Vietnam hopes three make one
Vietnam’s newest IR, Hoiana, wants visitors lifted into the sky. Vietnam’s first IR, The Grand Ho Tram, aims to keep travellers grounded. Corona, on Phu Quoc island, Vietnam’s only IR that allows players to gamble without a foreign passport, wants guests to do a little paperwork.
All three beachfront IRs have tempting features and all three say they’re profitable amid a paucity of mainland China tourists. The question remains whether three world class IRs make Vietnam a top-tier gaming destination for players, operators and investors.
Hoiana opened into the teeth of Covid in June 2020. After a successful opening came difficult months of what Hoiana president and CEO Steve Wolstenholme calls “character building”. The resort remained open – as did The Grand-Ho Tram – with reduced hours and staff adjustments.
Solar eclipse
But Covid wasn’t the biggest challenge Hoiana faced. In November 2021, Macau authorities arrested Alvin Chau, chairman of junket promoter Suncity Group, a 34% partner in Hoiana and engine of the IR’s erstwhile business plan focused on mainland China high rollers.
Chau’s arrest signaled Beijing would no longer tolerate junkets moving hundreds of billions of dollars out of the PRC illegally. Hoiana terminated Suncity’s casino management agreement and took over gaming operations.
“Hoiana’s business model had to be reconfigured and it is noteworthy that they have managed to do so,” iGamiX Management & Consulting managing partner Ben Lee says.
LET acquired Suncity’s Hoiana holding and its chairman Andrew Lo sits on Hoiana’s board of directors. With the pending sale of LET’s interest in Russia’s Tigre de Cristal and its Westside City casino hotel in Manila slated to open late this year, Lo tells iGaming Business that LET is “open” to selling its Hoiana stake.
Ownership evolution
“The ownership structure is evolving,” Wolstenholme says. Once a Genting-led project, Hoiana’s largest piece is controlled by Hong Kong billionaire Henry Cheng and family, whose empire includes conglomerate New World, jeweller Chow Tai Fook and Rosewood Hotel Group (Hoiana Rosewood is planned), plus a strategic stake in Australian gaming operator Star Entertainment. Vietnam-focused investment manager VinaCapital has invested in Hoiana and The Grand Ho Tram.
Hoiana’s US$1.3bn first phase includes four hotels with 1,225 keys, a golf course, plus 20 F&B outlets laid out along four kilometres of inviting coastline. “It is a fantastic property and positioned very well for a tropical holiday getaway resort,” Lee says.
The casino for foreign passport holders features 140 tables and 300 EGMs, nearly all slot machines with a few standalone roulette consoles. No stadium area, no poker or variants, no craps, just baccarat, blackjack, roulette and sic bo, in that order of popularity. “We have all the games that our target market wants to play,” Wolstenholme says.
Card games start at US$25 with squeeze baccarat at US$100. VIP rooms off the main floor and one level above are denominated in Hong Kong dollars – HK$1,000 (US$128) for squeeze baccarat. International tour operators (ITOs), Vietnam’s term for junket promoters, provide VIPs.
Dong drop
A handful of main floor baccarat tables take bets in Vietnamese dong. “Customers [with foreign passports] who stay here long-term or live here may find it more convenient to wager in the local currency,” Wolstenholme explains.
With contemporary comfort in guest rooms and top notch service, Hoiana balances beachfront casual and five-star elegance. Wolstenholme, who opened Okada Manila and worked extensively in North America, says the IR has to be outstanding enough to entice guests to fly there.
Poolside F&B options range from The Edge a la carte breakfast buffet and afternoon cocktails atop Hoiana Hotel and Suites to skewers at New World Beach Hotel’s Charred. Downtime Renew Spa features Japanese showering stools, whirlpool and sauna facilities for before or after treatment. Quang Nam House is an ultra lounge for business meetings by day and unwinding after dark. Perhaps Asia’s largest and best equipped kids’ club has pottery wheels, weaving looms, two adventure playgrounds and a kitchen for cooking classes.
Hoiana urges guests to look beyond the IR. “The value proposition is as much outside the resort as inside,” Wolstenholme says. “We want people to experience the charms of central Vietnam.”
