Inside Asian Gaming

JUly 2015 inside asian gaming 21 Cover Story Chu Lai zone master plan proposes upgrading its current domestic airport to an international gateway through private investment on a build-operate-transfer basis at a cost of $700 million to $1 billion. That’s a long-term hope at best. ASSOCIATIVE PRINCIPLE The family behind ChowTai Fook has extensive ties toMacau’s casino business. Patriarch Cheng Yu-tung has held a 10% stake in STDM, the parent of SJM Holdings, since 1982. His son, Henry Cheng, is chairman of Hong Kong-listed International Entertainment, which last year offered HK$7.35 billion ($950 million) for 70% of Suncity, which has an estimated 30% share of Macau’s junket market. Suncity itself has been expanding its range of travel services and destinations for customers, including a greater presence in Manila, and previously expressed interest in building a resort in Phu Quoc, an island off Vietnam’s southwestern tip. Unlike Hoi An South predecessor Genting, none of these investors has built or operated a casino resort. The Grand Ho Tram Strip’s conception and delivery undoubtedly benefited from its association with erstwhile management partner MGM Resorts International that withdrew a few months before the property’s July 2013 opening. Ho Tram’s $600 million first phase includes a 541-room Paul Steelman-designed beachfront tower, world class links golf course The Bluffs designed by Greg Norman and casino with 90 tables and 600 EGM positions. The resort can hold its own with any property its size in the region. “Ho Tram is just missing people,” Mr Klebanow says. Ho Tram executives say The Grand runs at 30% occupancy on weeknights, par for area beach resorts, and 70% occupancy on weekends, routinely filling to capacity on holidays. Monthly pool parties bring in 400 overnight guests. MICE offerings have been well received in Vietnam’s burgeoning corporate community. Since officially opening in October, The Bluffs averages 1,500 tee offs monthly. Tweaking F&B offerings since late last year has doubled revenue in that segment. In April, The Grand opened a poker room operated by World Gaming Group—the parent company of Inside Asian Gaming —and in May hosted a weeklong Asian Poker Tour event. Many guests at The Grand are Vietnamese that can’t use the casino, drawn instead by the closest good beach to Ho Chi Minh City, Vietnam’s commercial hub and its largest, richest urban center with a population of 9 million, some two hours away. Southern Vietnam is also home to several hundred thousand expatriates and Viet Kieu, Vietnamese with foreign passports. After initially focusing on overseas high rollers, The Grand began serious efforts to court those potential players late last year. “This has been an extremely successful marketing move for us,” The Grand President Shaun McCamley, with 35 years of industry experience on three continents, says. “Having large resident expatriate communities on our doorstep has seen us exceed even our own aggressive forecasts for drop and GGR.” The Grand also began phone betting last December. Mr McCamley joined ACDL last October amid a behind-the- scenes flurry that included a $20 million investment from Chien Lee, a founder of Macau junket promoter Iao Kun Group and China’s 7 Days hotel chain that’s in 300 cities across Asia. Mr Chien has helped ACDL connect with mainland China travel agencies to lure tour groups. Despite territorial disputes in the South China Sea that spurred anti-Chinese riots across Vietnam last May and left up to 21 dead and hundreds of factories damaged, China accounted for nearly 2 million of Vietnam’s 7.9 million visitors last year, more than double the arrivals from second place South Korea. In September, privately held ACDL appointed Stephen Shoemaker, its longtime president and chief financial officer, as CEO. At the same time, ACDL received a $50 million equity injection from majority shareholder Harbinger Capital, headed by Philip Falcone. Mr Shoemaker, who joined ACDL when Ho Tram “was still a PowerPoint,” has a close relationship with Mr Falcone, who stepped down as head of Wall Street investment fund Harbinger Group in November, allowing him to give more attention to ACDL, executives say. BEACHED WHALES ACDL is supposed to develop five resorts on its 164 hectares (405 acres), including 2.2 kilometers of beachfront to fulfill its $4 billion investment requirement. One more resort can have a full casino, and others can have electronic gaming if they’re certified five-star properties, according to the government’s decree on slot parlors issued in 2013. US regional gaming operator Pinnacle Entertainment agreed to manage Ho Tram’s second casino resort in 2011 as part of investing $110.6 million for a 26% stake in ACDL. Pinnacle, currently considering a REIT spinoff and GLPI buyout offer, has since written off its investment and seen its share of ACDL diluted, but it could still participate in Ho Tram’s development. The Grand says casino revenue has risen to record levels virtually every month since Mr McCamley joined. Gaming revenue currently skews 80/20 to the VIP side, “but we have seen fast growth in the In an interview last October, Mr Shoemaker forecast The Grand operations would turn profitable early this year. But company executives won’t say whether that hurdle has been cleared. Mr Klebanow says a key issue, apart from the ban on local play, is that The Grand doesn’t have enough rooms to support its casino.