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Cover Story<br />
forecast an imminent VIP rebound, Union Gaming’s Grant Govertsen<br />
expects more junket closures, possibly including “one of the major<br />
players … carried out on a stretcher.”<br />
Some junkets have a Plan B – buy all or part of casinos. Jimei<br />
Group has shown the way, long operating Fontana Hot Spring Leisure<br />
Parks in the Philippines plus a Macau casino. Hengsheng Group is<br />
building a hotel in Saipan and has taken steps toward developing<br />
an integrated resort in South Korea. Suncity Group, Macau’s largest<br />
junket promoter, has invested in a Vietnam IR project as a starting<br />
point for larger ambitions.<br />
Suncity Chairman Alvin Chau characterizes casino investment,<br />
as a partner and eventually sole owner, as a natural evolution of<br />
its junket business rather than a reaction to Macau’s woes. “The<br />
reason why we invest in overseas markets is not because of the<br />
bad business conditions in Macau,” Mr Chau says. “VIP business<br />
globalization is a strategy, and a casino hotel chain business is part<br />
of that strategy.” (See more of <strong>IAG</strong>’s interview with Mr Chau on<br />
page 10.)<br />
PROSPEROUS METAMORPHOSIS<br />
“Junkets are going to continue to morph and evolve with the times,<br />
by selling or joint venturing part or all of their business to casino<br />
owners or becoming casino owners themselves,” Macomber<br />
International President Dean Macomber says. “The better junket<br />
owners and operators will not suffer; indeed, they will prosper from<br />
this metamorphosis.”<br />
As China continues opening to the global financial system and<br />
adapting to world standard business practices, the unique role of<br />
junkets for players from the mainland and other Asian markets will<br />
diminish, and casinos will become more willing to take on traditional<br />
Fontana Hot Spring<br />
Tony Tong<br />
junket functions, including player finance, Mr Macomber, a former<br />
CEO of Jimei’s Fontana resort, suggests. “It may take 10 years, 20<br />
years, 50 years and certain pure boutique style junket companies<br />
will still exist, but beside the repercussions of the decrease in VIP<br />
play, even more fundamentally, junkets as middlemen can’t survive<br />
big company corporate ownership, which does not like sharing their<br />
profits with others. This inevitability was put in motion the moment<br />
Macau gaming was opened to large Western and Asian gaming<br />
operators.”<br />
“Junkets don’t want to be the wedding dress,” Pacific Financial<br />
Services founder Tony Tong says, citing the Chinese saying that the<br />
wedding dress gets used on the day of the wedding then is forgotten.<br />
“Sooner or later they lose their customers to casinos.”<br />
Industry insiders say it’s no great leap for junkets that operate VIP<br />
rooms in Macau to run their own casinos. There’s a range of opinions<br />
about junkets’ capital capabilities as investors and whether casino<br />
operation or junket promotion is the more profitable business. Jimei,<br />
Hengsheng and Suncity illustrate different approaches to junkets<br />
becoming casino owners.<br />
“Some junkets have a Plan B – buy all or<br />
part of casinos. Jimei Group has shown<br />
the way, long operating Fontana Hot<br />
Spring Leisure Parks in the Philippines<br />
plus a Macau casino.”<br />
<strong>December</strong> <strong>2015</strong> inside asian gaming 7
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