Foreign investors are afraid of Russia: Igor Trofimov, General Director at the Primorsky Krai Development Corporation

31.07.2018

The attendance of the Primorye gambling zone will grow from 400 thousand to 1.2 million people per year. It will soon establish new hotel and entertainment complexes and casinos. This information was reported by Igor V. Trofimov, General Director at the Primorsky Krai Development Corporation, in the interview to Russian Gaming Week. We talked to Mr. Trofimov about the current condition of the gambling zone and its development plans.

Interviewer: Russian Gaming Week (RGW).
Respondent: Igor Trofimov (I.T.).

RGW: Tigre de Cristal Casino has recently been awarded as Russia’s best resort of 2018. Congratulations! Tell us about the future plans for the venue development.

I.T.: Thank you. For us as the project developer, it is an extremely important event: Tigre de Cristal is recognized as Russia’s best resort. It is a very prestigious award being of great importance for the travel industry of the entire Primorye Region.

I have been working on the gambling zone project almost from the beginning of its implementation, since 2012, and know what a long way our co-investors have overcome to reach such results. Being the first, they have become the best in the country as of today.

We are looking forward to the official presentation of the Tigre de Cristal second phase and believe that it will be a one more ambitious entertainment object within the Primorye resort. According to casino operators, the second construction phase of the project will be introduced in September as a part of the fourth Eastern Economic Forum.

Preliminary figures indicate that the second stage will be a 100,000-square-meter hotel and entertainment complex consisting of 500 rooms. One is going to establish one of the Far East’s largest shopping space, food court, restaurants and bars, as well as conference and banquet halls. There will be more than two thousand created jobs. The object will be located at the adjoining section, near acting casinos. Following the preliminary plan, they will be united by the viaduct for guests’ comfort. By the way, the company stresses that the project will be corrected, thus the final option of the Tigre de Cristal second object is still an intrigue.

Besides, Summit Ascent Holdings Limited has a new chief stockholder. The strategy of new Taiwanese partners is aimed at the development of non-gaming objects in order to enhance the attractiveness of the Primorye Region as a place of public amusement for guests from Southeast Asian countries. The stockholder is considering the possibility to create major objects within the Primorye resort using the best models of the global entertainment industry. All of this will allow to expand the gambling zone up to the entertainment resort scale. We are planning to focus on this direction.

RGW: What difficulties do you face while developing the gambling zone? How do you overcome them?

I.T.: The key challenge is that gambling zones, in my opinion, do not receive sufficient attention. Even despite the fact that these projects are quite serious and significant for the social and economic development. The country has five gambling zones that annually bring pretty huge sums in the budget in terms of tax liabilities and social payments. For example, the Primorye gambling zone provided the budget of the Primorye Region with almost 500 million rubles in 2015-2017.

It means that residents of gambling zones are one of the major taxpayers because they should pay the gambling business tax apart from basic taxes. Moreover, a gambling zone is an appealing tourist spot able to adjust a steady growth of the tourist flow from Asian and European countries. will also have a multiplier effect on the development of each region.

Furthermore, the development of gambling zones based on the entertainment resort model for regular tourists may result in not only the entry but also internal volume of the tourist flow: the country has not so many worthy entertainment resorts. Therefore, if one pays a sufficient attention to the development of gambling zones, they will be much more beneficial than now.

I believe that, in general, Russia does not have any barriers to the successful growth of gambling zones. However, all of them are at initial formation stages, and it is the most appropriate time to arrange the work in the best possible way. One should just realize clear goals of their implementation and not change the rules for their residents. Once again, if we want to see such major gambling operators as Melco, Naga, Sands, Galaxy, Wynn, Gennting, and others in Russia, we have to get into their game on the international arena and correspond to their operational standards.

Tigre de Cristal representatives have repeatedly submitted their offers regarding the gambling regulation, casino activity, and development of travel industry in general. At the same time, if we want to organize gambling zone operations in order to systematize the work of Russian operators, we should take into account Russian realias.

Addressing the issue of attracting new investors to our project, we have discovered that foreign operators are afraid of some uncertainty about Russian market operations. So, it is important to inform them as much as possible of everything relating to business activity in Russia.

