure-I-want-to-walk’ distances for physical, weather, safety, or other reasons diminish the potential of a cluster exponentially by the sum of their incremental impact.” Yeongjong will need an effective shuttle system (and lots of VIP cars) to make its critical mass felt on the ground. Mr Macomber, with four decades of experience in US and Asia markets, believes IRs in the $1-2 billion class can create an attractive destination. “The product casinos sell and customers come to buy are compelling experiences, apparently more difficult and elusive to conceptualize and consistently deliver than might be expected,” he © Imkenneth | Dreamstime.com In Focus The MERS outbreak has led to South Korea waiving visa fees for Chinese tour groups, allowing groups bound for Japan 15 day visa-free stays in South Korea and extending visa validity from three months to six months. That could set the stage for more changes. says. “While money helps, compelling experiences are not always a function of dollars alone, particularly after the US$1 billion threshold is crossed. And, given the uncertainties facing Asian gaming these days, the gaziillion dollar projects being bandied about may backslide into a more rational range that narrows the eventual competitive level.” He also suggests the “unsettlement” across Asia, caused largely by lower Chinese high-roller overseas play, presents an opportunity for new destinations. “A consequence of this unsettlement is that a not immaterial portion of the capitalization of Macau companies and the net worth of their billionaire owners has taken to the sidelines with many of those remaining caught in the headlights not quite knowing what to do. Accordingly, governments, free economic zones, and potential joint venture partners would be well advised, if they want to get a project capitalized and started in the next six to twelve months, to take whomever comes along, imperfections and all,” Mr Macomber says. “Note that there will be winners: Asia is still undersupplied casino-wise and over some mid-term moving average increment— for example three to five years—should still outperform just about anywhere else in the world, barring unforeseen events.”