Vietnam hopes to make three out of one

Hoiana is Vietnam’s newest IR. It wants to lift visitors into the air. The Grand Ho Tram is Vietnam’s very first IR. It aims to ground travellers. Corona on Phu Quoc Island, Vietnam’s one and only IR which allows foreigners to play without a passport, asks guests to fill out some paperwork.

The three beachfront IRs all have attractive features, and they claim to be profitable despite the lack of tourists from mainland China. It remains to be seen if three top-notch IRs will make Vietnam a premier gaming destination, both for operators and players.

Hoiana launched in the face of Covid on June 20, 2020. Steve Wolstenholme, Hoiana’s president and CEO, describes the difficult months that followed a successful launch as “character-building”. Both the resort and The Grand-Ho Tram were open, but with reduced opening hours.

Solar eclipse

Covid was not the greatest challenge Hoiana had to face. Alvin Chau was arrested by Macau authorities in November 2021. He is the chairman of Suncity Group, a junket-promoter and 34% shareholder of Hoiana. This company had been the engine for IR’s former business plan, which focused on high rollers from mainland China.

Chau’s arrest was a sign that Beijing will no longer tolerate illegal junkets transferring hundreds of billions dollars from the PRC. Hoiana took over the gaming operation after terminating Suncity’s management contract.

Ben Lee, managing partner of iGamiX Management & Consulting says: “Hoiana had to reconfigure its business model and that is remarkable.”

Andrew Lo, LET’s chairman, sits on the board of directors at Hoiana. Lo told iGaming Business, that LET was “open” about selling its Hoiana share.

Ownership evolution

Wolstenholme says that “the ownership structure is changing.” Hoiana, once a Genting project, is now controlled by Hong Kong billionaire Henry Cheng, and his family. His empire also includes New World conglomerate, jeweller Chow Tai Fook, Rosewood Hotel Group, (Hoiana Rosewood will be planned), and a strategic interest in Australian gaming operator Star Entertainment. VinaCapital, a Vietnam-focused investment management firm, has invested in Hoiana as well as The Grand Ho Tram.

Hoiana’s US$1.3bn phase comprises four hotels, each with 1225 rooms, as well as a golf-course and 20 F&B outlets, all arranged along four kilometers of beautiful coastline. Lee describes the property as “a fantastic one and very well positioned for a tropical getaway resort”.

There are 140 EGMs and nearly 300 slot machines in the casino reserved for passport holders. A few roulette consoles stand alone. There is no stadium, no poker, craps or variations, only baccarat and blackjack. Wolstenholme says, “We offer all of the games our market is interested in playing.”

Squeeze baccarat is US$100. Card games begin at US$25. VIP rooms on the upper level and off of the main floor are in Hong Kong Dollars – HK$1,000 for squeeze baccarat. The VIP rooms are provided by junket organizers (also known as international tour operators in Vietnam).

Dong drop

Some of the main floor baccarat table accept bets made in Vietnamese dong. Wolstenholme says that customers with foreign passports who live in or stay long term here might find it easier to bet using the local currency.

Hoiana’s modern comfort in the guest room and its five-star service balance beachfront casual with elegance. Wolstenholme who worked in North America and opened Okada Manila, believes that the IR must be exceptional enough to entice customers to fly to this hotel.

The poolside F&B menus range from The Edge breakfast buffet à la carte and cocktails in the afternoon at Hoiana Hotel Suites, to Charred’s skewers. The Downtime Renew Spa offers Japanese showering seats, a whirlpool or sauna before and after treatments. Quang Nam House, an ultra-lounge for both business and relaxation in the evenings. The largest kids club in Asia has two adventure playgrounds, pottery wheels and weaving looms. There are also cooking classes and a full kitchen.

Hoiana encourages its guests to think beyond the IR. Wolstenholme states, “The value proposition extends beyond the resort.” We want to let people experience central Vietnam’s charms.

