China row casts clouds in Korea

Once touted as one of Asia’s most promising markets, due to its proximity to China and Japan and cultural appeal, South Korea had another disappointing year in 2017, this time due to politics.

Revenue in the country’s foreigner-only casinos had only just recovered from an outbreak of Middle Eastern Respiratory Syndrome in 2015 that triggered a slump in tourism. Prospects at the beginning of the year were looking up, but then South Korea agreed to deploy the U.S. terminal high air altitude defense (THAAD) system sparking Beijing’s ire.

In retaliation, Beijing banned tour-group travel to South Korea from March, with a resulting collapse in tourism numbers. Individual tourists are still able to travel, but they were unable to make up from the large and rapidly rising number of China arrivals. 

The number of mainland visitors fell by more than 48 percent in the eight months through August, according to figures from the Korea Tourism Organization. In August, alone China arrivals were down more than 60 percent. Beijing finally signaled at the end of October that it may ease up on the blockade.

N. Korea lifts racing ban as sanctions bite

The North Korean government has lifted its ban on horse race betting. It is understood that race goers 12 or older were allowed to bet on jockeys through a lottery system at the end of the competition. According to a report from Reuters, experts see the move as the latest method for the isolated country to ride out a series of international sanctions, which has placed bans on key exports such as coal, textiles and seafood. “Kim has been pushing for vanity projects for a theme park, sky resort and the horse riding club for the sake of propping up the people’s well-being but their real purpose was to earn foreign currency,” said Na Jeongwon, head of the North Korea Industry- Economy Research Institute in Seoul.

Paradise Sept. sales gain

Paradise Co posted 34.1 percent gain in revenue year-on-year in September, despite the plunging mainland tourist arrivals. Revenue was approximately KRW54.70 billion ($48.1 million), compared to about KRW40.78 billion in September of 2016. Table revenue rose 37.9 percent to nearly KRW52.09 billion, from nearly KRW37.77 billion in the prior year. The group gave no explanation for the gain, though analysts have speculated it may be benefiting from efforts to broaden its clientele base. In the first half of the year, revenue tumbled 20 percent.

Despite the setback, a number of projects have progressed, including the opening of the country’s first integrated resort in April. 

Paradise City, a joint venture between Paradise Co. and Japan’s Sega Sammy Holdings Inc, opened in April. The project is located at the International Business Center (IBC-1 Phase 2) Area of Incheon International Airport, and is around 40 minutes drive west of the country’s capital.

It holds a land area of around 330,000 square meters, and opens with 154 game tables, 281 slot machines and 4 electronic table games (62 seats). The remaining facilities under the first phase, which will include commercial facilities and a premium spa are scheduled to be completed in 2018.

The company said that it forecasts roughly 1.5 million annual visitors in the early years of the resort, with revenues for the group’s four casinos to reach 880 billion won in 2017 and 1.1 trillion won in 2018.

The property will be restricted to foreigners only, with only one casino in South Korea permitted to allow the entry of locals. 

The company has dismissed concerns about the tourism slump, saying the resort will pull in visitors from the Seoul region to the non-gaming attractions, while the mainland VIP can visit. 

Caesars Entertainment and the Mohegan Sun also have licenses to develop IRs in the Incheon area, though progress has been slow. Hong Kong-listed Lippo Group, which was part of the Caesars consortium completed its pullout from the project in March. 

Mohegan in May said it had  “executed important agreements” with Incheon International Airport Corp (IIAC) regarding necessary infrastructure around the site, as well as a development services agreement with the scheme’s consortium under which it will receive $40 million a year. The project is slated to open in 2020.

The southern island of Jeju has also seen projects advance, with Landing International Development holding a soft open for the first part of its Shinhwa World complex in April. Landing was originally developing the $2.2 billion resort with Genting Singapore, but the partner announced it was pulling out at the end of 2016, leaving the Chinese property developer to go it alone.

Landing opened The Shinhwa Theme Park, on Sept. 30, which was developed in collaboration with TUBAn, one of Korea’s premier animation companies, based on its popular 3D animated characters such as Larva, Wingcle Bear, Buck, and Oscar. The IR will hold its grand opening in December, when the casino will come online. 

The Gongzi Jeju Casino within the Ramada Hotel complex in Jeju held an official opening in July, while another major project from Lotte Tour Development Co is also moving forward. It has selected Grand Hyatt as the hotel brand for its Jeju Dream Tower integrated resort in a hotel agreement signed in August. The Hyatt will operate 1,600 rooms, 11 restaurants and bars, and all other hotel amenities. It will be the world’s second-largest Hyatt hotel in terms of room capacity.