Hotels left without casinos
Foreign gambling operators are leaving Russia. As the RBC Daily has found out, Sun International Ltd. from South Africa, a company running hotels and casinos, turned down its plans to become a co-investor of the “Parkland” entertainment centre in Ramenski district. Gambling market competitors say the withdrawal of another western company is natural, and developers are concerned that it will be difficult for “Parkland” to make up a new business concept instead of the “Moscow region Las Vegas”.
Let us remind you that in the middle of the previous year “Belaya Dacha” and the South African company Sun International Ltd. agreed to jointly build “Parkland”, a multi-functional entertainment centre, its area being 5 thousand hectares. The initial Sun International`s investments in the Russian Project must have been about $1bn. But, after the gambling regulating law came into effect on January 1st, Sun International had to review its plans.
Market competitors were not surprised with Sun International`s refusal to invest funds in “Parkland”. “Such a project might have been recompensed within 3-5 years only if there had been a casino and if gambling had been banned in the capital city. Otherwise the recompense would have taken over 10 years”, says Lavrentiy Gubin, a representative of Storm International (the “Super Slots” chain). And Alexander Povolotski, a corporate finance consultant of the “Korston” group, remarks that the casino-hotel synergy leads to good performance. “Investments in a non-Moscow hotel are a risky business, and a casino available reduces risks, increasing the yield. The profitability of hotel investments is 11-13% a year, and, a casino available, it increases up to 30%”, says Mr Povolotski.
RBC Daily