South Korean casino operators are literally luring Chinese tourists away from Macau.
South Korea has nothing to lose by seducing China’s gamblers and everything to win. As Macau casinos see their earnings and visitors disappear, other Asian countries are laying the way to welcome China’s rejects. This has resulted in Seoul’s foreigners-only casinos overflowing with whom has come to be known as ‘low-roller’ gamblers or simply, Chinese shoppers. If they win in South Korean poker rooms, tourists get to take home free rice cookers and Apple Inc. APPLO iPads, in giveaways.
• South Korean casinos not relying exclusively on working with junket operators
• Chinese visitors spent $10 billion in South Korea in 2014
• VIPs helped build Macau into the world’s biggest casino hub
As visitors pour in to South Korea, casinos are gambling on earning enough to foster Chinese tourism growth and to build trade. They rival with other Asian hubs to get the ‘whales’, another name for VIPs, who’ve deserted Macau’s casinos because of the clampdown on Beijing’s anti money laundering directives which have not only crippled exuberant spending but have also sent high-rollers scurrying away from former Portuguese colony.
South Korean casinos sidestep junkets to get moneyed gamblers
South Korea’s biggest casino firm, Paradise Walkerhill in Seoul, Paradise Co Ltd, seeks to court tourists, without working with junket operators. The casino recently targeted Chen Jie Yi, a 27-year-old VIPs from Beijing, who was part of a tour group, visiting with friends. After checking out the snazzy gambling hub, Walkerhill casino, Chen said that although “It’s a lot smaller than Macau…the service is pretty good … I’m more looking forward to the shopping.”
With Chinese visitors spending $10 billion in South Korea last year alone it is little wonder that the foreigners-only casinos, in accordance with South Korean gambling laws, are going all out to please. The number of Chinese high rollers visiting South Korea has jumped 50 % to a record 6 million. South Korean casinos woo customers with cosmetics and provide luxury services for tour groups as well as duty-free shopping and dinner shows.
State-owned casino partners up with Paradise for the greater good of gambling
According to South Korean gambling news, Paradise has Chinese visitors riveted on games like baccarat. However with gaming revenue increasing only slightly by 3.7 %, this shows that most of the new customers were ‘low rollers’ or casual players. And, unlike Macau, South Korea casinos have the government on their side. Grand Korea Leisure Co (GKL) which is run by the government has partnered up with Paradise to enhance their capacity this year to accommodate the influx of Chinese tourists.
GKL’s is extending its southern Seoul casino by 13% and Paradise by 15%. Taking a lesson from Macau, South Korean casinos are using the ‘Very Very Important’ (VVIP) gambler model, in a bid to lure both tourist shoppers and higher rollers. This has proven effective, not only in targeting big spenders but also in attracting ‘high end’ mass market gamblers too. But despite a flourishing tourist industry, Casino VIP revenue per Chinese visitor to South Korea last year was just $164.
Weakness in big markets generates opportunities for average-sized markets
Paradise saw its monthly gaming review retreat in several months over the past year in comparison to $1,646 for the Philippines and $1,716 for Singapore. Chung Yoo-seok, analyst at Kyobo Securities, explained that “The decrease in customer numbers is less pronounced in Korean casinos as Chinese visitors to Macau are VVIP-level customers, but Chinese casino visitors in Korea are VIP-level with betting amounts marginally higher than mass customers” .
So what South Korea needs to do is to foster the development of big “integrated resort” casinos. They plan to open the first one in early 2017 near the country’s main airport in Incheon. Karen Tang, an analyst at Deutsche Bank, said gross gaming revenue in 2015 was almost sure to increase 16% in South Korea’s casinos, as Chinese gamblers travel farther away, unhindered, from Macau.