RGW: Does your gambling zone have seasonality? When does its attendance grow and reduce?

I.T.: It has the seasonality, but our estimates show that it will matter only at the initial stage of the project implementation. Currently, casinos are the most visited from May till October: the amount of attendees reach up to 2000 – 3000 people per day, depending on entertainment events and tournaments. There are less visitors in winter, but it rather refers to common players. Besides, due to the development of the gambling zone based on the entertainment resort pattern, the seasonality will be less noticeable because of establishing other amusement objects.

RGW: Tell us about your cooperation with investors. Are they interested in the gambling zone?

I.T.: They express a strong interest in the gambling zone. Moreover, it refers to foreign operators, as we are primarily interested in the establishment of world-class integrated resorts within our gambling zone. Summit Ascent Holdings Ltd. and Naga Corp. Ltd. are implementing such projects now.

According to the results of Global Gaming Expo G2A in Macau, which brings together world’s large gambling operators, we have noted that the Primorye gambling zone is of the utmost interest among investors. Nevertheless, the cooperation with major players requires better preparations.

We are actively selling new areas. Recently, we have found a new investor: Shambala Company planning to invest 8 billion rubles in the construction of its own object. We are negotiating with a range of South Korean companies. There are concerned companies from the People’s Republic of China and Europe as well. We are not disclosing detailed information because of being under negotiation. But they are definitely professionals in their sector.

RGW: What is the current audience of Primorye? Please describe a typical visitor.

I.T.: Tigre de Cristal visitors can be primarily divided into foreigners and Russians in the percentage correlation of 30/70. In general, foreign tourists include average citizens of China and Korea with medium income. At the same time, there are also VIP travelers, the so-called Junket ones, who generate a good part of casino profit. Russian tourists consist of various people in terms of their welfare and interest.

RGW: How are you going to attract new attendees to the gambling zone?

I.T.: It is G1 Entertainment LLC and other casino operators that focus on the engagement of new customers. Whereas, we regularly promote our project with the support of the Department of Tourism of Primorsky Territory, making presentations at various meetings and events.

I'd like to mention that the opening of Naga Vladivostok and Selena complexes in 2020 would soon encourage the increase of tourist flow. As of today, the annual average attendance of the gambling zone is about 400 thousand people; after 2020, the number of guests will exceed 1.2 million people.

Cambodia-based Naga Corp Ltd. is going to establish a hotel complex with a water park and casino in the territory of Primorye. During the first phase of the construction project, the company will build an 11-floor hotel complex with a casino. According to the plan, the object will feature a 279-room hotel and a 2000-seat concert hall. The casino will offer 300 slot machines and 30 gambling tables.

Diamond Fortune Holdings Prim, a group of Russian investment companies, will establish a hotel and entertainment complex called Selena. At the first stage, Selena will consist of a 295-room hotel as well as a casino with at least 100 gambling tables and 500 slot machines,

The gross site area of Selena will be more than 174,000 sq.m. At the final stage, the complex will feature two hotels with standard and luxurious rooms, casino, restaurants, shopping space, and SPA center.

By the way, we are working on the planned site improvements, which will allow travelers simply to visit the resort: to attend its beach zone, walk around the strand or along the Turtle Lake.

RGW: The Primorsky Krai Development Corporation was an exhibitor at Russian Gaming Week. What do you think about the event?

I.T.: In general, the event provided us with positive impressions and allowed to establish useful contacts. We were interested in companies supplying gambling equipment and online gambling representatives.

As project developers at the initial implementation stage of Primorye gambling and entertainment complex, we participate in similar events in order to share our plans and establish the cooperation with potential investors. We have taken part in Russian Gaming Week for the first time and mentioned that Russia’s only specialized event dedicated to the gambling development gives no more than 5% of the program to the development of gambling zones. Although such projects, as mentioned above, are quite important for the Russian economic growth and advancement of the travel industry in particular. In this context, we are talking not as a government institution driven by political motivations, but as managers of this project with a clear understanding of its concept. Therefore, we are sure that if one pays a due attention to this sector, the results will be more efficient.

Foreign investors are afraid of Russia: Igor Trofimov, General Director at the Primorsky Krai Development Corporation

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