With some $600 million already invested in Hann Casino Resort, Chairman and CEO of Hann Resorts, Daesik Han, is focusing on building the synergy with its new $4 billion Hann Reserve property.
Leveraging a first-mover advantage and focusing on direct VIP, Han says that other players who want to move in to the market will find it tough to compete, even though Hann Reserve should only have a casino by 2028 or 2029.
We’re here with the Chairman and CEO of Hann Resorts Daesik Han. Thank you very much for being here with me. It’s a very exciting time for Hann Resorts, you already have the Hann Casino Resort, which has been very successful. The next major project is the Hann Reserve. How can Hann leverage the synergy between Hann Casino Resort and Hann Reserve?
First, I think the most important thing is timing. Because when I acquired this 450-hectare property for Hann Reserve in the year 2019, because of COVID everything went kind of slow. And, because of this very challenging terrain there, it will take time for me to build infrastructure, all of the road network and everything.
That’s why, based on my study, the fastest I can have the casino in Hann Reserve is going to be, realistically, something like 2028 or 2029. But right now I have Hann Casino. So that’s why my plan is to build all of the different facilities, for instance, golf, and then different entertainment at Hann Reserve.
I’m [also] planning to expand Hann Casino right now, because the feedback from the market is kind of fantastic. That’s why our operation team feel that the casino is getting smaller and smaller.
That’s a good problem to have.
Yes. I plan to have this expansion of the casino, which will add something like 500 to 600 slot machines, maybe more or less an additional 100 tables in three years. So, in three years time, while I’m developing this Hann Reserve, different supporting facilities, then my casino, I’ll be having more of this gaming capacity there. So this supporting facility from Hann Reserve will support, definitely, that’s one thing, because of this timing; development and timing.
The other one is, I really want to make Hann Reserve a very luxury integrated resort. Again, the timing is very important. Right now, the Clark market is being spotlighted lately, because of these different infrastructures and especially the airport. But still, it will take time for a nearby area to be fully developed.
That’s why I want to make sure to maximize Hann Casino right now, and then later, when Hann Reserve is done, it will widen the market, not only in Metro Manila, but also as a different destination, from Clark airport, to provide a luxury gaming entertainment experience from Hann Reserve.
We saw recently you secured another $166 million in loans. How much is the Hann Reserve project estimated to cost?
Right now I should say the ballpark number is something like $3 billion to $4 billion over maybe seven or eight years. Yeah, that’s what I see.
Is all of the financing already secured? Or does that have to be done in tranches as development progresses?
First, we’re making a decent amount of money from operation. And plus, last week I secured this PHP9 billion loan. That will be the first loan for the first phase. And then again, every time we’re adding more facilities at Hann Casino, and we’re expanding. So over the years, I’m pretty confident that we can support this investment with the funds from our operation. And we’re having pretty strong support from the financial sector in the Philippines.
Plus I’m thinking of having an IPO with a gaming company and then the REIT (real estate investment trust) because, you know, our hotel has been performing very, very good. We are running somewhere higher than 90 percent occupancy. So, that is a different way of funding this project.
What timeframe are you looking at for the IPO? Is now an ideal time? Would it be a couple of years from now?
I think the most important thing is the multiple, which is tied up with interest But, always there’s up, there’s down. So now the interest rate is moving slowly up but because of this concern from banks from the US, from Europe, always it’s pretty tricky to speculate.
But a lot of people they see that towards the end of the year it’s going to stabilize, and then it goes down. So, I’m thinking of maybe one or two years from now. I need to see how this interest rate moves. But yeah, that’s what I’m thinking.
You mentioned that you did have great occupancy. The Hann Casino Resort has been performing very well, even as other competitors within the market weren’t reaching the same level as you are. How important is the higher-end play to the bottom line?
High end players, higher end players, they’re very important. But the tricky part is that I don’t think it is only the Chinese government that’s trying to somehow tighten the scrutiny on these high rollers, but also all of these governments, that’s what they’re doing. So, it’s pretty tricky, especially transferring money, like across the border.
I think that’s very, very tricky. So, from the beginning, the club market was not that big enough to draw attention from these big junket players. That’s why I had to focus on how to improve my mass VIPs. So that’s what I’ve done. Our performance is pretty healthy in the way that the contribution from this junket is kind of limited right now.
And definitely, that’s the way to go – by adding more different supporting facilities. I’m not saying that junket or VIP players like those which used to dominate the market in Macau are not important. But because of these government regulations, I think as time goes by it’s going to be more and more tricky. So we’re really focusing on how to develop this mass VIP, which we have been successfully doing.
Speaking about the Hann Reserve, you’ve called it before a “millionaire’s playground”. What does that mean to you? And what does that mean for you having the first mover advantage? What will your competitors have to face?
So far, I have invested something like $600 million in Hann Casino. I know that a number of big players have studied if it’s feasible to step into the Clark market, after they saw my numbers. But the thing is, they realize that in order to compete with me, they have to really spend more than a billion dollars. And then now, when we talk about the Clark market, the market is definitely not as big as that of Metro Manila. So, if they spent a billion dollars and then split the market, it’s going to be a big concern.
But, what I’ve done is I started small, and I keep on reinvesting. Plus, if somebody stepped in, it would maybe take a year or something to secure the property, and two years of the design stage, maybe three to four years of development. So only it’s going to be in five to six years. What’s going to happen to Hann Reserve five or six years from now?
It’s going to be very well developed and shaped-up. Then it’s going to be more difficult for them to compete with me. That’s why, always spending a certain amount of money today is going to be much more worth it than spending the same amount of money in the future. So I’m not very concerned about competition in the Clark market.
As far as the Clark market is concerned, the thing is there are some things that you cannot control in your life, there are some things that you can control. So, how can I control if somebody wants to step in? I cannot control it, right? But what I can control is I make my product different, I make my product unique from somebody else’s. So that will draw more attention from the market. That’s what I’ve been doing.
With the expansion project of the Hann Casino Resort, and with the Hann Reserve, you have your hands full with things to do. Are you looking at other markets though?
Yes, given the opportunity, sure. But right now, especially, let’s say from now until something like, more or less, two years from now, I think that is very critical for the success of Hann Reserve. Because I have a lot of components there to lead to the success, but I have to make sure everything will be somehow mixed well together and then all of the circulation. T
here are certain facilities which should not be together, there are certain facilities which have to be together. So I have to analyze all the different parts in two years, and set up all of the structure. And then after that, there’s a time probably while I’m developing the rest of the components of the project when I will look into different areas if given a chance.
I look forward to seeing the growth and seeing what can happen. Thank you very much for being with us!