Riverside charm
The IR is 15 minutes drive from Hoi An, its Ancient City area a UNESCO World Heritage site. The well-preserved port district dating to the 1400s features river boats, brightly painted lanterns and centuries-old buildings, where families still live, work and worship. On the opposite riverbank, there’s nightlife reminiscent of Singapore’s Clarke Quay.
About an hour away, UNESCO heritage site My Son Sanctuary has restored structures from the Champa kingdom, a Hindu civilisation that ruled central Vietnam for a millennium from the 4th century. Orange brick buildings highlight sandstone carvings of Shiva and other deities.
UNESCO designations, further attractions including Chu Lao Cham Marine Park, seen offshore from Hoiana, and ancient capital Hue to the north, Danang’s international airport (45 minutes from Hoiana) and miles of beaches have spawned well developed tourism infrastructure, including more than 50,000 guest rooms.
Crown International casino continues to operate in Danang and there are a few slot clubs in hotels, but Wolstenholme sees Hoiana’s main competitors as Asia’s other IR destinations, Macau, Singapore and the Philippines: “Not necessarily because of volume but more because of what we have to offer.”
Hoiana Shores Golf Club highlights that offer. The 7,004 yard links course designed by Robert Trent Jones Jr has been listed among the world’s top 100 courses with its back nine hugging the coastline. A state of the art clubhouse has teaching studios and meeting space adjacent to a miniature golf course.
Overseas patrons hail largely from Korea, travelling either independently or on group tours, often for golf. Clubhouse restaurant 1552 Bistro specialises in Korean food and the casino hotel towers have a branch of Seoul’s Obaltan.
Grand plan
The Grand Ho Tram has its own Korean restaurant and Korean players enjoying its top 100 golf course, The Bluffs, designed by Greg Norman. It has three hotels with 1,314 keys along 2.2 kilometres of beachfront with spas, water sports and kids club. The IR works with ITOs to power VIP roll beyond US$1 billion annually. But none of that is CEO Walt Power’s main objective.
“I have always submitted that every successful gaming operation has as its primary market a local component,” Power says. “Our primary gaming target market are foreign passport holders living and working in Ho Chi Minh City.”
The Grand’s location – two hours (or more, depending on traffic) south of Ho Chi Minh City – remains a defining feature.
The IR lies within driving distance of Vietnam’s commercial capital with 15 million-plus residents, including the nation’s largest cluster of expatriates with a handful of other resorts and restaurants in the vicinity. But the lengthy drive from HCMC’s airport makes it a hard sell for overseas guests.
Las Vegas Sands’ senior vice-president of operations in Macau, responsible for opening Sands Macao in 2004, Power arrived at The Grand in early 2020, just before Covid restrictions on international travel forced his team to focus on the local expat market. “The current performance of Ho Tram is multiples of the performance of 2019,” Power says.
Grand events
With pandemic restrictions fading globally, Power says, the challenge is to convince those expats to ride to The Grand rather than fly to other casino resorts.
Events provide one draw. “International professional boxing, mixed martial arts competitions, VIP banquets, beauty pageants, golf tournaments and, yes, even horse racing on the beach have positioned the Grand as a place where something is always happening,” Power says.
In 2019, private equity group Warburg Pincus acquired The Grand Ho Tram in partnership with VinaCapital. Power terms their ownership as “critical to the success of the project. The ability to adopt a long-term strategy to increase the value of the investment is imperative.”
Grand expansion
New ownership brought in IHG Hotels and Resorts. IHG renovated and rebranded the original Paul Steelman-designed hotel tower, opened in 2013, as InterContinental Grand Ho Tram with 543 rooms. In January 2022, IHG launched the IR’s long anticipated second hotel tower, Vietnam’s first Holiday Inn Resort with 561 rooms, catering to families.
Last August, Ixora opened with 46 villas and 164 rooms developed through Warburg-VinaCapital partnership Lodgis, operating under its wellness-oriented Fusion group. Units are sold to investors and rented to guests when not owned occupied. As at Hoiana Residences, owned units increase guest room variety while recouping some of ownership’s multibillion dollar investment that the casino licence mandates.
