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Viva Vietnam
As Macau strives to develop the international component of itís gaming industry, visitor figures show it remains a playground for Hong Kong and neighbouring Chinese provinces. Regional competition looms and Vietnam has revealed big plans. The man behind the Ho Tram Strip, David Subotic, spoke to Macau Business. By Joyce Pina
It’s a long way from the fall of Saigon or Graham Greene’s The Quiet American but Vietnam’s first ever integrated casino resort – two hours drive from Ho Chi Minh City on the US$4 billion Ho Tram Strip – could mark yet another pivotal moment in the colourful history of this emerging nation of over 86 million people.
As well as revolutinising Vietnam’s tourism industry, the under-construction resort is also being perceived as a future rival to Macau.
In time-honoured fashion, the developers of the 169-hectare site prefer not to talk about regional competition and offer the more palateable phrase ‘complementing services offered to a wider region’ to characterise the relationship between the two.
But the bottom line is that two significant components of Macau’s economy, convention business and VIP gaming operations, could suffer at the hands of Vietnam’s gaming adventure.
Shark attack
The first of three phases of the Ho Tram Strip, with its planned hi-tech meeting facilities, world-class entertainment, luxury retail, live entertainment and nightlife, spas, and above all a stunning natural setting that includes several kilometres of beach, and a Great White Shark – well, a Greg Norman-designed golf course – will be ready in 2011.
While Vietnam’s tourism figures are dwarfed by Macau – it expects five million visitors this year – the country is one of the world’s fastest growing tourism destinations and one that is placing increasing emphasis on quality.
The company behind the Ho Tram Strip, is a wholly-owned subsidiary of Canadian based Asian Coast Development Ltd., (ACDL). Its Chief Executive Officer, David Subotic, spoke to Macau Business about the project and its implications for Macau.
Straight talker
First off, Subotic is nothing if not direct: “Macau is Atlantic City without a beach,’’ was his opening gambit. The Canadian CEO also speaks in precise terms when talking about the differences between the two destinations.
“Vietnam is culturally beautiful, the people are pleasant, it is a different place to visit, the air is fresh and clean – you can breathe – all these are big components. In South East Asia I want a destination I can go to and have all these types of amenities and at the same time be in a great place. Wouldn’t that be nice?”
Nice enough perhaps for Macau’s policy makers sit up and take notice of the challenges the Ho Tram Strip could pose to the city’s place as top gaming dog in the East.
Even so, there’s a reluctance to use the “C’’ word. Subotic prefers an American parallel: “I think it is just a complement. When Las Vegas and Atlantic City were the only legal gaming casino jurisdictions in the United States, people were afraid of Mississippi opening up, or Illinois and the Indian gaming, but those markets are still performing very well. Las Vegas was performing extremely well and the other markets were complementing it,” he says.
ACDL’s CEO sees no reason for concern: “There is an extreme lack of supply in this region for integrated resorts. I believe we could build ten Ho Tram Strips in the area, in one day, and we’ll have people (to use them). There is just a lot of people.
“As the South East Asian middle class grows, I think there will much more demand and the supply will still be low. There is no way the market will be saturated in the next five years,” says Subotic.
Luring VIPs
On the possibility VIP gamblers could be lured to Vietnam by junkets, Subotic says: “Sure, they can cross [from Macau to Ho Tram]. But I think it is more beneficial to MGM. I will have more of a database in Vietnam to help them put business into Macau. We would say this relationship is the best thing that ever happened to Macau.”
The junket business forms 70 percent of Macau’s gaming revenues and, of course, it is a target market for Ho Tram: “People might like diversity. Eventually the junket business is about people feeling comfortable. Just like in North America where we can offer a higher commission to junket operators, we also offer an alternative,” he says.
And in Vietnam, junket commissions are tax deductible.
Both locals and foreigners are expected to make up the Ho Tram customer base. Despite the Vietnamese population being barred from playing the tables, the non-gaming facets of the operation will be open to them.
“There are lots of things Vietnamese visitors can use. They can go to the beaches, use the convention business facilities, the restaurants or the wedding chapels, to name a few,” says Subotic.
Tapping Macau talent
The project, in the southern Vietnamese province of Ba Ria Vong Tang not far from the country’s biggest city Ho Chi Minh – population 8 million – has tremendous potential to attract visitors both and professionals to the gaming workforce.
Subotic says: “I am going to be within a two hour drive from a city of 8 million people. There are 20 million people within a five-hour drive and they don’t have anything of our type of quality resort. There are no restrictions to employ expatriates, but our company policy is to employ and teach as many locals as possible. We believe that over 90 per cent of our employees are going to be locals.”
Despite the intention to hire Vietnamese people, the recent wave of layoffs in Macau represents opportunities for Ho Tram. Many of those made redundant by Macau gaming operators were angry at the way they were treated and have no plans to return once the economy recovers.
Cash and comfort
Subotic is very confident with the US$4 billion investment in Vietnam: “The [Vietnamese] government has been very supportive, and took time and effort to understand the gaming and the integrated resort business, so I am very, very pleased with the level of support in these difficult financial times.”
MGM Mirage was the first international development company to join the project, by way of managing the first of its five planned integrated resorts.
Steelman Partners, one of Las Vegas’ main architectural companies, was charged with coming up with a design concept for the Ho Tram Strip and its two kilometers of sandy beaches.
Subotic appears very proud of the synergies he managed to achieve: “We chose MGM because of their properties and resorts. They have a convention business, they know how to entertain their people and know how to handle the gaming business and have an enormous database of people,’’ he says.
Discussions are being held with other potential partners and we asked if any of those involved in the Singapore gaming projects might have a shot: “There are two other groups out there in the gaming space that we would feel comfortable with, and Harrods and Genting are neither of them.”
Note: Given the recent news about MGM Mirage being on the course to default on its loans, immediately before going to print and following an inquiry by Macau Business, MGM Mirage Global Gaming Development president Lloyd C. Nathan assured us MGM Mirage is commited with Asian Coast Development Limited (ACDL) to, in Mr. Nathan’s words, “bring this exciting project to fruition”.
