Business World, 27 January 2015
By Krista A.M. Montealegre
THE OPERATOR of Solaire Resort and Casino is making its first foray abroad with a plan to build a casino and entertainment complex in South Korea.
In a disclosure to the Philippine Stock Exchange yesterday, Bloomberry Resorts Corp. said it is buying an aggregate 12.2-hectare plot of land in the Incheon Free Economic Zone (IFEZ), where a “leisure and tourism complex with entertainment facilities and mixed-use developments” will rise.
IFEZ is a few minutes away from the Incheon International Airport and close to Chinese cities such as Beijing and Shanghai.
Bloomberry shares rose 0.93% to close at P13 apiece yesterday.
Bloomberry Chairman Enrique K. Razon, Jr. has said the company was exploring opportunities to bring the Solaire brand overseas, including Japan.
“Korea has a thriving tourism, leisure and entertainment business,” Silverio Benny J. Tan, Bloomberry’s corporate secretary, said in an e-mail to BusinessWorld.
South Korea, which is keen to boost tourism, has said it will approve two new casino resorts and hopes to select operators this year. Operators are expected to invest at least one trillion won ($925 million) in their resorts.
Two casino resorts in Incheon have already been approved. A venture between South Korea’s Paradise Co. Ltd. and Japan’s Sega Sammy Holdings, Inc. has invested 1.3 trillion won in a resort project that broke ground late last year. Caesars Entertainment Corp. and Lippo Ltd. have pledged a combined 2.3 trillion won for an integrated resort expected to be ready by 2018.
The resort could be completed within five years, Reuters reported.
Unlike others which have formed joint ventures, Bloomberry plans to go solo with its investment in South Korea.
“It is very near China and is a popular destination for Chinese tourists so it is an attractive area for BLOOM’s expansion,” Mr. Tan said.
BLOOM is the ticker symbol for Bloomberry.
Macau’s casinos posted their first annual revenue decline in 2014 to end a decade of expansion, as the Chinese government’s anti-corruption drive spooked high rollers, who account for bulk of the gambling hub’s casino receipts.
As a result, VIPs are making their bets elsewhere and other emerging gaming markets like the Philippines and South Korea are vying to get a share of those high rollers.
“South Korea is accessible from China and because of the crackdown, it is expected to pick up the slack from the slump in Macau,” said Luis A. Limlingan, business development head at Regina Capital Development Corp.
Mr. Razon’s vast experience in running International Container Terminal Services, Inc. (ICTSI) — a developer, manager and operator of container terminals in gateway ports in over 20 countries across the globe — may work in Solaire’s favor when it expands overseas, Mr. Limlingan added.
“Any expansion by the company is positive. I’m sure they are not making a gamble in investing overseas. It will shore up revenues in the long run,” said Astro C. del Castillo, managing director at First Grade Finance, Inc.
The first integrated resort complex to rise in Entertainment City, Solaire may be drawn to expand overseas as the Philippine gaming market has yet to take off, with analysts citing the lack of infrastructure as the main challenge to boost that industry’s growth.
“In the Philippines, it is taking longer than anticipated to get an ROI because of infrastructure bottlenecks. It’s mostly the local market. They can’t seem to get the VIPs,” Limlingan said. ROI stands for return on investment, which measures the efficiency of an investment.
The Philippines is building an expressway — funded under the public-private partnership (PPP) scheme — that will connect Metro Manila’s three airport terminals to the Entertainment City, the casino-resort complex that state-run Philippine Amusement and Gaming Corp. envisions to be Asia’s next gambling mecca.
That expressway, meant to make it easier for foreign gamers to get to Entertainment City straight from the airport, was originally scheduled to start partial operations in April this year and become fully operational by January 2016, according to documents from the PPP Center. But as of Jan. 5, the so-called Ninoy Aquino International Airport (NAIA) Expressway that is being built by a subsidiary of San Miguel Corp., is just 19.21% complete, according to the PPP’s Web site.
The other integrated resorts in Entertainment City are the City of Dreams Manila, a joint venture between the Philippines’ richest man Henry Sy, Sr. and Macau-based Melco Crown Entertainment Ltd.; Bayshore City Resorts World, a partnership between Alliance Global Group, Inc. and Genting Group; and Manila Bay Resorts of Japanese billionaire Kazuo Okada.
Of the three, only the City of Dreams Manila has opened its doors to the public with a grand launch set for Feb. 2.
