Government help appreciated
The chief operating officer of Summit Ascent Holdings’ Tigre de Cristal integrated resort in Russia’s Primorye Integrated Entertainment Zone reports a substantial increase in visitation and gaming revenues since the IR opened in October 2015. But he adds that a “cluster” effect with multiple resort options is imperative and overdue.
“The area will be much more attractive, especially for foreign customers” when there are more places to go and things to do, said COO Stylianos Tsifetakis. “The sooner the cluster effect is created, the better it will be. From the beginning the strategy for this place was to try to attract the 400 million people that live in the neighboring regions” of China, South Korea and Japan.
When Tigre de Cristal opened, it suffered from “the perception of the local market towards casinos,” he said. “Our visitation from the local market was very low and the playability was not there, and we were relying heavily on the junket market,” Tsifetakis told GGRAsia. Three years in, that situation has improved. “The majority of our revenue actually comes from the local market, rather than the junket segment.”
Summit Ascent reported total revenues of HKD207.8 million (US$26.5 million) for the first six months of 2018, up 1.5 percent year on year, and an increase of 4.4 percent in gaming operations to HKD190.7 million, despite a decline in rolling chip volume in the firm’s VIP segment. Rolling chip turnover in the first half was HKD6.51 billion, down 22.6 percent from the prior year. The casino investor posted a net profit of HKD2.6 million for the first half of the year, compared to a loss of approximately HKD5.4 million a year earlier. Mass-table business saw “a significant improvement” with revenues up 47 percent year-on-year to HKD83.5 million in the six months to June 30. Tsifetakis said the junket segment “was a completely new territory” when the resort opened and junket operators were “not aware of the Russian market.
“Now we see that the perceptions have changed completely, and we continue to develop both the VIP and the mass-market segments,” he said, and added that the firm will soon welcome new junket investors to the property.
Tsifetakis added that the company appreciates the increasing cooperation of the local and federal governments. “That has changed completely, as they are very supportive; things now happen much faster and they have now a better understanding of the casino business. Taxation here is very low because we are not taxed on gross gaming revenue, and that allows us to remain competitive.” The local government charges RUB125,000 (US$2,198) per month for each gaming table and RUB7,500 per month for each slot machine.
Tigre de Cristal is currently the only casino property operating in the Primorye Integrated Entertainment Zone, located about 30 miles from the Russian port city of Vladivostok. It will eventually be joined by NagaCorp Ltd.’s Naga Vladivostok and the $900 million Selena World Resort and Casino, a project planned by Russia’s Diamond Fortune Holdings.
According to CalvinAyre.com, 118 acres are still available for development in the zone, known as PIEZ, which is promoted by Primorsky Krai Development Corp., an arm of the Department of Tourism of Primorsky.
In Phase II of its development, Tigre de Cristal will add hotel capacity, an indoor beach club and upscale shopping center. Set to open in the second half of 2020, pushed back from 2019, the US$500 million Phase II development will be “geared to appeal to the foreign mass and rolling-chip customer with extensive dining, entertainment, and retail facilities anchored by a large premium outlet mall,” according to a statement from the company.
Tsifetakis noted that according to news reports, more than 2 million people visited Vladivostok in the first eight months of 2018, “an increase of 21 percent year-on-year, which is very encouraging to the local industry.”