Riverside Charm

Hoi An’s well preserved port district, dating from 15th-19th century, is a UNESCO World Heritage Site. The IR can be reached in 15 minutes by car. In the ancient town, you can see riverboats, lanterns with bright colors, and buildings that are centuries old. Families still work and live there. The opposite riverside is home to a nightlife that’s reminiscent of Singapore Clarke Quay.

My Son Sanctuary, a UNESCO world heritage site, is about an hour’s drive away. It features structures from the Champa civilisation, a Hindu civilization that dominated central Vietnam from the fourth century. The orange brick buildings feature carvings in sandstone of Shiva and deities.

UNESCO-designations, additional attractions such as Chu Lao Cham Marine Park (seen offshore from Hoiana), and the ancient capital Hue in the north have all contributed to a well-developed tourism infrastructure.

Crown International Casino continues to run in Danang, and there are a couple of slot clubs within hotels. Wolstenholme, however, sees Hoiana as the main competitor to Asia’s IR destinations: Macau, Singapore, and the Philippines. “Not because of our volume, but because of what we can offer,” he says.

Hoiana Shores Golf Club is a great example of this. Robert Trent Jones Jr designed the 7,004-yard links course, which has its back nine following the coast. It is listed as one of the top 100 golf courses in the world. The state-of-the art clubhouse features teaching studios, meeting rooms and a mini golf course.

Most overseas patrons are Koreans, who travel either on their own or in groups, and often to play golf. The 1552 Bistro, located in the clubhouse, specializes in Korean cuisine. In addition to this restaurant, there is an Obaltan branch within the Casino Hotel Towers.

The Grand Plan

The Grand Ho Tram is home to its own Korean Restaurant and Korean golfers enjoy its Greg Norman-designed top 100 course The Bluffs. Three hotels, 1,314 rooms and 2.2 km of beachfront are available. There is also a kids’ club, spas and watersports. The IR collaborates with ITOs in order to boost VIP revenue beyond US$1bn annually. Walt Power, CEO of Walt Power & Co. Inc. has no such goal.

Power: “I’ve always maintained that every successful gambling operation is a locally-based business.” Our primary target audience is foreigners who live and work in Ho Chi Minh City.

Location of The Grand – 2 hours south (or even more depending on the traffic conditions) from Ho Chi Minh City, remains one of its most distinctive features.

Within driving distance is the IR, which has 15+ million residents in Vietnam including its largest group of expatriates. There are also a few other restaurants and resorts nearby. The long drive to HCMC airport is a deterrent for many overseas visitors.

Power, Las Vegas Sands senior vice president of Macau operations, was responsible for the opening Sands Macao back in 2004. He arrived at The Grand early in 2020 just as Covid’s restrictions on international travel forced him to concentrate on the local expats market. Power states that “the current performance of Ho Tram” is many times greater than the performance in 2019.

Grand Events

Power points out that as pandemic restrictions fade globally, it is important to encourage expats who are still in the country to fly to The Grand instead of riding to The Grand.

One of the main draws is events. Power says that “International professional boxes, mixed martial arts, VIP banquets and beauty pageants as well as golf tournaments have helped to position the Grand Hotel in a way where there is always something happening.”

Warburg Pincus, a private equity firm in partnership with VinaCapital acquired the Grand Ho Tram at the end of 2019. Power describes their ownership as being “critical” to the success the project. It is essential to have a strategy in place to maximize the return on investment over the long term.

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IHG Hotels and Resorts has a new owner. IHG rebranded and renovated the Paul Steelman designed hotel tower opened in 2013 as InterContinental Grand Ho Tram, with 543 guest rooms. In January 2022 IHG will launch the IR’s second, long-anticipated hotel tower. It is Vietnam’s first Holiday Inn Resort, with 561 family friendly rooms.

Ixora, a new development of 46 villas with 164 rooms, was opened in August last year. It is operated by the wellness-oriented Fusion Group. When not occupied, units are rented out to guests. Hoiana Residences is a good example of how owned units can increase the variety and quality of guest rooms while recovering some ownerships’ multi-billion dollar investments that are mandated by casino license.

