NagaCorp rolls dice on $15 million VIP terminal

NagaCorp rolls dice on $15 million VIP terminal

A private VIP terminal costing $15 million is being planned at Phnom Penh International Airport by NagaCorp, which hopes that once it is ready – likely by early next year – high-rollers would flock to its casino and double their spending to $8 billion.

The new terminal “will be located at a different location from the existing passenger terminal”, and “would house its own immigration facility, VIP lounge, food and beverage outlets and other services”, the company said in a release two months ago on the Hong Kong Stock Exchange, where it is listed.

NagaWorld, the casino arm of NagaCorp, had “entered into an agreement” with the Cambodian government on January 11 this year for NagaWorld to construct “the Naga Terminal”, the release said.

No other details were given. NagaCorp’s chief financial officer, Philip Lee, in March reportedly said the terminal would be completed by the end of this year or early next year, according to a third-party report by financial analysis firm Citi.

The terminal “will not only afford a unique VIP arrival and departure experience but also position the junket segment of the company’s business in a more competitive manner,” NagaCorp’s release added.

In a junket, the casino pays for some or all of the travel and hotel costs of the gambler, who in turn must play until a minimum sum or length of time is reached. For NagaCorp’s junket VIP floors, the average buy-in is $150,000, with a maximum bet of $24,000 per hand.

The terminal is part of $156 million NagaCorp is pumping into the VIP segment to reverse its lack of luck in this area. While its revenue from junkets has increased steadily, their contribution to the overall revenue has dropped every year. In 2009, the
segment contributed 45.3 per cent, plunging to 34 per cent by last year. According to a report last month by EBS International, NagaCorp aims to more than double the spending by VIP players, from $3.8 billion last year to $8 billion in about three years.

NagaCorp currently has at least one private jet that is used to fly VIP customers into the Kingdom.

It is rare, though not impossible, for a company that does not deal with aviation or transport to have its own planes and terminal simultaneously, said Thomas Jaeger, managing director of ch-aviation, a company that analyses aviation issues.

“I am also not aware of casinos running their own private terminals,” he added.

But procedures related to immigration and customs would still be conducted by the government, he added. If everything is done right, the security “will be no different than going through normal immigration checks at the main terminal building”.

The State Secretariat of Civil Aviation’s undersecretary of state, Soy Sokhan, said he was not aware of NagaCorp’s plan. However, he believes it is not necessary for a new terminal, because Phnom Penh’s existing terminal has VIP facilities, and “not enough people use them”.

In 2011, Cambodia’s then 27 casinos generated about $20 million in tax revenue for the government, a quarter more than the previous year.

The opposition has previously criticised the Kingdom’s casinos for not paying enough taxes to the government, as well as for their lax security that allows locals to slip in and gamble, which is illegal.

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