IPI agrees amended timetable

Hong Kong-listed Imperial Pacific International says construction work at its delayed casino resort on the Pacific island of Saipan is now on track and it expects the labor issues that have dogged the project to be resolved soon.

The company opened the casino portion of its resort in July, transferring operations from a temporary facility in a downtown mall. After the transfer, the company’s gaming capacity was increased from 48 tables and 141 slot machines to 76 tables and 184 slot machines, with a maximum capacity of up to 193 tables and 365 slot machines once the resort is finished in 2018.

The temporary facility, with its handful of tables, has been generating rolling chip volume that has averaged more than $2 billion a month since it opened in Nov. 2015, despite a lack of hotel and other tourism infrastructure to accommodate VIP guests.

At present the company has three villas and five yachts to host visitors as well as hotel rooms secured from local high quality hotels.

However, the company acknowledges that a lack of hotel space is a serious bottleneck for the tourism industry on the island.

Mariana Islands, for the first half of the calendar year of 2017, average hotel rates reached a new high of $145.5 per night with average hotel occupancy rates of 92.1 percent, representing growth of 5.3 and 5.8 percent compared to the same period of 2016.

Koreans fuel visitor arrivals

The Marianas Visitors Authority says, for the first half 2017, total visitor arrivals to CNMI grew by 37.4 percent to 333,960. This was mostly driven by an increase from South Korea of 78.1 percent as a result of increased flights. Visitor arrivals from Mainland China grew by 8.6 percent, while arrivals from Hong Kong and Taiwan boomed by 216.5 percent and 66.6 percent, respectively.

Casino tax revenue to close pension gap

Lawmakers in the Commonwealth of Northern Mariana islands have agreed to allocate a portion of casino tax revenue to make up a pensions shortfall. The House has accepted that $22 million in casino taxes will be proportioned to retirees, rather than a separate account of $15 million generated from the annual casino fee. Instead, $1.5 million of the license fee for Saipan will now go to the Saipan Higher Education Financial Assistance program, while Rota and Tinian will get $2 million each. The rest can be appropriated by Saipan lawmakers.

The company now has an amended timetable in place for the opening of its resort, with the initial gaming facility to be completed by August 2018.

The original plans involved a five-stage rollout, beginning with a town hotel in 2016, but the company ran into issues with its main contractor, which is under investigation by U.S. authorities for using illegal Chinese labor. It has also faced delays linked to weather due to the disruption caused by Typhoon Soudelor.

Under the amended accord, the initial gaming facility needs to include at minimum, a 329 room four or five-star luxury hotel; 14,140 sqm of gaming area; 3,870 sqm of food and beverage outlets; 186 sqm of retail space; 930 sqm of meeting space; 15 villas; 1,500 sqm of spa/fitness area; and associated parking, site improvements, landscaping, furnishings, fixtures, utilities and infrastructure.

Phase one is to be completed no later than August 13, 2023, and is designed to “result in the establishment of a fully functional integrated resort.” It will need to include an 800-room four or five-star hotel, a $100 million themed entertainment facility, 5,372 sqm of food and beverage outlets; 2,500 sqm of meeting space (including indoor seating space for 600 persons); 5,000 sqm of retail shops; wedding chapel; 500 sqm spa/fitness area; 10,000 sqm of gaming area (which includes back-of-house areas); and associated parking, site improvements, landscaping, furnishings, fixtures, utilities and infrastructure.

Phase two, which includes similar elements, is required to be completed no later than August 13, 2028.

Capital needs As of end June, the company said $506 million had been invested in the construction and design of the resort. Shortly after winning the license to develop the island’s only casino in 2014, Imperial Pacific said the full roll out of the resort would cost $7.1 billion.

In its filing to the Hong Kong Stock Exchange announcing its first half results, the company outlined capital raising steps it has taken to date to secure funding for the development and said it doesn’t rule out further financing efforts should the opportunity arise.

In 17H1, the company reported an 8.9 percent rise in profit to HK$912 million, helped by a surge in revenue to HK$7.3 billion, up from HK$3.98 billion in the prior year period.

Best Sunshine Live saw VIP table games rolling revenue rise to HK$196.3 billion in the half year, compared to HK$104.7 billion in 16H1.

Revenue from mass gaming operations amounted to HK$147 million up from HK$121 million.

“We are also planning to open more VIP gaming rooms by the end of 2017,” the company noted in the statement. “With the gaming capacity to be further enhanced, we expect to commence collaboration with gaming promoters after they are granted junket operator licenses to operate on the Island of Saipan. Due to CNMI’s low tax regime, we believe we will be able to offer very competitive commission rates to our gaming promoters.”