Concerns across Asia due to the Covid-19 outbreak and travel restrictions amidst the Russia-Ukraine war have put the Phase II development of Tigre de Cristal on a backburner for Summit Ascent.
Macau’s purge of the junket industry has had a significant impact on the industry all across the region.
“Without the bespoke marketing efforts and services of the gaming promoters including, but not limited to, arrangement of the travel visa, transportation, accommodation, complimentary items or services and rebate, the total number of high rollers in Asia may decrease,” the company statement remarked
Due to the ongoing COVID-19 pandemic, the unfavorable factors have progressed from short-term to long-term for the Group.
Management said it would continue to revisit the assumptions used in the fair value assessment of the Group’s assets to determine whether, on the basis of the evidence available, the carrying values properly represent their fair values.
The dramatic drop in Chinese outbound tourism numbers in terms of both departures and expenditure will have a lasting impact on Tigre de Cristal’s rolling chip business.
The company’s rolling chip business primarily targets non-Russian foreign visitors and is the key growth engine in the cash flow projections regarding the fair value assessment of the Group’s property, operating rights, and equipment in relation to Tigre de Cristal.
“The Tigre de Cristal property contributed 54.2 percent of the Group’s total gross gaming revenue in 2019, dropped to 20.9 percent and 0 percent in 2020 and 2021 respectively since the COVID-19 outbreak,” the company statement read.
The company has been remodeling Tigre de Cristal to concentrate on mass table business and electronic gaming business, which caters primarily to the local Russian market and upgraded the marketing campaigns accordingly to attract locals rather than the usual foreign tourists.
As of 15 July 2022, the Russian government further lifted restrictions on crossing the country’s land border which was introduced over the spread of the coronavirus infection in March 2020.
However, it did not rule out re-introducing restrictive measures if the situation deteriorates.
“When the Russian tourism industry is merely just emerging from the COVID-19 pandemic, it now faces huge uncertainty from the impact of the Russia-Ukraine conflict since late February 2022,” the company statement read.
Several governments, including the United States, the European Union, the United Kingdom, Canada, Australia, and New Zealand announced that they have banned Russian aircraft from their airspace, with several other countries following suit, and have issued travel advisories calling on their nationals to avoid travel to the Russian Federation.
The Russian government responded with a mutual ban on these countries.
Many Russian tourists are adversely affected due to economic sanctions against their country and handicapped by bank withdrawals using an international credit card system.
Meanwhile, the Russian government is looking to develop and promote domestic tourism to include subsidy offers for local destinations and tax incentive provisions.
Phase II is principally developed to improve its accommodation capacity and non-gaming amenities to serve the potential high rollers who want to stay overnight inside the IEZ Primorye.
The COVID-19 outbreak continues to hinder the progress of the pre-construction phase, including design, procurement of construction materials tendering and associated payments, of the development of TdC Phase II.
“Taking into account the ongoing adverse effects of COVID-19 and the economic uncertainties, the company considers that the number of foreign visitors, especially the high rollers, and the forecasted revenues will not significantly rebound in 2022 or 2023 as previously predicted,” the company statement read.
While proceeding with the development of TdC Phase II is not an immediate priority of the Group, and the company is targeting an opening no earlier than 2025 as disclosed in the 2021 Annual Report.