The Grand runs 90 gaming tables and just under 500 slots and terminals for live multigames. All play is in US dollars. With slot clubs in Ho Chi Minh City among competitors, The Grand is adding new EGMs.
The main gaming floor holds about half of tables. Baccarat squeeze games have minimums of $100 and $200 with a $50,000 maximum differential. Blackjack and poker variants played against the house start at US$25, sic bo and roulette from US$10.
VIP rooms host ITOs. Commission and share rates are higher than Macau. The Grand has marketing teams in Korea and, since last August, Taiwan, with the biggest chunk of casino play from Korea.
“The demographics of our guests mirror the sources of FDI [foreign direct investment] within southern Vietnam,” Power says. “Given that we focus on language, food and other cultural requirements of those guests, we simultaneously are well positioned to entertain overseas visitors from those locations.”
Corona break out
At Corona Resort and Casino on Phu Quoc island, two-thirds of its guests come from overseas. But as the country’s only casino that doesn’t require a foreign passport for entry, Corona gets about 80% of its gaming revenue from Vietnamese nationals.
“Considering Covid’s impact on international travel that makes sense, as foreign players could not visit Corona for almost three years out of the five years that we have been open,” Corona general manager Goran Milosheski says.
Vietnamese nationals who want to enter Corona’s casino must show monthly income of VND10 million, about US$400, for the past three months through tax filings, bank statements or pay slips, and pay a VND1m entry fee, for 24 hours. With the right documentation, the process and approval can be completed in less than 10 minutes.
The casino has 147 tables, 875 slots and 125 ETG terminals. Main floor play is in Vietnamese dong from VND100,000 for roulette, VND50,000 for sic bo and VND1m for baccarat – “Players can touch the cards in all of our baccarat games,” Milosheski says – VND300,000 for blackjack and VND200,000 for poker variants.
Corona has grown to four hotels, 20 restaurants, plus a 24-hectare amusement park, wildlife conservation park, golf course, convention centre and 500-seat theatre. Grand World, a shop house entertainment complex opened in 2021, has gondola rides, cultural performances and a nightly light and fountain show.
Bringing in the masses
Off the southwest coast of Vietnam, Phu Quoc is an hour flight from Ho Chi Minh City and two hours from Hanoi. International direct flights originate from Seoul, Busan, Shanghai, Taipei, Hong Kong, Kuala Lumpur and Bangkok.
Three-quarters the area of Singapore, Phu Quoc is seeing billions in new tourism investment along its white sand beaches fronting crystal blue water. Vietnamese authorities have provided financial incentives and infrastructure improvements, including an international airport and a new road from it to Corona.
“More resorts opening means more marketing teams are working to bring guests to Phu Quoc,” Milosheski says. December and January were Corona’s best months ever for casino visitors, averaging more than 600 per day.
Local play pilot
The government’s pilot programme that allows local gaming at Corona (and unopened Van Don in northern Vietnam) is due for review this year. Management at Hoiana and The Grand expressed eagerness to join the programme, although each claims to be profitable with their current foreigner-only casino status.
LET’s latest results at the time of writing show Hoiana had US$113.8m GGR for the first half of 2023, 88% from VIP play. Vietnam has a 35% gaming tax rate but allows deductions for promotional expenses, lowering the effective rate to roughly 20%. Hoiana’s EBITDA for the period totalled US$10.1m. At that rate of return, it would take 100 years to recoup the $2bn mandated investment.
“It has been proven time and again that an IR in Vietnam cannot succeed without allowing Vietnamese residents entry into the casino,” Klebanow Consulting principal Andrew Klebanow says.
In Vietnam and beyond, IR performance should improve as travel and economies regain their footing after Covid. “The PRC market, we believe, will come back,” Wolstenholme says. “And that will no doubt be a primary, if not the primary, market for us.”
VinaCapital expects solid long term returns from each IR. The firm, with US$4 billion in assets under management, writes: “We would note that both investment cases were not predicated on policy changes regarding Vietnamese passport holders being allowed entry.”