Australia-listed casino investor Donaco International Ltd says it will be adding approximately 100 gaming tables in the next few months to its Star Vegas Resort and Club (pictured) in Cambodia. The expansion of the gaming floor is the result of a deal with a marketing firm to bring new junket operators to the property, the firm said in a filing on Monday.
Donaco had announced in June a deal with Vivo Tower Ltd for the latter firm to bring gambling junkets from “Macau, Hong Kong, Malaysia and elsewhere” to the Star Vegas property. Vivo Tower was described in a previous filing by Donaco as an international casino marketing agency.
Under the deal, Vivo Tower will pay Donaco annual fees and operate a revenue share arrangement with the casino operator for the right to bring high roller players to the Star Vegas property.
In Monday’s filing, Donaco said that Vivo Tower has already “signed a number of deals with international junkets”, which will result in the addition of “approximately 100 gaming tables to the property over the next few months”. The company said these tables would be supplementary to the 140 tables currently in operation at Star Vegas.
The new international VIP marketing partner for the resort will tender a “minimum fixed fee of US$1.5 million in financial year 2018, increasing to US$3 million in subsequent years, plus a revenue share which varies depending on the junket operators engaged by them,” said the casino operator.
On Monday, the Australian casino operator said it was completing a transition to full management control of Star Vegas, as a management contract held by the previous owner of the resort ended on June 30. When Donaco announced – in January 2015 – the acquisition of the Star Vegas property, it said at the time that the vendor would still manage the venue for a further two years post acquisition. The vendor was identified at the time as Star Vegas Resort and Club.
Management changes
“Key management roles have already been filled, or are in the process of being filled, utilising the group’s extensive experience in managing Asian casino operations,” said Donaco in the latest filing.
“New appointments are being made to replace a number of staff that departed with previous management. This process includes the relocation of several highly performing Aristo staff members to the Star Vegas,” the firm added.
Donaco started operations with a single casino property called the Aristo International Hotel in Lao Cai, near Vietnam’s border with Yunnan province in China.
To mark the transition in management at Star Vegas, the company launched a poker room on July 1 under the brand Poker King Club, then played host to an event by the Asian Poker Tour.
In Monday’s filing, the casino operator said that as part of the management transition, it is now “actively marketing the property and targeting growth from new junket operators”.
Aside from the deal with Vivo Tower, Donaco is currently renegotiating the terms and conditions applicable to the existing Thai junket business, “with the former junket operators being replaced by new operators”. “Further junket deals are under negotiation, to ensure the best possible utilisation of the junket halls at Star Vegas,” the company said.
It added: “During this transition period, and the introduction of new junket operators at Star Vegas, Donaco anticipates that earnings from the VIP portion of the Star Vegas business in the first quarter of fiscal year 2018 will be lower than the corresponding months last year.”
In the same filing issued on Monday, Donaco said the firm’s two properties, Star Vegas and Aristo, “have performed in line with earnings guidance”.
Based on unaudited management accounts, the Star Vegas business has recorded earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$61 million for fiscal year 2017, said the firm.
The Aristo property has also performed strongly during the period, “benefiting from strategic initiatives implemented to enhance mass market visitation at the venue, and cost control measures,” said Donaco. Unaudited EBITDA for fiscal year 2017 was approximately RMB73.2 million (US$10.8 million), an increase of 38 percent year-on-year, the firm added.
