Just the start ‐‐ the little casino that can

When Hong Kong‐listed Imperial Pacific said it would double its planned investment on Saipan, a tiny Pacific territory that forms part of the Commonwealth of Northern Mariana Islands, it’s fair to say eyebrows in the industry were raised.

Many doubted the island, with its limited infrastructure, would be able to attract enough visitors to generate a return on an investment of that magnitude. Now, almost a year after its temporary casino began operations, the market is beginning to see the vision materialize

The property held a soft opening in July last year with just 10 tables and immediately took US$400,000 to US$500,000, averaging around 5,800 customers a day. In April, it achieved an eye-­popping US$3.2 billion of rolling volume and it has delivered an average of about $2 billion a month in table games roll since November 2015 when it began VIP operations and held its official opening of the temporary casino. The temporary casino now has 32 mass tables, six premium tables, seven VIP tables and 106 slots.

So what is the secret to its success? AGB sat down with Mark A. Brown, CEO of Imperial Pacific, to find out what is making the destination so popular.

Brown was approached while he was CEO at NagaCorp and said that once he heard the story and saw the location, which took six years to find, he knew it was an opportunity he couldn’t pass up.

The wholly-owned subsidiary of Imperial Pacific International Holdings, Best Sunshine, has won the sole right to run Saipan’s casinos in 2014 after a bitterly contested fight with rival Mega Stars Overseas’ Marianas Stars Entertainment. Imperial Pacific estimated in its tender submission that the total investment would be approximately $3 billion.

The group bought two planes in 2014 and decided to open a temporary casino to begin generating revenue while work continues on the planned Grand Mariana property, due for completion in New Year 2016/2017.

“It is incredible. We are continually growing every month,” said Brown, adding that the mass business also continues to do well.

Brown was quick to stress that, contrary to recent reports, the casino is not “saturated,” merely that the explosive rate of growth is unlikely to continue given current capacity constraints. Real growth should only come once the new resort is open, with a planned 250 tables. Contrary to Macau, the upside is that there is no table cap in Saipan.

In terms of fees and taxes, the casino operator has to pay a fixed license fee of $15 million per year for the next 40 years. Upon completion of Phase II, there will be an additional $20 million fee per year. There is no casino tax in Saipan, but the company pays sales tax of 5 percent, rebatable from income tax. Since the opening of its temporary casino in Nov. 28 last year, Best Sunshine has so far remitted approximately US$24 million in taxes, according to Brown.

The casino’s customers are a mixture of local business owners, Chinese, Japanese and Korean tourists. Brown estimates that its current VIP customers number to be around 500, with about 60 of those returning regularly. All VIP play is direct so far as junket operators have yet to be approved by the Saipan Commonwealth Casino Commission. Each one of them is personally known to Imperial Pacific and has to be licensed by the Commission.

The company operates a rolling chip commission program. Recently, a request to the Commonwealth Casino Commission to increase the rebate scheme to a competitive rate in order to better compete with the changing incentives currently offered by Macau and the Philippines, and was granted a six­-month trial period.  

Brown observed that players in the $20­-30,000 range do not qualify for rolling chip programs in Macau, so they are being introduced to rebates, creating good stickiness.

In addition to the two private planes, Imperial Pacific has five yachts and one villa, and VIPs are ferried everywhere to take part in unforgettable excursion experiences such as sunset dinners, cruises on the yacht, and fishing in the crystal clean waters. Brown says that this is what makes Saipan special in the Asian market, with no other location able to offer VIPs these unique experiences that nature offers locally. He says that the service provided is second-­to­-none, with the company currently employing 1,200 staff, 60 percent of whom are locals.

In terms of infrastructure, the island currently has 2,800 hotel rooms, which are consistently close to 100 percent occupancy. Compared to Macau, which has five hotel rooms per table, Saipan has around 12 rooms per table when the Grand Mariana is opened. Best Sunshine is also setting up restaurants and coffee shops, partnering with some that have celebrity chefs to escalate their appeal to visitors.

Phase I of the development, the Grand Mariana Casino Hotel and Resort is expected to be completed in December 2016, with the planned 14­ storey hotel building to be opened in April 2017. The hotel targets to offer over 350 opulent hotel rooms and 15 deluxe villas “to exceed the satisfaction of all guests who pay attention to every detail.”

The company has hired four high-­level marketing executives to spread the word throughout Asia and, in an ingenious marketing move, sponsored four episodes of a popular Chinese program, Running Man, which has been filmed on the island to spread wider recognition of Saipan in the Mainland.

According to a recent survey by the China National Tourism Administration, Saipan ranked 5th in a list of the top 100 dream destinations for Chinese travellers. The Marianas Visitors Authority has been actively marketing the Northern Mariana Islands group in China since opening representative offices in Beijing and Shanghai in 2012. It has also extended its reach to the Guangdong province.

In the fiscal year­-to-­date, overall visitor numbers are down 2.3 percent, though the number of tourists from China rose just over 18 percent, giving Chinese visitors a 43.1 percent share of the overall market, up from 35.7 percent in 2015. Hong Kong visitors have also surged 40 percent, according to MVA figures.

The island offers visa upon arrival for 45 days for mainland Chinese and visa free access for Hong Kong citizens, which is another key factor in its appeal while an increasing number of airlines are offering direct flights from Hong Kong and the Philippines. From June 15, Philippine Airlines will be offering twice weekly flights to and from Manila, while low-­cost carrier HK Express, in response to the popular requests of their customers that Saipan is their preferred destination, has applied to add Saipan to its destination list from October.

Brown, being an experienced executive in the industry in the US, Macau and Asia, is brimming with enthusiasm for the casino project and for the unique attractions of Saipan. “We have created something that you can’t duplicate anywhere in the world,” he said. For Brown, there is nothing out there “that can really compare to our overall experience of gaming on Saipan.”