CBRE recently released a comprehensive analysis forecasting positive financial performance for Mohegan, the US-based operator also behind the Incheon Mohegan INSPIRE, stating that the Korean IR should already report positive EBITDA in 2024.
Mohegan recently announced its highest quarterly net revenue in its history, hitting $461.73 million, up by 13.8 percent yearly.
The group officially opened its South Korean resort on March 5th, becoming a new revenue stream for the US-based company.
While specific performance metrics were not fully disclosed, CBRE estimates that gaming revenue accounted for approximately 40 percent of the total revenue mix for the two months the Incheon casino was operational.
CBRE analysts Colin Mansfield and Connor Parks suggested that INSPIRE is contributing to market growth based on trends in visitation, gaming drop, and lodging, but is facing competition from Paradise City.
Overall INSPIRE’s revenue performance exceeded CBRE analysts’ initial forecast of $30.1 million, but EBITDA losses were greater than expected.
Still, the analysts indicated hey were not ‘overly concerned’ with the property’s $24.1 million EBITDA loss quarterly loss given the ‘excess labor/marketing costs associated with a casino opening’.
CRBE analysts also stated there were two trends showing encouraging signs for the South Korean gaming market, namely the improvement in Korea inbound visitation and INSPIRE’s impact on the overall market.
In February, there was a surge in inbound visitation to Korea, with a 22 percent month-over-month increase observed in Chinese visitation, coinciding with the opening of INSPIRE’s casino. The foreigner-only casino opened roughly one month before the property’s grand opening.
The brokerage also noted there was still room for a full recovery of visitation
from mainland China, Taiwan and Hong Kong (70 percent, 87 percent, and 81 percent of 2019 levels, respectively) and that as visitation into Korea continues to improve, this will support INSPIRE’s ramp up, as well as the rest of the market.
As an example, they point out the 4 percent quarter-over-quarter growth in total gaming drop at Paradise City, INSPIRE’s most direct competitor, during the initial three months following the inauguration of INSPIRE’s casino.
‘However, concurrently, Paradise City experienced a 7 percent decline in mass drop during the same period, suggesting that INSPIRE is effectively drawing mass players from its competitor during its initial ramp-up phase,’ the dispatch reads.
‘Recent assessments of INSPIRE’s Forest Tower King room Average Daily Rate (ADR) later this month indicate a rate of approximately $240, aligning closely with initial forecasts and affirming anticipated growth trajectories.’
For CBRE, these emerging trends bode well for the Korean gaming industry’s resilience and future prospects.