There are 90 gaming tables, and about 500 slot machines and terminals with live multigames. The game is played in US Dollars. The Grand has added new EGMs to compete with slot clubs located in Ho Chi Minh City.

About half the tables are located on the main gaming floor. Baccarat games with squeeze have $100 or $200 minimums and a maximum of $50,000. Playing blackjack and poker against the casino starts at US$25. Sic bo, roulette and other games start from US$10.

VIP rooms are used by ITOs. Commissions and shares are more expensive than Macau. Since last August, The Grand has had marketing teams working in Korea, and since then, Taiwan. Korea is the largest source of casino traffic.

Power explains that “the demographics of the guests we have are similar to those of foreign direct investments in southern Vietnam.” We are able to accommodate overseas guests from these locations because we cater to their language, cultural and food needs.

Corona break out

Two-thirds (60%) of the guests at Corona Resort and casino on Phu Quoc Island are from abroad. Corona Casino, the only casino in Vietnam that does not require foreign passports for entry to play games, gets 80% of their gaming revenues from Vietnamese citizens.

Corona’s general manager Goran Mlosheski says that it makes sense to consider Covid’s impact on travel abroad, since foreign players couldn’t visit Corona in almost three of the five year span that Corona has been operating.

Vietnamese citizens who wish to play at Corona Casino must provide proof of their monthly income, which is VND10m, or about US$400 for the last three months, through bank statements, tax forms, pay slips and other documents. They also have to pay an entry fee of VND1m for 24 hours. The process can be finished in under 10 minutes with the correct documentation.

There are 147 gaming tables and 875 slot machines. The main floor is played in US Dollars. Roulette costs US$1, sic bo, baccarat and other games cost US$20.

Corona now has four hotels and 20 restaurants. It also boasts a wildlife park, golf club, convention center, 500-seat theater, a 24-hectare park of amusement, gondola rides, cultural performances, et cetera. Grand World is a 2021 shop-house entertainment complex that offers gondolas, cultural performances, and nightly lights and fountain shows.

Bring in the mass

Phu Quoc, located on the southwest coast in Vietnam, is only an hour away from Ho Chi Minh City. Hanoi is two hours away. Direct international flights depart from Seoul, Busan and Shanghai.

Phu Quoc, which is about three-quarters of the size of Singapore and has white sandy beaches that face crystal clear water, sees billions invested in tourism. Vietnamese authorities provided incentives for infrastructure and financial improvements. These include an international airport, a new road to Corona and an improved international runway.

Milosheski adds, “As more resorts open up, there are now many marketing teams working hard to attract guests to Phu Quoc.” Corona had its best ever months for casino traffic in December and January, with an average of more than 600 visitors per day.

Local Play Pilot

This year, the government will review its pilot program that permits local gaming in Corona and Van Don (in northern Vietnam), as well as other casinos not yet opened. The management at Hoiana Casino and The Grand have expressed their desire to participate in the pilot programme. However, both claim to be financially successful with their foreign-only status.

LET’s most recent results reveal that Hoiana generated US$113.8m in GGR during the first six months of 2023. 88% came from VIP play. Vietnam’s gaming tax is 35%, but promotional costs can be deducted. This reduces the rate to around 20%. Hoiana’s EBITDA during this period was US$10.1m. It would take 100-years to recover the mandated $2bn investment at that rate.

Klebanow Consulting’s principal Andrew Klebanow states that it has “proven time and time again” that a casino in Vietnam will not succeed if Vietnamese citizens aren’t allowed to enter.

As travel and economies recover their feet after Covid, IR performances should be improving in Vietnam and elsewhere. Wolstenholme believes that the PRC market will return. Wolstenholme says, “The PRC market will come back.”

VinaCapital anticipates solid returns over the long-term from every IR. With US$4 billion under management, the firm writes: “We’d like to note that two investment cases were and not based on policy changes regarding Vietnamese citizens being allowed entry.”