Caesars breaks ground in South Korea
You have to think Caesars Entertainment CEO Gary Loveman spares more than the occasional thought imagining what a different company he’d be running with a destination-scale casino in one or more of East Asia’s key gaming markets.
Of course, these days he’s doing a lot more than daydreaming about it, and as the company looks ahead to breaking ground in South Korea this year on its first Asian IR, it’s clear that no matter how events unfold for the debt-laden giant in U.S. Bankruptcy Court, the region is seen as integral to its future.
After famously declining to bid for a Macau concession in its former life as Harrah’s Entertainment, Loveman & Co. later tried to get in through the back door and burnt $577 million on a golf course on Cotai in hopes a gaming license would be forthcoming.
When the next opportunity came around, this time in Singapore, Harrah’s did pull the trigger but failed to make the cut in the intense competition that ensued for one of the two IRs that eventually went to Las Vegas Sands and Genting Group.
So to be chosen as the first Western operator to develop in South Korea is clearly a coup. Not that it’s been a smooth ride either. Caesars was welcomed initially as an asset to the government’s tourism growth goals, only to be rejected for reasons that were never publicized, although concerns about its industry-leading $25 billion of debt doubtless factored into it. Then at the end of 2013 the company was invited to apply again, and in March of last year won approval to include a foreigners-only casino as part of a megaresort complex on Yeongjong Island.
Yeongjong, which lies about 50 kilometers west of Seoul, comprises the heart of a special economic zone the government has fashioned around Incheon International Airport for the express purpose of cashing in on China’s outbound travel boom. A second resort on a similar scale is also going up there, co-developed by Paradise Group, the leader of the country’s foreigners-only casino market, and Japanese machine gaming giant Sega Sammy.
The Caesars project, a joint venture with Indonesian conglomerate Lippo and Singapore property developer OUE, covers 4.3 hectares encompassing 150,000 square meters of developable floor space.
The partners want to have the first phase open in time for the country’s hosting of the 2018 Winter Olympics and plans call for an initial expenditure of around $800 million—the whole is priced at $2 billion at full build-out—for 500 or more hotel rooms together with entertainment venues, a shopping mall, a stand-alone convention center and a casino with 100 table games and 150 machine games.
The company has even more ambitious plans for the Philippines. It’s a market that U.S.-regulated operators have yet to come around to trusting, and perhaps because of that Caesars spies a lucrative opportunity in an environment where the government is also looking to resort gaming for an economic lift and, as in South Korea, might be open to accommodation for the sake of burnishing its efforts with a globally recognized Western brand.
That hasn’t panned out so far. President Benigno Aquino leaves office in 2016, and the industry regulator, the Philippines Amusement and Gaming Corp. (PAGCOR), which operates as a direct arm of the executive, says it prefers a more prudent stance—or a safer one politically—of waiting to assess the impacts of the four IRs already approved for a special tourism zone on Manila Bay, two of which are up and running, the remaining two slated to open in 2016 and 2018.
Caesars doesn’t want to build there, however. It has selected a site next to Manila’s Ninoy Aquino International Airport and has upped the ante by bringing in experts to advise on a redesign and expansion of the country’s main international gateway in concert with its plans.
Its offer to invest $1 billion or more in the combined projects, together with the promise of 20,000 jobs, has piqued enough interest to gain Loveman and company executives an audience with President Aquino and meetings with PAGCOR officials.
—JAMES RUTHERFORD, INSIDE ASIAN GAMING MAGAZINE