In this regular feature in IAG to celebrate 18 years covering the Asian gaming and leisure industry, we look back at our cover story from exactly 10 years ago, “Going the distance”, to rediscover what was making the news in August 2013!
Opened in July 2013, The Grand – Ho Tram Strip has long faced questions over whether its business model is viable. By far the largest integrated resort in Vietnam when it welcomed its first guests, and at an initial cost of US$500 million (and growing), the absence of local players long stood as the biggest obstacle to the property achieving any sort of decent ROI.
But the fact that The Grand – Ho Tram Strip opened at all was an achievement in itself.
As Inside Asian Gaming reported at the time in our August 2013 cover story, titled “Going the distance”, Ho Tram had to overcome a litany of obstacles on the way to opening its doors, from the ill-timed global financial crisis of 2008- 2009 to various funding issues and problems which arose due to its missing certain completion deadlines.
That, IAG wrote, is “Nothing uncommon perhaps when you’re trying to get a very big hotel with a casino and restaurants and all the rest built. But in an uncommon environment like Vietnam that can spell headaches. The government withheld the necessary investment certificate, which triggered a syndicate of Vietnamese banks to suspend the undrawn portion of the project’s credit facility.
“That was enough to move NYSE-listed Pinnacle Entertainment, a major regional casino operator in the States, to announce that it was writing off its 23% stake.”
In March 2013, MGM Resorts pulled out as operator for reasons undisclosed but in all likelihood due to the investment certificate issue. Then, ironically, the certificate was issued almost immediately afterwards in April, forging the way for The Grand – Ho Tram to finally open its doors three months later.
“There were many people who probably thought it might never happen,” said COO Mike Santangelo, who joined right around the time MGM departed.
Although The Grand – Ho Tram undoubtedly brought international standard casino resorts to Vietnam for the very first time, it has continued to face challenges in the years since.
Rumor has it that US hedge fund giant Phil Falcone’s Harbinger Capital – which sprung the majority of the development’s initial US$500 million investment – was lured in on the expectation that locals gaming would be approved for the property sometime in the near future.
Such a scenario has never eventuated, ultimately leading to US private equity firm Warburg Pincus acquiring Harbinger Capital’s majority stake in The Grand Ho Tram’s parent company, Asian Coast Development Ltd (ACDL), in July 2019.
There were also myriad different management teams in place over the years before Warburg Pincus inserted Walt Power – a Macau industry veteran whose previous roles include SVP of Operations for Sands China subsidiary Venetian Macau Limited – as CEO in 2020.
Under his watch, The Grand – Ho Tram has continued to expand, completing a second hotel tower, to grow hotel room capacity to 1,100, and preparing for the launch of a new apartment and villa complex in August, with more to come soon afterwards.
According to Power, a shift in marketing strategies has seen the property make significant strides forward in recent times.
“We brought a new strategy into the property, a new management team, and we’ve been executing the strategy pretty aggressively,” he explains.
“Our focus is on the expat market located in Ho Chi Minh City. It is two-and-a-half hours away from Ho Tram, but it was not efficiently being exploited in the past. It’s a metropolis of 15 million people and we estimate there to be somewhere around 500,000 expats there.
“Given we’re the only [casino-resort] in southern Vietnam, when you combine that monopoly with the size of the market, we’re doing quite well compared with previous years.
“I would consider us to be an event-driven property. We’ve started offering on a regular basis professional boxing, mixed martial arts events, casino-related VIP dinners, fashion shows and beauty pageants. Our onus is to have events here to give a reason for customers to drive those two-and-a-half hours from Ho Chi Minh City, as well as our international arrivals from Korea, Taiwan and Hong Kong.
“We’re certainly a weekend driven business – last weekend we sold out more than 1,000 hotel rooms and had 2,000 people on the property – so that’s our current strategy. We are taking a leaf out of Macau and The Venetian in Las Vegas by filling the hotel up with MICE events during the week, and then weekends are for holiday makers, tourists and casino guests.”