Monopoly will last until 2019
Hong Kong-listed Summit Ascent Holdings, owned by Melco Entertainment honcho Lawrence Ho, has posted impressive VIP growth at its Tigre de Cristal integrated resort in the Russian port city of Vladivostok. Union Gaming’s Grant Govertsen has forecast at least two years of the same for the property after Summit Ascent reported VIP volume increases exceeding 200 percent in the second half of 2016 and 160 percent in the first half of 2017.
According to Inside Asia Gaming, Govertsen’s confidence is well-founded, as NagaCorp’s Vladivostok resort is not expected to open until late 2019 and local regulations have opened the door for more Chinese tourists.
“An upcoming online visa application system should help drive volume,” Govertsen said. “Ultimately, we like the odds of a jurisdiction that is friendly with China to enjoy the benefits of outbound Chinese tourism (opposite of what Korea is currently experiencing) which, when combined with access to the under-penetrated northeast of China, makes for a compelling long-term growth story.”
He added that the government has already opened a new highway that allows enables visitors to get from the airport to the casino in 15 minutes. “Up next is the implementation of the online visa application system that goes live in three weeks, which will make it much easier for Chinese to obtain individual visas,” Govertsen wrote. “Further down the road we look for visa-free access to Vladivostok. Management is separately lobbying the government to implement banking-related changes that will allow them to exchange foreign currencies at the cage, replacing the current expensive and cumbersome process for foreign mass market visitors.”
He called the two-year monopoly “an enviable runway” that “allows the company to effectively lockup the locals market in the meantime. Ultimately we do think scale will be beneficial and expect the cluster-effect of multiple casinos to have a positive impact on market-wide VIP GGR.”
Mass growth at Tigre de Cristal hasn’t been as robust due to the proliferation of illegal casinos in the city, Govertsen noted. He said mass could triple in growth if authorities crack down on the lawbreakers.
Meanwhile, Cambodian operator NagaCorp has rebranded its development in the Primorye economic zone. “The second casino in the Primorski Kray will be called not Mayak, as investors earlier said, but Naga Vladivostok. Obviously, the new version sounds more serious, which can’t but please us,” said Andrei Folomeev, head of the Primorsky Territory Development Corp.
Naga Vladivostok is expected to complete construction by the end of 2018.
Folomeev added that the corporation is in search of new investors, and may “adjust the concept of the development of the entire resort.” Another development is in the works: Diamond Fortune Holdings Prim is building a resort it calls Selena.
