In January, Caesars Entertainment sold its entire stake in a South Korean casino project to its former partner in the venture, Hong Kong-listed Guangzhou R&F Properties Co. Ltd. The sale was disclosed to GGRAsia last week by an official from the Incheon Free Economic Zone Authority (IFEZA). The source disclosed no terms of the transaction.
The project known as Midan City Resort Complex is now being promoted by an entity called R&F Korea (RFKR), the news website reported. It replaces RFCZ Korea, a 50-50 joint-venture between Caesars and China’s Guangzhou R&F.
Last year, Caesars Entertainment Corp. merged with U.S. regional casino operator Eldorado Resorts Inc. in a $17 billion deal; the merged operation became Caesars Entertainment Inc. In mid-2019, when the merger was first announced, an Eldorado Resorts executives seemed to downplay the opportunity for Caesars in Asia, saying any opportunity would have to be “stupendous for us to be running in that direction.” Shortly thereafter, in August 2019, Caesars said it was dropping its pursuit of a Japan casino license, one of the first U.S. companies to announce an exit from the race. It was soon followed by others like Wynn Resorts and Las Vegas Sands.
The South Korea project is located near Incheon International Airport, known as “the gateway to Seoul.” Along with a foreigners-only casino, the 1.85-million-square-foot, $767.5 million complex was to include a 720-room hotel along with suites and villas.
Construction was meant to be completed as early as March 2018, but funding problems and construction delays left the resort unfinished. Work on the project was suspended in February 2020, with the resort only half-finished, and in February of this year, the former partners asked South Korea’s Ministry of Culture, Sports and Tourism if they could postpone the Phase 1 opening of the complex from March 2021 to March 2024.
The Korean Ministry of Culture, Sports and Tourism and the IFEZ warned the partners that if they did not have an approved plan to complete the location by mid-March, they would lose their license. That’s when Caesars withdrew from the market.
While Caesars’ exit was likely based in part on a plan to focus on its U.S. business, the project had been troubled for years before the company cut the cord. RFKR now must find a new partner with casino-operations experience. “The approval of the project change, such as extending the completion period, will be decided through a review by the Ministry of Culture, Sports and Tourism,” said an official from the Incheon Economic Office. “If approved, the speed of the project will increase.” If the license isn’t extended, the project could be abandoned altogether.
In a conference call with investors for the fourth quarter report last week, CEO Tom Reeg said that the company is becoming largely U.S.-centric, emphasized by the sale of the Korean project.
“We sold it for some barbequed pork,” said Reeg, who claimed the sale happened last May rather than January as had been reported. The quip quickly offended Asians, and if the company had any notion of a Far East expansion, that was ended with a bang.
But Reeg doubled-down on the U.S. business.
“You should expect that over time (our Windsor management contract in Ontario, Canada) will be the extent of our non-U.S. business,” he said.
On a positive note, Reed said that Las Vegas, the epicenter of the Caesars empire, was ready to rebound.
“We feel very good that we’ve seen the bottom in Vegas and in the business, and that we’re only going to keep getting better,” he said. “In Las Vegas, we are at our highest level of bookings since reopening,” he said. “It’s almost like a switch was flipped sometime late January, early February.”
He also said that a sale of any Las Vegas property, which had been contemplated at the time of the Eldorado purchase, would not occur in 2021, and he said that Planet Hollywood would likely not be sold at all.
