OFF INTO THE WILD WET YONDER How does this...
South Korea Stands to Win as Macau Loses
South Korea may quickly capitalize on Chinese gamblers that are shying away from the tables in Macau, opting instead for other destinations. Increasing numbers are heading to Seoul, largely for shopping but also for baccarat and other low-stakes games on the side.
Casinos have caught wind of the growing market for Chinese tourists by catering to these average Joe (or Lee) casino goers.
Just last year, South Korea had six million visitors from China. This was a record number and a 50% increase from the previous year. These numbers also translated to approximately US$10 billion spent. The gaming industry obviously wants more of this spent on the casino floors.
Despite big spending overall from the Chinese, revenue actually brought in from South Korean “foreigner only” casinos was far from impressive in 2014 (although nothing like the prolonged slump that Macau is experiencing). So, casinos are scrambling to try and get more of these tourists in their doors by providing services specifically for tour groups, along with promotions such as iPad or shopping giveaways. Additionally, casinos are hiring on more Mandarin speakers, and some larger operators are already expanding floor space in anticipation of what’s believed to be a large market increase in the next few years.
Low-rollers certainly aren’t the only ones being targeted either. VIP gamers always make up a small yet key proportion of gamblers—minimum VIP bets can range anywhere from US$40,000 to a whopping $400,000 (in Macau)—revealing who the real contributors to casino revenue are.
To attract these big fish, operators are offering free flights, limousines, and hotel packages. What’s more is that “premium mass players” are given true VIP treatment at big casinos such as Seoul’s Paradise Walkerhill—something that these gamblers would not experience in Macau.
Paradise has reported that the number of Chinese gamblers shot up late last year, while gaming revenue only rose around 3.7%, apparently reflecting action mainly from low-rollers.
Strategies that Paradise is using may give South Korea a competitive edge over such gaming destinations as the Philippines, Vietnam, and Singapore. Although, competition could be stiff with the Philippines’ newly opened City of Dreams Manila and (if funding is locked in) with Vietnam’s ambitious casino resort island.
Not to be left out, South Korea also has its eye set on similar casino resort developments. One of these is slated to open in early 2017, right next to Incheon International Airport.
One advantage that South Korea already has is its proximity to both Beijing and Shanghai, the main sources of Chinese visitors to both Seoul and Jeju Island—another gaming destination that is quickly growing in popularity. Southeast Asian casinos probably see far more visitors from Hong Kong, Guangzhou, and other southern cities, due to the larger number of options for cheap, direct flights to places such as the Philippines or Vietnam.
Throughout Asia, developers (and investors) must be applauding China President Xi Jinping’s campaign against corruption and its marked impact on Macau. For other Asia-based travelers and casino goers out there, well, brace yourselves for a continued influx of noisy, sometimes unruly, ultra-consumer Chinese tourists, possibly in your neck of the woods.