NagaCorp Makes Casino 'Holiday In Cambodia' No Joke

[General Mackevili]

Article by Forbes...

The US and Vietnam made Cambodia a war zone. The Khmer Rouge turned it into killing fields. The Dead Kennedys’ song “Holiday in Cambodia” mocked it as a vacation destination. NagaCorp has turned it into a goldmine.

NagaCorp operates the largest casino hotel in Cambodia, NagaWorld, and its shares have been among the top performers on the Hong Kong stock market since listing in 2006. Last year, NagaCorp reported net profit of $140 million on revenue of $345 million, both up 24% from 2012. Since 2009, NagaCorp’s net profit has shown a compound annual growth rate (CAGR) of 53% with revenue CAGR of 31%.

Several factors have helped NagaCorp evolve from a floating casino in a branch of the Mekong River into a regional gaming player that, like Vietnam and the Philippines, provides an alternative to Macau for high rollers and turns lower tier players into VIPs. The company holds a 70 year license running through 2065 that includes a 41 year monopoly within a 200 kilometer (120 mile) radius of capital city Phnom Penh. It pays no taxes on income or gaming revenue, just a fixed fee that last year amounted to 1.5% of total revenue. Labor and construction costs are low compared with other Asian gaming destinations. “We built a facility for $200 million that would have cost $1.5 billion in Macau,” NagaWorld chairman Timothy McNally says.



The company has also helped promote Cambodia as a tourist destination. Visitor arrivals have shown 18% CAGR since 2002, reaching 4.2 million last year. Neighboring Vietnam provides 20% of the arrivals, with China, South Korea and Laos in the low double-digits. NagaWorld works with travel agents in China to arrange charter flights for tourists. “We want to keep growing with Cambodia,” McNally told listeners at Global Gaming Expo Asia in Macau last month. The company highlights its commitment to nation building following Cambodia’s wars and genocide in the 1970s and 1980s. NagaCorp CEO and controlling shareholder Chen Lip Keong, a Malaysian who trained as a medical doctor before turning to property development, has long served as an economic advisor to Cambodia’s Prime Minister HE.

As you’d expect, gaming dominates NagaCorp’s revenue, accounting for $325 million or 94% of last year year’s total Mass market revenue grew 16% to $192 million, just over half of it from very popular electronic gaming tables and slot machines. Machine betting is nearly two and a half times greater table bets yet produces just 12% more income, suggesting electronic players are getting a much better deal. Overall, the property has 172 tables and 1,543 machines.

VIP revenue rose 40% to $133 million last year and represents about 45% of total gaming revenue. Vietnam and China provide the biggest chunks of the roll, along with Cambodians holding foreign passports (other Cambodians are barred from gaming). Last year, the company stepped up cooperation with Macau junkets to bring more of their players to NagaWorld.

What you may not expect is that NagaWorld is a thoroughly first-class property. Its 700 rooms include 500 five-star accommodations at less than half of Macau prices. Gaming area themes includes a Chinese garden and NagaRock with the feel of a dance club, complete with lights, music and dancers. Every treatment room in the spa has a whirlpool bath (and karaoke). The breakfast buffet may be the best in Southeast Asia, featuring Japanese, Chinese, Korean, Indian and regional flavors, starting with four different soup stations, along with Western standards, the perfect place to try hargow with bacon, uni, kimchee and mango pickle, wrapped in a crepe.


NagaWorld’s gaming revenue for the entire year represents the take from busy weekend in Macau, but that doesn’t bother chairman McNally. “You don’t have to be a big operator if you have vision and smart operations,” the former FBI agent and Hong Kong Jockey Club executive says. Nonetheless, NagaCorp aims for plenty of growth, including ambitious expansion plans in Phnom Penh and beyond.

The company is building an extension to NagaWorld, dubbed Naga2, that will make the property a true integrated resort. Scheduled to open in 2017, Naga2 will include more than 1,000 new hotel rooms and luxury suites, hundreds more gaming tables and machines, and convention facilities including a 4,000 seat theater. Naga2 is about 300 yards from the original resort, across a major boulevard, and the properties will be linked via NagaCityWalk, doubling as a shopping mall. In 2012, five luxury retailers opened at the NagaWorld end of what will become the passage.

NagaCorp has also agreed to develop a $350 million casino hotel in one of Russia’s new special gaming zones outside Vladivostok. The company’s experience in Cambodia, where it had to lead way on regulatory issues such as anti-money laundering initiatives and sell visitors on the idea that Cambodia was no joke for a vacation, will undoubtedly serve it well in another frontier destination.

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[horace]

I like nagaworld, I don't gamble but enjoy it's buffets and darlin darlin is my night out of choice these days

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[General Mackevili]

I still haven't been to Darling Darling...

[horace]

The main band who come on around ten are the best philippino band I have seen. Plus loads of high class casino hookers to watch dancing and a few grey girls as well,but with beer at an expensive 7$ a pop make sure your wallet is fat

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[General Mackevili]

... beer at an expensive 7$ a pop...

Holy Moly.

[horace]

Make it part of a hundred dollar night (2or 3 hundred if you take back a casino hooker)by going out for a decent meal first 30 or 40 bucks then hit darlin darlin around 9:30 and do another 60$ on booze in there.
Once a month for me is enough

[Sailorman]

Naga world has one Airbus jet to fly gamblers in from China and just ordered three more. Their second floor buffet used to be good in the $20. range, but last time I was there it was in the $30. range and had gone way downhill (no lamb or prime rib, just cheap cuts of meat.

The long term monopoly will probably end the same time as the present government does. The Koh Pous/Chinese one billion dollar hotel/casino project should divert the gamblers that like a nice beach instead of filthy Phnom Penh. Las Vegas was able to turn a dusty desert town into a gambling mecca with mafia money to start,(Chinese government has more $$$ than any other mafia), but it wasn't a one note song as there are many different companies behind the many, many casinos. Nagaworld is a one note show and Phnom Penh won't be a gambling mecca until there is competition. Take away the bars and the one new shopping mall (and the new Thai run hospital opening soon) and all you have is a dusty, filthy city with no public transit, petty theft everywhere , non-existent police and ingrained government corruption. (At least Bangkok 30 years ago had a public transit system.)

To my knowledge, Sihanoukville is the only town/city in Southeast Asia that you can walk out the front/back door of the casino/hotel onto a white sand beach and the Chinese government has taken notice of this. (this may change because of the oil refinery supposedly being built between Kampot and Snooky. It may change to black oil beach's behind the casinos.)

[The Add Jay]

Darling Darling is pretty cool. I really liked that Phillopino band...voice of reason. The girls are glorified bar girls. Great place to meet business people depending on field of work. Best to buy a bottle and go with 3 or 4 friends. I got 1 bottle there but no one wants to chip in.