SEOUL/HONG KONG (Reuters) - The dealing rooms of Seoul’s foreigners-only casinos are echoing to the sound of Mandarin as operators target a new breed of ‘low-roller’ gamblers – Chinese shoppers.
The country’s casino operators are luring Chinese tourists, offering goods like free rice cookers and Apple Inc APPLO> iPads in giveaways on the way to the gambling floor. Amid record visitor numbers, South Korean casinos are betting on growing Chinese tourism to build trade, while still competing with rival Asia hubs to land big-money gamblers known as ‘whales’.
In places like Paradise Walkerhill in Seoul, Paradise Co Ltd (034230.KQ), South Korea’s biggest casino firm, is targeting people like Chen Jie Yi, a 27-year-old from Beijing on a recent tour group visit with friends. Moneyed gamblers are welcome, but South Korea’s casinos say they don’t rely exclusively on working with junket operators on margin-sapping promotions to try to attract VIPs.
“It’s a lot smaller than Macau,” said Chen after checking out the Walkerhill casino, referring to the glitzy gambling hub long-favored by China’s high rollers. “The service is pretty good ... I’m more looking forward to the shopping.”
The number of Chinese visitors to South Korea with money to burn is expecting to keep growing after last year’s near 50 percent surge to a record 6 million. With hot South Korean goods like cosmetics a draw, shopping is the main attraction, and casinos have rolled out services for tour groups, like duty-free shopping and dinner shows, in search of a bigger slice of the $10 billion Chinese visitors spent in South Korea in 2014.
Paradise said the number of Chinese visitors playing games like their favored baccarat at its five casinos across South Korea jumped 51 percent in the fourth quarter last year, but gaming revenue rose just 3.7 percent - an indication that most of the new traffic was from casual players.
State-run Grand Korea Leisure Co (114090.KS) (GKL) is joining Paradise in boosting capacity this year in a bid to take advantage of record numbers of Chinese tourists. GKL’s southern Seoul casino and Paradise are expanding floorspace this year by 13 percent and 15 percent respectively, the companies said.
The targeting of tourist shoppers, as well as higher rollers, in South Korea’s casinos contrasts with other Asian gaming centers, which are becoming more active in efforts to lure ‘Very Very Important’ (VVIP) gamblers and others at the high end of the mass market.
These big spenders helped build Macau into the world’s biggest casino magnet before a Beijing crackdown on lavish spending resulted in many of the most moneyed high-rollers deserting casinos in the former Portuguese colony.
Casino VIP revenue per Chinese visitor to South Korea last year was just $164, according to Morgan Stanley, the smallest take among six Asian countries listed. That compared with $1,646 for the Philippines and $1,716 for Singapore.
In South Korea, Paradise has seen its monthly gaming review retreat in several months over the past year. But in Macau casino revenue has shrunk for 11 straight months.
“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,” said Chung Yoo-seok, analyst at Kyobo Securities.
In the next step in efforts to compete with its neighbors, South Korea is encouraging development of big “integrated resort” casinos, the first of which will open 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 likely to grow 16 percent in South Korea’s casinos.
“Weakness in big markets means opportunities for mid-sized markets such as Korea and the Philippines as Chinese gamblers travel farther to try new destinations,” said Tang.
Editing by Tony Munroe and Kenneth Maxwell