The future of Integrated Resorts in Europe
The IR concept in Europe has had a long and not particularly illustrious history, with many grand plans, many false starts and a total of zero actual launches. However, this is changing with the granting and subsequent development of two major resort properties, the Melco site in Cyprus and the recent grant of the Athens licence to Mohegan Sun. The early slot at VOX ICE was dedicated to a discussion of the future of projects of this scale in Europe and its panel included key members of both the above project teams: Michael Silberling from Mohegan Sun and Andy Choy of Melco.
The discussion began with issues surrounding operators working together with regulators. Andy spoke of the relationship being critical, not just as they move toward full operation, but even at the planning and licence-application stages. He pointed out some failures over the years due to unrealistic expectations from licensing bodies and expressed the need for a good project “fit” between both parties. He insisted that a shared vision was key and that if that did not look like it was achievable (as in other projects in the past), it would be unwise to pursue a project. This discussion centered around expectations for tourism, capital investment, job creation and even simply the pitch of the offer.
At this point, the question of tax rates was raised. Michael pointed out it was reasonable for legislators to look to maximise their return and perhaps for prospective operators to then determine whether their business model would work with the proposed rate. He also, interestingly, made the point that tax-rate stability was as important as the rate itself; a volatile tax environment would make significant investment pretty much unworkable.
George Campanellas, Director General of Invest Cyprus, presented the point of view from the other side of the equation. He spoke about the need for the right partner, not just the biggest name or the one promising the biggest dollar investment, and spoke of his confidence in Melco as their partner.
The panel moved onto the prospects for future IR options in Europe. A really interesting comment from Andy then routed the conversation toward how prospective new IR regions might market their opportunity. He said it was critically important for potential new regions offering an IR opportunity to be clear in what they hope for as a result of the process. It is rarely as simple as straight cash and he pointed out it is important to reach internal consensus and maintain transparency for an operator considering a billion-dollar investment.
In a world where the Integrated Casino Resort concept, if not yet close to saturation, is certainly spreading rapidly, it seems curious that the potential of Europe has not yet been fully exploited. A combination of politics, existing gambling provision and unfamiliarity has perhaps held back progress, but as more Europeans become comfortable with the concept through travel and potential investors see increasingly solid returns from new markets, perhaps this is the decade where we will see significant new development.