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[Marianas Variety] ETG island casinos to round out China offer

THURSDAY, 18 APR 2013 03:00AM

ASIA GAMBLING BRIEF

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MACAU, China – Those ambling around the beaches of Samoa next year might expect the traditional scent of young taro leaves baked in coconut cream to waft from seaside shacks and instead be surprised to catch the fragrance of jasmine tea and boiled rice.

The aroma of Chinese food is likely to become more commonplace in Samoa and its fellow Pacific island of Yap in Micronesia, as well as the Maldivian atoll of Huvadhu, as China’s Exhibitions and Travel Group pushes the development of huge resorts featuring gambling and golf.

The projects represent ETG’s attempt to seize a bigger piece of the value chain that channels Chinese gamblers to casinos around the world keen for their favor. ETG’s Panda Travel agency already claims to arrange a million international trips a year for Chinese travelers, according to the Wall Street Journal. The Micronesian, Maldivian and Samoan resorts would allow ETG to fill out those travel packages with its own hotels and casinos rather than those in Macau or Singapore –and it has told officials in Yap and the Maldives to expect a million visitors a year.

However, the projects face varying degrees of local opposition. Meanwhile, Chinese media reported this week that Deng Hong, ETG’s chairman, was under investigation by local authorities and that he had not been seen in public since mid-February.

Moreover, ETG’s “desert island casino” approach has been tried without success by other operators on Tinian and Rota, two islands in the Northern Marianas group at similar distance from China as Yap. The Tinian Dynasty Hotel & Casino, which relies largely on Chinese gamblers arriving on chartered flights, was fined nearly $200,000 last year over unpaid wages and was this week reported to have missed payroll again since January. The casino was sold last year amid a deal that saw it also settle $30 million in local back taxes with a $6.1 million payment. The Rota Treasure Island casino closed last year, leaving unpaid vendors and staff in the lurch after several years of trying to lure over Japanese gamblers. It too has been sold.

But if ETG’s founder resurfaces unscathed in China, the company may have the muscle to pull off its plans. Executives from the state Export-Import Bank of China have joined ETG in meetings with officials in Samoa and Yap and senior Chinese officials have also led discussions with counterparts in the Maldives on ETG’s plans there. The moves show the company has “some agreement or guidance from important people,” said Wolfgang Georg Arlt, founder of China Outbound Tourism Research Institute.

ETG’s biggest projects to date have been at home, including large hotel and exhibition complexes in Chengdu and Jiuzhaigou centered on InterContinental-branded hotels. ETG aims to complete two more landmark projects in the first half of the year: another InterContinental hotel that will be Lhasa’s largest, and the New Century Global Centre, a complex of hotels, offices, shops, conference halls, a water park and an artificial beach in Chengdu pitched to be the world’s largest standalone structure at 1.7 million square meters.

InterContinental is also reportedly lined up to manage ETG’s planned 500-room Samoa resort, with Malaysia’s Genting Group to run a 10,000-square-foot casino. The project appears to be proceeding apace, though the country’s opposition leader has vowed to overturn the law legalizing casinos if he comes to power, calling casinos a threat to the island’s cultural and religious heritage and likely to cause social problems. Another obstacle may be assembling land for the site as communal ownership could slow the process. One regulator said resistance has been less than expected. Aggie Grey’s Beach Resort, a locally owned hotel, also won a casino license.

Samoa however will be a long 12-hour flight from Beijing. The lack of existing connections meant only about 1,000 Chinese visited the country last year and even the long non-stop flight will be a deterrent.

Yap will be only three-and-a-hour hours from Beijing, but starts from a lower base, with just 10 Chinese visiting in 2011. Moreover, opposition to ETG’s plans is more fierce. To try to win over support, ETG has offered to pay $200 to each Yap citizen if the state’s laws are reformed to allow for a casino and to pay $400 more once its casino opens. The company has also made donations to local schools and healthcare providers and flown local officials to Chengdu to see its projects.

Many islanders have been unmoved, worried that ETG’s plans for a 4,000-room resort will overwhelm their island of 11,000 people. “The [development] will devastate everything the Yapese hold dear on Yap,” said resident Henry Norman, among those campaigning against the project. “The [development] will mean the end of Yap culture as we know it and it would be a tragic shame.”

The state legislature has passed several resolutions to try to halt the $1 billion project, demanding that ETG first get a comprehensive master plan approved. However, ETG argues it cannot produce a master plan until it secures land for its project and so is continuing to pursue leases.

The depth of opposition to ETG in the Maldives is unclear but Chinese already make up the largest tourist market for the Indian Ocean nation. The country has been politically unsettled since its elected president was forced from office last year. A document purported to be ETG’s development master plan was subsequently uploaded on the Internet as “Maldives Leaks.” It describes grand plans for reclamation to build new urban centers and 10 million to 12 million square meters of new buildings, including more InterContinental hotels.

It also said the project will include a casino to help attract tourists and urges the government to confirm this plan. The issue could be difficult as the country is predominantly Muslim and the current government has sought Islamist support with stricter policies, with dancing and spas at resorts both coming under pressure.

ETG is not discussing its projects other than to deny they involve gambling. Local media reports on its projects notably do not mention plans for casinos either. Beijing has also blocked domestic access to the website of at least one Yap group campaigning against the resort there.

But analysts believe ETG’s island casino resorts could be a winning proposition, noting the growth in travel to the Maldives and Hawaii. Arlt also points to the rapid expansion in local travel to Hainan Island, an offshore province often marketed as “China’s Hawaii” and which attracted 33 million visits last year, up from 20.6 million in 2008. Ben Lee, managing partner of Macau gaming consultancy iGamiX Management & Consulting, said the key will be creating an integrated package of infrastructural support and other tourist attractions. “The destination itself has to be attractive in the first place before you put gaming in.”

Resource

*We thank Mr. Henry Norman for providing the link of the article on the facebook page, Yap’s Development.

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