South Korean casino resort to open amid China tensions
First Vegas-style project to be reliant on foreign visitors
KIM JAEWON, Nikkei staff writer
SEOUL -- South Korea's first integrated casino resort will open near the country's gateway of Incheon International Airport on Thursday, with hopes of securing gamers from China, Japan and other Southeast Asian countries.
But rising political tensions on the Korean Peninsula are painting a gloomy outlook on the 1.3 trillion won ($1.14 billion) project, jointly funded by South Korean casino operator Paradise and Japanese game machine maker Sega Sammy Holdings. China has banned group tours from visiting South Korea since March in protest against the deployment of a U.S. missile defense system in the country.
According to data from the transportation ministry, airline passengers on Chinese routes dropped 22.5% to 1.1 million in March year-on-year, hit hard by the travel ban. The share of Chinese routes in the international airplane passengers' market also dropped to 18.7% from 26.4% in the same period.
Analysts say that Paradise City will have to attract customers from Japan and other Asian countries to offset the fall in Chinese tourists. "Strategically, Paradise plans to work with Sega Sammy to lure more Japanese and non-China gamers from other Asian countries such as Thailand," said Thomas Kwon, an analyst at Daiwa Capital Markets.
In an earlier report, Kwon noted that in the fourth quarter, Japanese high-stakes gamblers overtook Chinese ones as the biggest customers of the company's five casinos. The two nations together account for three quarters of customers at the casinos; locals are banned from admission to all but one of the country's 17 casinos.
Paradise City says it will offer customized casino services along with entertainment and shopping competitive to those in Macau and Las Vegas. The resort has a 711-room five-star hotel and top-class restaurants in a 330,000-sq.-meter area.
"We will provide private jet services to VIP customers. Our location close to the airport will also help us draw more customers," said Shin Im-chul, a marketing director at Paradise Sega Sammy which operates the casino resort. Paradise City, which will feature 160 gaming tables and 728 gambling machines, is 1.1 kilometers away from the Incheon airport.
The Paradise-Sega Sammy joint venture has already been operating a smaller casino in Incheon since 2013. Paradise itself operates what until now was the country's largest foreigner-only casino, the Paradise Casino Walkerhill in Seoul as well as one in Busan and two on Jeju Island.
Sega Sammy has poured 232 billion won into the joint venture for a 45% stake. The company told Nikkei Asian Review that its main objective is to acquire casino operation knowhow, eyeing future casino business back in Japan where the company thinks it can capitalize on the enormous untapped local market and rising number of foreign travelers.
"We assumed Japan will allow casinos in the future. We have decided to build knowhow [through the Incheon resort] to lead others in Japan," said a Sega Sammy official.
The Japanese parliament passed a casino bill in December, paving the way for the establishment of such businesses. Sega Sammy said it chose the Incheon resort because it can distinguish itself from other Asian casinos thanks to the shorter distance from China, the main target market.
Shares of Paradise slipped 0.33% to 14,950 won, after rising 6% over the last two days on expectation of the casino launch. The benchmark Kospi lost 0.47% at 2,138.40.
Nikkei staff writer Kentaro Iwamoto in Tokyo contributed to this story.