By Paulo A. Azevedo in South Korea
The breakfast buffet restaurant is completely full. South Korean families and countless children delight themselves in the middle of the morning in what is Korea’s first Integrated Resort (IR). A luxurious building that Paradise Company Limited, the first casino operator in the country, does not hide has been built to offer the same refinement to its guests as the Wynn brand.
These are new times and South Korea is slowly upgrading its small casinos to follow the example of Las Vegas and Macau. The regional competition, with Singapore and Manila now embracing the IR concept, is no forgiver of loss of time or mistakes.
The first phase of Paradise City, with its 711 hotel rooms, screams luxury. In terms of materials and finishings, in its cozy and warm colours, and in its ample spaces. From the rooms, from where you can see planes take off and land at Seoul International Airport right next door, to the Spa to the restaurants, the concept is that of luxury in all its splendid hues.
And in the simplicity of its geometric lines and exemplary service: “It is in the service that we want to show the difference and in the content of what we have to offer,” said Philip Chun shortly after an interview with Macau Business. The Chairman of the group for the past 12 years, Chun has already defined his 2020 strategy. To offer the best but with the Korean brand the key differentiator. After all, K-style continues to garner millions of Asian fans every year, from pop to soap operas on TV, and from cosmetics to design.
Paradise is thus a kind of SJM of Korea, the first major gaming operator. The first of its parent company casinos dates back to 1967, pioneering gaming for foreigners, as South Korea is still not convinced that it should open licences for domestic casinos.
There is only one – and by the way the most profitable one. Kangwon Land is three hours distant from the capital, nestled in a remote ski resort, near the site of next year’s Winter Olympics. It emerged very exceptionally, as a form of government compensation to the local population for the loss of their main livelihood, mining.
But unlike SJM, Paradise did not expect competitors to release version 2.0 of the game in the country, the IR concept. Paradise City did the same as The Venetian in Macau when it opened the Sands Casino in 2004 but with the taste and the quality of a resort created under the care of Steve Wynn. And without looking at expense, as shown by the numerous artworks scattered throughout the hotel, with prices ranging from US$1 million to US$5 million.
South Korea is only now really getting into the game, despite its various casinos, mainly in Seoul, the Jeju holiday destination island and in Busan. Five gaming licences for the same number of boutique casinos would also not make Paradise Group a regional competitor, even with other business synergies such as the important Paradise Construction, founded in 1969 or, more recently, Paradise Travel & Leisure (2007). Going bigger, better and with more substance is the global concept.
But the winds are not favourable, while complications in regional geopolitics have the power to make South Korea pay a heavy price for taking its place in the history of men.
Its northern neighbour appears more unstable than ever, with threats exchanged with the new American President, a man who for many South Koreans enjoys the same moral stature and sanity as Kim Jong-Un, which does not much help.
To further complicate matters is the fact that the Americans are allied to the South, while the Chinese are the patron state of the North, causing the main tourism market in South Korea to have plunged spectacularly when Beijing slashed the number of visits to the country in retaliation for the installation on the peninsula of the ground-based missile defence system provided by Uncle Sam known as THAAD.
Regarding its financial results for the second quarter, Paradise Company Limited posted a 26 per cent decrease year-on-year in overall sales to US$122.91 million and an 85.3 per cent fallin gross profit to US$6.58 million.
The company, however, told Macau Business that the numbers are better now and that its chairman is confident the partnership with Japanese pachinko operator Sega Sammy Holdings Incorporated is already paying off, with the return of important numbers of tourists, once its strongest market.
More Japanese than Chinese
Japanese are the main source of revenue for the casino, with the amount of cash exchanged for chips at the table increasing 104 per cent year on year. Currently, VIP Japanese gamblers in Paradise City account for 40 per cent of the cash exchanged by chips, while the Chinese dropped to 27 per cent and other regions signify 18 per cent. VIP continues to be the main generator, while the mass market represents 15 per cent.
Up to last month, according to Paradise numbers, its IR had received 600,000 visitors since the opening of the hotel and casino last April, most of them Koreans. Still far from the anticipated 1.5 million in the first year of operation of the US$1.7 billion property.
The luxury casino, with its 350 slots and 160 gaming tables, hopes to do more than it has done but the company once again reveals to Macau Business its optimism, telling us: “Monthly sales recently achieved operating profit breakeven level.”
Adding that August casino revenue reached KRW20.6 billion (US$17.5 million). “We expect to be closer to breakeven in 3Q and then 4Q profit would be increased driven by a continued ramp-up of P-City resort”, said a spokesperson just days ago via email.
Philip Chun insists
Impeccably dressed and with a well-tanned complexion, courtesy of Ibiza’s sun, the chairman reveals that political circumstances will improve and business will flourish as it has been doing for the past half century. Especially when the second phase of Paradise City is completed in September next year, he says.
As the war games on the Peninsula continue, as veiled threats take their toll, life in Seoul continues as ever. The South Koreans, if they are worried, show no sign of it. At the weekend, restaurants and bars are crowded and Inkeon’s shops do brisk business as usual. Getting a ticket to the overcrowded air bridge with Jeju Island seems to be the main concern whenever a holiday expands weekend downtime.
For the gaming operators in South Korea, however, good news will certainly be the normalisation of relations and the return of the previous numbers of Chinese to the gaming tables. Although good customers, the Japanese are far from betting fortunes on simple hands of baccarat – something only the Chinese seem to have a particular penchant for.
VIP Japanese gamblers at Paradise City account for 40 per cent of the cash exchanged by chips, while the Chinese dropped to 27 per cent and other regions signify 18 per cent Paradise City received 600,000 visitors since the opening of the hotel and casino last April