The Tigre de Cristal casino, located in Primorye gaming zone in Russia, is relying more on modest class customers for the majority of revenues than on VIP gamblers.

Summit Ascent Holdings, the Hong Kong-listed company that has a majority stake in Tigre de Cristal, reported a 2% increase year-on-year to HK$207.8m (US$26.5m) for the first quarter. But the adjusted earnings surged by 17% to HK$66.8m and overall profit increased to HK$2.6m from a loss of HK$5.4m in H1 2017.

The profit came even after the casino’s VIP gambling turnover decreased by 22.5% year-on-year to HK$6.5b in H1. The gross win was also down by 38.2% to HK$189m as win rate fell 0.74 points to 2.9%. After deducting VIP rebates, net VIP win was down 44.5% to HK$41m. It’s worth noting that the casino’s average number of VIP tables fell to 12 from 16 in H1 2017.

Summit Ascent Holdings said the slowdown in VIP revenues was anticipated. The casino had refused to succumb to the “increasing pressure” from VIP customers who demanded higher levels of rebates. The casino said no such requests and focused on developing its own ‘premium mass’ business.The casino’s mass market numbers appear to support this strategy, as mass table drop rose more than one-third to HK$348m and net win spiked 47.3% to HK$84m.

The slots business, which primarily caters to a local clientele, reported handle up 44.4% to HK$1.35b but a lower win rate kept slots revenue’s gain to 27% (HK$66m).

Tigre de Cristal’s average hotel occupancy was largely unchanged year-on-year at 76% on the weekends but just 45% on weekdays. Still, hotel revenue fell 22% to HK$17m due to fewer high-rolling clients.

Summit says it’s encouraged by the Primorye region’s rising foreign tourist visitation, which is growing at an annual rate of 33% over the past five years. At the end of H1, there were 50% more direct flights to the region than one year ago.

Summit says, it is currently refining the design and construction requirements of Tigre de Cristal’s Phase II, construction of which is expected to commence next spring with a targeted opening in “the latter half of 2020.” Phase II originally targeted a late-2019 opening but delays stemmed from alterations in financing and design options following “recent changes in substantial shareholders.”

Summit also says it is observed “an acceleration of building works” by other Primorye operators, including NagaCorp’s Naga Vladivostok and Diamond Fortune Holdings’ Selena project. Assuming these other operators continue at this accelerated pace, Summit says it may start to see the benefits of a “cluster effect” of casinos as early as 2021.

Source: calvinayre.com

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